In January 2004, U.S. authorities arrested Asher Karni, an Israeli citizen living in South Africa, for allegedly re-exporting U.S.-made triggered spark gaps from South Africa to Pakistan. Among other things, triggered spark gaps can be used to detonate nuclear weapons. Karni's court records offer a rare glimpse into the workings of a company that allegedly transferred items of use in nuclear weapons, and might have done so again, had authorities not been tipped off. This review of court records is an effort to better understand the illicit trafficking of such items and ways to prevent this. This review does not presume, based on the limited evidence in the court records, to show or acknowledge that any party involved-including Karni, who has not been convicted-is guilty of a crime.
According to a U.S. government affidavit against Karni, Humayun Khan, the CEO of a Pakistani company, Pakland PME, approached Karni around June 2003 in search of triggered spark gaps, model number GP-20B, made by PerkinElmer Optoelectronics of Salem, Massachusetts. It is not clear exactly how many spark gaps Pakland initially sought. A source in South Africa told U.S. law enforcement that Pakland sought between 100 and 400 units, according to court records, and Pakland eventually placed an order for 200.
Triggered spark gaps are a dual-use item. They can be used to detonate nuclear weapons or to separate missile stages, but they can also be used in lithotripters, medical devices used to break up kidney stones without surgery. The Nuclear Suppliers Group agreed to restrict their export if there is a risk they will be used in nuclear weapons. Based on the NSG guidelines, the United States requires an export license to send them to countries of nuclear proliferation concern, including India, Iran, North Korea, and Pakistan.
In search of the triggered spark gaps, according to the affidavit, Karni first contacted the company Polytec, PerkinElmer's sales representative in France. The affidavit states that in response to Karni's request, a Polytec representative told him that, because of the potential nuclear application of the spark gaps, he would need a U.S. export license to send them to Pakistan. In a fax dated June 11, 2003, Polytec told Karni that the spark gaps were subject to a U.S. export license and that he would need to provide an end-user certificate with detailed information on the spark gaps' end user and use, including a statement that the items would be used in South Africa, not re-exported, and that they would not be used "for nuclear application."
The reference to South Africa in Polytec's fax raises the question of whether Karni told Polytec the final destination was South Africa or, as the affidavit alleges, he said it was Pakistan. Karni may have said the destination was Pakistan and then, when he learned that would need an export license, said they were going to South Africa. By changing his story after learning he would need an export license, Karni certainly would have raised suspicions at Polytec. This might explain why Polytec asked Karni to give written statements that the spark gaps would not be re-exported from South Africa or used in nuclear applications. It is possible, however, that for items such as spark gaps the company might regularly ask for such written guarantees.
Karni forwarded the fax from Polytec to Khan of Pakland PME and said, "I will decline to quote on this requirement." Khan replied in an email, "I know it is difficult but that's why we came to know each other. (P)lease help to re-negotiate this from any other source…." He told Karni, "We can give you an end user information as it is genuinely medical requirement." (Hospitals typically order only five or six at a time, a PerkinElmer manager told law enforcement.)
Karni then allegedly approached Zeki Bilmen, the owner of Giza Technologies of Secaucus, New Jersey. Giza Technologies then apparently approached PerkinElmer, the manufacturer of the spark gaps, based in Salem, Massachusetts. PerkinElmer had never sold to Giza before, a PerkinElmer official told law enforcement. The discussions between Giza and PerkinElmer and between Giza and Karni are not documented in court records, but Giza officials apparently assured Karni they could provide the spark gaps.
On July 11, 2003, Khan's company, Pakland PME, placed a written order with Top-Cape, Karni's company, for 200 "EG&G, GP-20B" (PerkinElmer triggered spark gaps) for $1,040 each, $208,000 total. On the order the customer is listed as "AJKMC Lith. Aid Society," (later identified as AJKMC Lithography Aid Society). The order notes, "Your prices offer refers your email dated June 27, 2003." The order was to be paid by letter of credit ("LC at site"). The order says, "Remit to: Humayun A. Khan, US$ Account # 55767-5, Habib Bank Limited, CDA Civic Centre Branch #602, Islamabad-44000, Pak." It is not clear if the reference to Habib Bank means the bank would issue the letter of credit, but other evidence, including an air waybill, indicates that the letter of credit was issued by the National Bank of Pakistan.
