5 March 1998
Source: http://www.access.gpo.gov/su_docs/aces/aces140.html

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[Federal Register: March 4, 1998 (Volume 63, Number 42)]
[Notices]
[Page 10671]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04mr98-128]

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DEPARTMENT OF STATE

[Public Notice 2752]


Office of Defense Trade Controls; Reinstatement of Eligibility To
Apply for Export/Retransfer Authorizations Pursuant to Section 38(g)(4)
of the Arms Export Control Act

AGENCY: Department of State.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the Department of State has
rescinded its policy of denial and suspended its statutory debarment
against the Armaments Corporation of South Africa, Ltd. (Armscor); the
Denel Group (Pty) Ltd. (Denel) and its divisions; and any divisions,
subsidiaries, associated companies, affiliated persons, and successor
entities pursuant to Section 38(g)(4) of the Arms Export Control Act
(AECA) (22 U.S.C. 2778) and Sec. 127.11(b) of the International Traffic
in Arms Regulations (ITAR) (22 CFR Parts 120-130).

EFFECTIVE DATE: February 27, 1998.

FOR FURTHER INFORMATION CONTACT: Philip S. Rhoads, Chief, Compliance
and Enforcement Branch, Office of Defense Trade Controls, Department of
State (703-875-6644).

SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA and Section
127.7 of the ITAR prohibit the issuance of export licenses or other
approvals to a person, or any party to the export, who has been
convicted of violating certain U.S. criminal statutes enumerated at
Section 38(g)(1)(A) of the AECA and Section 120.27 of the ITAR. The
term ``person'' means a natural person as well as a corporation,
business association, partnership, society, trust, or any other entity,
organization, or group, including governmental entities. The term
``party to the export'' means the president, the chief executive
officer, and any other senior officers of the license applicant; and
any consignee or end-user of any item to be exported.
    Effective June 8, 1994, the Department of State implemented a
policy of denial pursuant to Sections 38 and 42 of the AECA and
Sections 126.7(a)(1) and (a)(2) of the ITAR for Armscor, Denel and its
divisions (including Kentron (Pty) Ltd.), and any divisions,
subsidiaries, associated companies, affiliated persons, and successor
entities in response to an indictment returned in the U.S. District
Court for the Eastern District of Pennsylvania charging Armscor and
Kentron with violating and conspiring to violate the AECA (see 59 FR
33811, June 30, 1994).
    Denel was not named in the indictment. Denel came into being when
the South African Government restructured Armscor to separate the
acquisition function from the manufacturing function. Armscor was
assigned responsibility for procurement and acquisition, while Denel
was assigned responsibility for production and manufacturing. Denel was
therefore included in the Agreement Between the Government of the
United States and the Government of the Republic of South Africa
Concerning Cooperation on Defense Trade Controls. The company Kentron
(Pty) Ltd., which had a separate legal status as a subsidiary of
Armscor at the time of the indictment, has since become a division of
Denel.
    Subsequently, after the companies accepted plea agreements in
connection with the criminal charges, the Department of State imposed
statutory debarment against Armscor and Denel and its divisions
effective February 27, 1997 (see 62 FR 13932, March 24, 1997).
    Section 38(g)(4) of the AECA permits reinstatement of eligibility
to apply for export/retransfer authorizations on a case-by-case basis
after consultation with the Secretary of the Treasury and after a
thorough review of the circumstances surrounding the conviction or
ineligibility to export and a finding that appropriate steps have been
taken to mitigate any law enforcement concerns.
    In accordance with these authorities, effective February 27, 1998,
the policy of denial for all export license applications and other
requests for approval involving Armscor and Denel and its divisions
(including Kentron (Pty) Ltd.) has been rescinded and debarment has
been suspended. The effect of this notice is that Armscor, Denel and
its divisions, and any divisions, subsidiaries, associated companies,
affiliated persons, and successor entities may participate in the
export or transfer of defense articles, related technical data, and
defense services subject to Section 38 of the AECA and the ITAR.

    Dated: February 27, 1998.
William J. Lowell,
Director, Office of Defense Trade Controls, Bureau of Political-
Military Affairs, U.S. Department of State.
[FR Doc. 98-5715 Filed 3-3-98; 8:45 am]
BILLING CODE 4710-25-M