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Division
of Investment and Export
PO Box 7970
Madison, WI 53707-7970
USA
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Vol.
7 #5, May 2008
$400,000 Fine for Export Violations
MTS Systems Corp., of Eden Prairie, MN, pleaded guilty and was
sentenced to two years probation and a $400,000 fine in connection with
submitting false export license applications involving proposed
shipments to India. Pursuant to the plea agreement, the court
also ordered MTS to implement and maintain a model export compliance
program and to sponsor an export compliance conference to be held at a
future date.
MTS manufactures and sells test systems throughout the world, including
some determined to be involved in unregulated nuclear
activities. After India conducted nuclear weapons tests in
1998, the United States prohibited U.S. companies from exporting
certain goods and services to various Indian entities without first
obtaining an export license.
In 2002, MTS evaluated a purchase inquiry from a potential Indian
customer and determined that it might be destined for an inappropriate
user or destination. An MTS representative in India confirmed
that the customer would be using the MTS equipment for testing nuclear
power plant components. MTS, therefore, was required to obtain an
export license from the Commerce Department. The MTS employee
in charge of export compliance stated that it was “extremely
unlikely” that it would gain approval for the export unless
the customer could make a “strong and convincing”
argument that this test system would not make a significant
contribution to India’s nuclear energy programs.
When MTS electronically filed a license application, the stated end-use
was “for seismic calibration testing facility to test motors
and other electronic equipment under earthquake conditions.”
The license application did not reflect the company’s true
knowledge of intended nuclear end-use and was therefore considered a
criminal act.
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