On August 1, 2003, Karni emailed Khan that he had received the documents for the letter of credit. Generally, to be paid by letter of credit, Karni would have had to present the bank with documents that show the contract has been successfully completed, usually that the correct items were sent to the correct consignee by a certain date.
According to its affidavit against Karni, the U.S. government believes AJKMC Lithography Aid Society was a front company. An agent of the Office of Export Enforcement testified that he believes the AJKMC Lithography Aid Society prints copies of the Koran. The address on the organization's letterhead appears to be very similar, perhaps identical, to that of Pakland PME, suggesting it was created to serve as the fictional consignee or end user. The affidavit notes that "AJKMC" are the initials of the All Jammu and Kashmir Muslim Conference, a Pakistani opposition party that supports fighters in Kashmir. Also, the affidavit notes, lithography refers to printing, not lithotripters. PerkinElmer representatives told U.S. law enforcement that the spark gaps would have no use in printers.
On August 1, Giza placed an order with PerkinElmer for the 200 GP-20B triggered spark gaps. Court records do not document Karni's order with Giza, but he almost certainly made some sort of commitment to Giza before the company placed its order. Giza was to pay PerkinElmer $89,400 for the spark gaps. Pakland was to pay Karni $208,000. Together Giza and Karni had increased the manufacturer's price by 118 percent, or $118,600. Based on the value Giza declared in its export declaration when shipping the spark gaps to Karni, Giza's profit for all 200 pieces was to be $10,590. This indicates that Karni's profit would be $108,010, although a government affidavit states Karni's profit would have been $80,000. A company might insist on such a high markup for providing a difficult-to-get product and because of the risk involved in violating export controls.
Giza's order with PerkinElmer stated that the 200 spark gaps were to be sent in three shipments over the course of about two months, 66 on September 22, 2003, 67 on October 15, and 67 on November 15.
Meanwhile, beginning in July or August 2003 and lasting through the end of the year, U.S. law enforcement began receiving detailed anonymous tips from a source in South Africa, according to court records. The source said that Karni was diverting controlled U.S. goods to India and Pakistan. The source said Karni was buying the items from U.S. brokers, shipping them to South Africa, then re-exporting them to India and Pakistan. The source gave specific information on Karni's attempt to acquire the spark gaps for re-export to Pakistan, including shipping details and email correspondence between Khan, Karni, and Zeki Bilmen of Giza Technologies.
Acting on the information from the anonymous source, agents of the Department of Commerce's Office of Export Enforcement asked PerkinElmer if it had received any large orders for triggered spark gaps, according to testimony from an OEE special agent. It is not clear when the OEE first contacted PerkinElmer, but apparently it was before Giza had placed the order on August 1, because PerkinElmer replied that it had received no large orders, according to testimony. (According to a news report, a PerkinElmer employee went to authorities first, because of suspicions about the order size, and was told the matter was already being investigated.) On August 8, OEE agents met with a PerkinElmer business manager, who said the company had received an order for 200 spark gaps from Giza Technologies. The manager told the agents that the company had received nearly identical requests for the spark gaps from two companies, one of which was Giza. The other company may have been Karni or another broker acting on his behalf, but this is not clear from the evidence. Perhaps the business manager was referring to Karni's initial inquiry with Polytec, the French sales representative, but the records do not say if Polytec had told PerkinElmer about that inquiry. At the government's request, PerkinElmer agreed to go ahead with the first shipment of 66 pieces after making the spark gaps inoperative by not filling them with gas and by pinching closed their gas in-take lines.
On August 8, Zeki Bilmen of Giza Technologies emailed Karni: "One Good News regarding the EG&G [PerkinElmer] order. NO EXPORT LICENSE REQUIRED to South Africa. I thought you might want to know." On August 16, Bilmen emailed Karni that PerkinElmer had requested an end user certificate before making the shipment, "just for their files as proof that no license is required." Karni asked Bilmen if the name and address of the end user was enough information, "or they actually wants (sic) some sort of forms to be filled in?" Bilmen responded that he had checked with the manufacturer and just the name and address were enough. Karni replied that the end user was Baragwath Hospital, Soweto, Johannesburg, South Africa, listing an address, phone and fax number.
