Macau resident convicted in US of illegal defense exports

U.S. lawmakers slam EADS over tanker bid
Washington (UPI) May 12, 2010 - U.S. lawmakers argue it is unfair to U.S. workers that European aviation giant EADS has been allowed back into the bid for a major Air Force tanker plane contract. A group of lawmakers from Washington state slammed the re-entry of European Aeronautic Defense and Space Co. into the bid, saying U.S. rival Boeing would have to compete against European Union subsidies. Boeing, which has a large presence in Seattle, will be "competing against the treasuries of European governments," U.S. Sen. Patty Murray, D-Wash., said at a rally in Washington.

EADS North America, the U.S. holding company for the European aviation giant, last month announced it would bid for a $35 billion-$40 billion contract to outfit the U.S. Air Force with 179 refueling tankers. The decision came after EADS was granted a 60-day extension on a deadline to enable the Europeans to return to the competition. EADS had planned to bid with its U.S. partner Northrop Grumman but the Los Angeles company in March pulled out of the race, arguing the bidding conditions clearly favor U.S. rival Boeing.

EADS then requested a deadline extension so it could alter its bid or find new partners. U.S. lawmakers from Washington are now accusing the those running the bid process of favoring the Europeans. Sen. Maria Cantwell, D-Wash., said the U.S. government "should not have to participate" in business with a company that receives such substantial subsidies. The Europeans are throwing their KC-45 tanker, a large plane based on the Airbus A330, in the race; Boeing is bidding with an altered version of its 767, called New Generation Tanker.

The Generation Tanker is slightly smaller and probably cheaper than the KC-45; the European plane has logged more flight testing hours and is closer to serial production, experts say. Meanwhile, EADS is looking for additional partners to boost its bid. Companies including the United States' Raytheon and L-3 Communications, as well as Britain's BAE Systems have been mentioned. EADS plans to submit a bid by July 8, with U.S. officials to award the contract in the fall. The bidding war goes back several years. The KC-45 won the contract in February 2008 but the decision was overturned four months later by the Government Accountability Office after Boeing challenged it. The GAO said it found problems with the bidding and the contract is up for grabs.

by Staff Writers
Los Angeles (AFP) May 12, 2010
A Macau resident has been convicted of trying to illegally export communications, encryption and GPS equipment used by the US military and NATO forces, the Department of Justice said Wednesday.

Chi Tong Kuok, also known as Edison Kuok, was convicted by a federal jury in San Diego, south of here, on Tuesday of trying to export defense articles to Macau and Hong Kong without a license, the department said in a statement.

Kuok, a Portuguese citizen who lives in Macau, was arrested in Atlanta in June 2009 following an operation which involved undercover agents of the US Immigration and Customs Enforcement agency.

He was convicted of conspiring to export defense articles without a license, smuggling goods from the United States, money laundering and other charges.

The Justice Department did not mention the ultimate destination for the equipment Kuok was seeking, but Wired magazine quoted a government affidavit in the case as saying he was acting at the direction of Chinese officials.

"This conviction underscores the threat posed by illicit efforts to obtain sensitive US technology and the need for continued vigilance against such schemes," David Kris, assistant attorney general for national security, said.

"The military encryption technology at the heart of this conspiracy is controlled for good reason," Kris said.

"The United States is engaged in a daily cat and mouse game to keep sensitive technology from falling into the hands of those who might seek to harm America or its allies," added Department of Homeland Security assistant secretary John Morton.

"The enforcement of arms export controls keeps America safe, and Kuok's arrest and conviction have done just that when sensitive encryption technology is not taken overseas by someone whose interests are not in line with those of the United States," Morton said.

According to court documents, Kuok contacted a company in Britain in 2006 to obtain components related to the VDC-300 data controller, a device made by a California defense contractor which is used by the US and NATO militaries to route data to and from tactical radios.

The Justice Department said the British company referred Kuok to the ICE, which carried out negotiations with him for more than two years through email.

It said Kuok also sought to obtain a PSN-13, a Global Positioning System device used by the US and NATO, and a PRC-148, a multi-band handheld radio system manufactured by Thales Communications that was originally designed for US Special Operations Command.

He also sought to obtain a CYZ-10, which is used by US and NATO forces to load encryption software into communication devices such as tactical radios to allow them to communicate securely.

Kuok also attempted to buy a KG-175 Taclane Encryptor, a General Dynamics device made under contract with the National Security Agency for use by the US military which encrypts Internet Protocol communications, it said.

Sentencing was set for August 23.

Kuok could face up to five years in prison for conspiracy to smuggle goods from the United States and exporting defense articles without a license and up to 10 years for smuggling goods from the United States.

Attempted export of defense articles without a license is punishable by up to 10 years in prison while money laundering carries a sentence of up to 20 years in prison.

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