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CPUGate: the details

Don't forget, the US Commerce Dept denies it all

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The US Commerce Department, currently being sued by Charles R. Smith in the Eastern District of Virginia, does share some of the same concerns as the plaintiff. For example, the Dept of Commerce announced that IBM had entered a guilty plea for the illegal export of a super computer to Russia. It was fined $8.5 million, the maximum, for selling one of its machines to a Russian nuclear weapons lab called Arzamas-16. On April 18th, the Commerce Department fined Compaq $55,000 for exporting kit to several countries including China, without export licences. And on the 26th of December, a Hong Kong reseller for Sun sold a super computer to a Communist China lab, but the machine was to go to the Yuanwang Corporation -- a part of the Chinese Army. Sun managed to get the supercomputer back in this case. That's the documented history. However plaintiff Smith has entered evidence to the court which is not so public. One is a list of Chinese military officials compiled by the Commerce Department including People's Liberation Army (PLA) generals Ding and Huai. Another is a memo from Colonel Blasko, a Defense Intelligence Agency official, to Commerce officials Deliberti, Albanse and Isbell. That states that Yuanwang Corp and Great Wall Industries and other PLA companies including China National Nuclear and China North (Norinco), are significant to the defence conversion. The plaintiff alleges that Tandem sold over $100 million of computers to the PLA company Great Wall Industries in 1994. He alleges that the Department of Commerce knew of contacts made directly with PLA owned companies like Great Wall and Yuanwang. Smith alleges that the US Defense department knew that the Commerce Department had issued licences for technology transfers to Chinese military units covered by the State Department's International Traffic in Arms Regulations (ITAR) under the Arms Control Act. Smith claims that the Commerce Department is not authorised to issue such a licence. That, he says, is backed up by a Defense Department report stating that the Commerce Department had issued licences to the Chinese military. That report, says Smith, said: "This was clearly beyond the scope of Commerce export control jurisdiction because only the Department of State is authorized to issue licenses for defense services". Computer Systems Policy Project (CSPP) members such as IBM, Sun and Compaq, sought Commerce officials to approve transfers of computers to military end users in Russia and China. Smith claims the Commerce Department is illegally withholding document on these allegedly illegal transfers. Plaintiff Smith makes a number of allegations against White House advisor John Podesta, including conflict of interest because his brother Anthony Podesta, the owner of Podesta Associates, had his employee Kenneth Kay director of the CSPP, engaged in secret meetings inside the Commerce Department and the White House. John Podesta, alleges Smith, directed and controlled computer export and computer security policies with a direct financial impact on Anthony Podesta's client the CSPP. Smith also alleges that the Commerce Department is withholding documents on CSPP activities. Smith's most serious allegations come in articles 14 and 15 of the filing. He alleges that the US government sponsored projects with the Chinese army including corrupt activities such as paying for lavish meals, expensive foreign luxury cars and Swiss bank accounts. Article 15 says: "The violations documented by plaintiff in this reply, and in the original complaint, show the actions taken by the defendant, White House officials, the CSPP computer companies and foreign military officers includes evidence of criminal activity via financial gain, and direct conflicts of interest. Plaintiff asserts that bribery, as defined by the Travel Act 18 U.S.C. 1952(a) (3) (1998) and the Foreign Corrupt Practices Act...is the primary reason for US government officials to withold records." The remaining articles of the suit claim that some activities are covered by the Racketeer Influenced and Corrupt Organizations Act 18 1962-1968 (RICO) through violations of Section 120.9 of the International Traffic in Arms Regulation and other cases. Smith wants the court to order the Commerce Department to prepare a so-called Vaughn index of all documents that are being withheld... ®

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