On September 26, PerkinElmer sent the first shipment of 66 spark gaps (having been rendered inoperative) to Giza's office in New Jersey via Federal Express. Giza received them on October 1 and paid PerkinElmer with a check for $29,502 on the same day.
PerkinElmer was cooperating with law enforcement when it shipped the spark gaps, which it had disabled, so it is impossible to know if the company would have delivered such a suspiciously high number of spark gaps based on the end user data provided by Karni and Giza. A business manager at PerkinElmer had told agents that after checking Giza's credit and business references, PerkinElmer had decided to sell the spark gaps to Giza. This statement was made on August 8, however, before PerkinElmer had asked Giza for end user information.
Giza sent the items to Karni's company in South Africa via AEI Freight Forwarding (owned and operated by DHL Danzas), which was also cooperating with the investigation. Karni received them on October 8. When shipping the spark gaps to Karni in South Africa, Giza declared in the Shipper's Export Declaration that the ultimate destination was South Africa. Giza also declared that the end user was Top-Cape, not the hospital Karni had named. In the declaration, Giza listed the incorrect Schedule B number for the spark gaps and no export control classification number, or ECCN, although PerkinElmer had given Giza the correct numbers, as shown on their invoice. Giza listed the spark gaps as "electrical splices and couplings for switching," and claimed that no export license was required.
Working with a U.S. broker was a key part of Karni's scheme. Court records do not make clear, however, how closely Karni and Giza were working or whether Giza officials knew all the details of the scheme. The records do not show whether Karni and Giza had discussed that the spark gaps were going to Pakistan. That Giza made a false export declaration, however, might demonstrate that the company knew or had reason to suspect that the deal was illegitimate. It also shows that the company may have been willing to act unscrupulously, if not illegally, to help Karni avoid export controls. In working with Giza on another deal for Tekronix oscilloscopes, Karni made clear to Giza that he wanted to avoid export controls by not allowing the manufacturer to know the destination was South Africa. This should have put Giza on alert to watch for irregularities in future deals with Karni.
That Giza did not pass on a huge price increase to Karni might indicate that Giza did not feel it was taking a special risk or providing a difficult-to-get product, and therefore that Giza might not have realized that the spark gaps were going to Pakistan or that anything was potentially illegal. Knowledge of Giza's potential profit, however, is based on the value it declared in its export declaration, which was shown to be false in other ways.
Karni sent the spark gaps from South Africa to AJKMC in Islamabad, Pakistan, via Dubai, United Arab Emirates, using AEI Freight Forwarding. Karni booked the shipment on October 1, but it did not leave for several weeks for unknown reasons. The air waybill listed the commodities as "scientific equipment" and the consignee as National Bank of Pakistan, with a note that AJKMC Lithography Aid Society should be notified on arrival. The bank was almost certainly listed as the consignee because it had issued the letter of credit for this order. The air waybill referred to letter of credit No. 0341-040-4011 of July 31, 2003.
The spark gaps left Johannesburg for Dubai on October 19 on an Emirates Air flight, and arrived the next day. It is not clear if South African authorities were aware of the U.S. investigation of Karni when they allowed the spark gaps to be shipped to Pakistan. Testimony by a U.S. law enforcement agent seems to indicate that South Africa was not involved until the spark gaps had already been shipped to Pakistan. According to the guidelines of the Nuclear Suppliers Group, South Africa should not have allowed the shipment of triggered spark gaps if there was a serious risk of their being used in nuclear weapons. Although Karni apparently tried to mislead South African authorities by listing the spark gaps as "scientific equipment," his vague description of a shipment destined for a country of such high proliferation concern as Pakistan should have raised enough suspicion in South Africa to trigger further scrutiny. Had the re-export been scrutinized more, the true contents probably would have been found and the transfer should have been prevented.
A U.S. OEE special agent based in Dubai learned of the shipment's arrival in that city's customs shed and tried to stop it from going to Pakistan, but was reportedly rebuffed by the country's customs director.
On December 11, 2003, U.S. authorities searched Giza Technologies in New Jersey. Court records make no mention of what was found in that search, or whether Giza officials were charged with a crime or whether they were cooperating with the investigation.
The same day that Giza was searched, South African authorities searched Top-Cape's office in Cape Town. During the search, Karni reportedly told South African authorities he had shipped the spark gaps to Pakistan, according to testimony by a U.S. law enforcement agent who was not present at the search. (Karni also appears to have admitted to the re-export in his initial U.S. court hearing, according to court transcripts.) Karni told South African investigators that the spark gaps were going to a hospital in Pakistan and were funded by USAID. He was not charged or arrested. He told South African authorities that he was planning a trip to the United States, and they told him he could leave the country, but that he should check with the U.S. embassy about going there, according to testimony by a U.S. law enforcement agent. A U.S. government affidavit against Karni says, "The likely inference that Karni drew from their actions was that no one considered his offense to be that serious."
Sometime after the searches took place, the remaining order with PerkinElmer was canceled, according to testimony by an OEE agent. The testimony did not say who canceled the order, whether it was Karni, Giza, or PerkinElmer.
On December 19, 2003, U.S. Magistrate Judge John Facciola signed an arrest warrant for Karni and a criminal complaint that charged he violated the Export Administration Act and the International Economic Emergency Power Act, 50 U.S.C. App. 2410(b)(1) and 50 U.S.C. 1705(b). Karni's name was subsequently put on an immigration watch list, and on January 1, 2004, he was arrested at Denver International Airport, on his way to a ski vacation with his family. A government affidavit says, "When Karni landed in Denver on January 1, he had no idea that federal agents would arrest him or that a federal court could detain him."
In making the case during a bail hearing that Karni might flee to Israel rather than South Africa, a U.S. assistant attorney said Karni could face charges in South Africa and is reportedly under investigation for violating that nation's Non-Proliferation of Weapons of Mass Destruction Act No. 87 of 1993.
In a letter dated December 27, 2003, Muhammad Ali Khan Rathor, identifying himself as technical director of the AJKMC Lithography Aid Society, wrote to Pakland PME that the 66 spark gaps had been supplied to the "Agha Khan Foundation University & Hospitals" in Pakistan and Sri Lanka, but that they did not work as they were supposed to, and had to be replaced. The letter said the spark gaps were supposed to have an output of 13kV (SBV), according to the manual, and none of the 66 pieces had an output more than 11.6kV (probably because they were disabled by PerkinElmer). The letter said that the "Pakistan AKF University" was using the "Donier (sic) Model MPL9000" (a model of lithotripter made by Dornier Medical Systems, Marietta, Georgia), and the "Srilanka AKF Hospital have recently ordered a Siemens unit." The letter said that the spark gaps, "when installed in the Lithography unit on level 08 the minimum output required is 12.5kV, but the supplied spark gaps do not measure up to the required level." If AJKMC Lithography Aid Society was a phony entity created by Pakland PME, the letter was probably written with the intention of forwarding it to Karni, perhaps to make the case for replacing the spark gaps and perhaps to further perpetuate the perception that they were for medical use.
E-mails given to U.S. authorities by the anonymous South African source show that on several other occasions Karni allegedly attempted to help entities in India and Pakistan evade U.S. export controls by offering to serve as re-exporter for other items that needed a U.S. export license. The e-mails also show that Karni had worked with Pakland PME on other deals, and that Pakland PME was involved in procuring items with possible WMD applications (oscilloscopes) and definite military applications (infra-red detectors for military aircraft). Court records do not indicate how many times Karni was successful in completing such deals, but Karni's freight forwarder told U.S. authorities that Karni had made numerous previous shipments to Pakistan, paid for the same way as the spark gap deal was to be, a letter of credit from the National Bank of Pakistan.
Proposed deal for Tektronix oscilloscopes. In May 2003, shortly before the PerkinElmer deal began, Karni contacted Tektronix of Beaverton, Oregon, in search of 10 high-end oscilloscopes for shipment to Pakistan. Tektronix told Karni, whose customer was again Khan of Pakland PME, that he would need a license from the Department of Commerce to send the oscilloscopes to Pakistan. Among other uses, the oscilloscope (Tektronix model number TDS7154 ) can be used in the development of missiles and nuclear weapons, according to a U.S. government affidavit. Tektronix sent Karni an end user certificate and license application, but Karni never replied. On the end user certificate, the Tektronix legal department had added: "We certify that the items will not be used in nuclear explosive activities; unsafeguarded nuclear activities; safeguarded or unsafeguarded nuclear fuel cycle activities or be directly employed in the design, development, production, stockpiling, or use of missiles or chemical and biological weapons." Such language perhaps shows that Tektronix was suspicious of Karni.
On June 29, Karni asked Khan to change his order to the model TDS5104 oscilloscope, instead of the TDS784. Karni said it is newer, better, "and it is the key for the successful completion of the order." Khan replied that he still wanted the old one. Karni again asked him to reconsider: "This might make or break the order. I cannot go to too much details but as you know Tektronix have an idea/thought where the goods are going to, and I need that change for that purposes so that it look like another order…." On August 12, Karni went to Bilmen of Giza Technologies for help in procuring the oscilloscopes. Karni wrote to Bilmen, "I have a new project for you, but we need to work this one very wisely, it is very important that they will not know it is coming to S.A." On August 21, Giza quoted Karni $32,219.20 for the 10 oscilloscopes, plus rack mount kits, with an availability of four weeks. It is unclear from court records whether Giza or Karni ever placed an order for the oscilloscopes. The government affidavit against Karni says the deal was never completed.
Possibly completed deal for Tektronix oscillators. Karni and Giza apparently were working on another Tektronix deal in August 2003, but it is not clear if it was related to the oscilloscope deal. Neither is it clear who Karni was buying it for or whether the deal was ever completed. On August 6, a week before Karni had asked Giza to procure the oscilloscopes, Bilmen had emailed Karni and said, "The Tektronix Oscillators are here. We are waiting for the rack…. So as soon as the rack comes, I will advise you and make the shipment." On August 16, Bilmen emailed Karni, "Your Tektronix order should ship Monday or latest Tuesday."
Proposed deal for Lockheed-Martin Naval Systems infra-red detectors. At about the same time as the PerkinElmer deal was developing, Khan of Pakland asked Karni to procure "IR Target Detector for AIM9L," which he said are "used in the airforce fighter planes to help detect target before firing/shooting." (AIM9L apparently refers to the AIM-9L Sidewinder air-to-air missile commonly used by U.S. military aircraft.) Khan later told Karni that the detectors were made by Lockheed-Martin Naval Systems, model 619-A. Karni asked if Khan could provide an end user statement. Khan replied, "Sorry, No. But I must tell you that the reason for the customer to contact me (since they know I represent your org. in SA [South Africa]) is that these detectors were supplied a few years ago from one of your countrymen!"
Proposed deal for a regulator made by Grove Regulators. In June 2002, Rago Rao, acting on behalf of his customer, Vikram Sarabhai Space Center (VSSC), in Thiruvananthampuram, India, asked Karni to quote a price on a "12-inch ANSI 300 Mode180 flexflo Regulator, FIN: 11351 NKA-120," made by Grove Regulators of Elk Grove, IL. VSSC is on the Department of Commerce's Entity List, a list of entities of proliferation concern. Rao told Karni in an email, "Owing to the fact that VSSC are still in the US embargo list, they believe they may not be able to procure it directly (from) the supplier, hence have sent the enquiry to us to see if we can quote to them and supply from some other source." In quoting Rao, Karni said, "be aware that the end user VSSC has been in direct touch with GROVE and have received already quotes from them, but they have quoted me too, and I will be able to execute the order." After receiving a quote from Karni, Rao replied, "VSSC…needs the item definitely, so if GROVE are willing to supply through you, they will not mind paying the extra price. That is why the end-user contacted us in the first place when he knew he could use our services through South Africa. So, if GROVE do not mind supplying the item to you, knowing that it is meant for VSSC, let us go ahead." Court records do not show whether the deal was ever completed.
Proposed deal for manometers made by Setra Systems. Shortly after inquiring about the Grove Regulators item, Rao asked Karni to quote a price for "Absolute Capacitance Manometers," model 720, made by Setra Systems Inc. of Boxborough, Massachusetts. The customer was again VSSC. Rao said, "For reasons mentioned earlier regarding the export sanctions, Setra must not come to know that the ultimate consignee is VSSC, Thiruvananthapuram." Karni responded, "I did not tell them [Setra] of course hwre [sic] it si [sic] going to, so please give me some description of the application so that I can feed it back to them and will see if they will ask for IVL to this country." IVL refers to an individually validated license, an export license from the Department of Commerce that would allow a one-time sale of a controlled item for a specifically defined end user and use. As VSSC is on the Department of Commerce's Entity List of entities of proliferation concern, it is highly unlikely an IVL would be granted. Court records do not show what happened with this proposed deal.
Proposed deal for accelerometer made by Columbia Research Laboratories or Crossbow. In an August 2002 email to Karni, Rao reminded him of an order he had placed in 2000 or 2001 for two accelerometers from Columbia Research Laboratories (Woodlyn, Pennsylvania), model SA-122 SE. The customer was Liquid Propulsion Systems Centre of India, also on the Department of Commerce's Entity List. Rao reminded Karni, "At the last moment, the supplier was refused an export license by US Government hence you could not supply the item and the order was cancelled." Rao now asked Karni to quote "Model CXL 01LF1Z High Stability LF series Accelerometer," made by Crossbow of San Jose, California. Karni replied that he would quote the item, though it might not meet the specifications of the previous item. He said, "I can also approach culumbia [sic] for a quote and see they may not want an export license this time." Rao replied, "Be careful to avoid any reference to the customer name Liquid Propulsion Systems Centre, Thiruvananthapuram, because any supply to their organization requires an export license at the moment, and it may be denied." He said, "There is a danger that Columbia may be denied the export license once again, since this model of accelerometer falls in the commodity list (because of its very high sensitivity and threshold value, and inherent possibility of being used in guidance systems for missiles.) That requires an export clearance from the US authorities for any country, leave alone India. I leave it to you to judge the best way out." It is not clear what happened with this inquiry.
The role of South Africa as a transshipment point. The Karni case has focused attention on South Africa as an important transshipment point for Pakistan's and other country's illicit procurement efforts. South Africa is a member of the Nuclear Suppliers' Group eligible to receive exports from other NSG members with fewer controls than exports to non-NSG members. Membership in the NSG requires adequate export controls and these controls failed in this case.
South Africa's enforcement of export controls needs to be improved. Proliferant states such as Pakistan have targeted South Africa to obtain controlled nuclear items.
Two of the emails cited in the court records show Karni's customers viewed South Africa as a good place to get controlled U.S. items because of perceived weak export controls in South Africa. In the proposed deal for the infrared detectors, Karni's Pakistani customer said the end user contacted him because they knew he represented Karni's South African organization and the end user had acquired the same detectors from a South African in the past. Karni's Indian customer told him the end user contact him because they knew he could acquire a controlled U.S. item through South Africa.
It is impossible to know how many times Karni successfully re-exported controlled items through South Africa, what they were, or where they ended up. But according to what Karni's freight forwarder told authorities, Karni had shipped numerous times to Pakistan, and his customer might also have been Pakland, as those shipments were financed the same way as the spark gap deal.
As a member of the NSG, South Africa is expected by the other members to prevent the transfer of dual-use items when the proliferation risk is high, as it was in this case. Because of this expectation, NSG members allow the transfer of dual-use items to other NSG members with less scrutiny. Weak enforcement of export controls by one member can weaken the export controls of the entire group, allowing traffickers to acquire controlled items that are made in some NSG states, such as spark gaps, by re-exporting them through another NSG member.
The NSG considers a state's export controls when deciding on its membership. Adherence to NSG guidelines is voluntary, however, and this case should remind NSG members that there is no guarantee that controlled items will not be improperly retransferred from another NSG member. When determining if an export is allowed, NSG members should consider the effectiveness of the recipient state's export control regime even if that state is an NSG member.
The role of private companies. The vigilance of private companies is the first line of defense in export control, and in this case their cooperation was key to preventing what would have been an illegal shipment. The evidence shows, however, that they might have been more vigilant in this case.
Giza Technologies shipped the items to Karni based on his statement that they were destined for a hospital in South Africa. Although the company should have been suspicious of Karni's intentions, it may have felt Karni's statement protected it from liability. Polytec, in its fax to Karni, said that he must provide a detailed end-user certificate, including a statement that the spark gaps would not be used for a nuclear application and would not be re-exported from South Africa. While requiring such written assurances might deter would-be violators-as it apparently deterred Karni from pursuing a deal with Polytec-a customer's willingness to provide such assurances should not override any suspicions the supplier might have about an illegal or questionable sale. A determined violator would have no qualms about providing false information, as Karni allegedly did. Once the controlled items have been exported, a written assurance can do little to prevent their misuse. While the Department of Commerce's Bureau of Industry and Security performs post-shipment inspections to verify compliance with an export license, no license was required to send the spark gaps to South Africa.
PerkinElmer was cooperating with authorities when it shipped the spark gaps, so it is impossible to know if it would have allowed the order otherwise. But it appears PerkinElmer may have prevented the order on its own, because of its suspicions about the quantity. As a company manager told authorities, a hospital typically orders five or six at a time, not 200. If not for the vigilance of the company or the anonymous tip, authorities might not have had reason to scrutinize a shipment of triggered spark gaps to South Africa, even 200 of them. This shows the importance of responsible private companies to the enforcement of export controls. Companies know their business best, and are often in the best position to spot a suspicious order. They also have direct contact with would-be violators and can get information from them that the government could never hope to get. PerkinElmer might also have stopped the shipment if its sales agent in France, Polytec, had passed on its suspicions of Karni's inquiry, which would have caused PerkinElmer to prevent any similar orders going to South Africa, whether or not Top-Cape was identified as the customer. Section 744.2 of the U.S. Export Administration Regulations requires companies to seek an export license if the company "knows, or has reason to know" that a controlled item will be put to a proscribed nuclear use.
One difficulty is simply that export controls are complicated, and companies may not fully understand their responsibilities or liability. National authorities must make would-be violators aware of the penalties for violating export controls. The evidence indicates that Karni did not see export controls as a deterrent and did not see their violation as a serious crime. Even after his office was searched he traveled to the United States, and his arrest there seems to have been a surprise to him. Also, companies must be made to understand that their suspicions of violations must be passed on to authorities and that they are not protected by a customer's false declaration if they are suspicious of a violation. The Department of Commerce maintains a web site and holds seminars to teach companies about their exporting responsibilities. Other NSG members should also work to ensure their citizens are aware of export controls and the penalties for violating them.
AEI Freight Forwarding (owned and operated by DHL Danzas)
or DHL Danzas
or Danzas AEI
Danzas AEI, 10601A Seymour Avenue, Franklin Park, IL 60131
AEI was the freight forwarder for the shipment of the spark gaps from the United States to South Africa and from South Africa to Pakistan. The company's export control manager in South Africa said Top-Cape had made numerous shipments to Pakistan financed with letters of credit through the National Bank of Pakistan.
Aga Khan Foundation University
In a letter to Pakland PME, the AJKMC Lithography Aid Society said the spark gaps had been supplied to the "Agha Khan Foundation University & Hospitals" in Pakistan and Sri Lanka.
AJKMC Lithography Aid Society
Suite No. 8 2/F Mohd. Plaza, Plot 1-C J/Avenue, Blue Area, Islamabad-44000 (same address as Pakland?)
Muhammad Ali Khan Rathor, Director Technical
The government believes AJKMC Lithography Aid Society is a front company. The government noted that AJKMC are the initials of the All Jammu and Kashmir Muslim Conference, a Pakistani opposition party that supports fighters in Kashmir. Also, "lithography" refers to printing, not lithotripters. Also, the address of AJKMC Lithography Aid Society is very similar, if not identical, to that of Pakland PME, suggesting it might be a creation of that company to serve as a fictional entity to serve as end user. In a letter on December 27, 2003, to Pakland PME Corp., AJKMC Lithography Aid Society said the EG&G (PerkinElmer) Spare Parts GP-20B were not the required voltage and should be replaced. A letter from this organization said these were supplied to the Agha Khan Foundation University & Hospitals in Pakistan and Sri Lanka.
Columbia Research Laboratories
Rao asked Karni to procure an accelerometer from Columbia Research Laboratories for export to India.
San Jose, California
Rao asked Karni to procure an accelerometer from Crossbow for export to India.
Giza Technologies Inc.
600 Meadowlands Parkway, Suite 19, Secaucus, New Jersey
Zeki Bilmen, principle
Giza shipped spark gaps to Top-Cape in South Africa via Danzas AEI. In its Shipper's Export Declaration, Giza listed the items as electrical splices and couplings for switching. The Schedule B number was falsely listed as 8536.90.4000. The declaration did not list an ECCN. (The proper Schedule B number is 8540.89.0020 and ECCN 3A228). The SED stated the end user was Top-Cape.
1550 Greenleaf Avenue
Elk Grove Village, IL 60004
toll free: 1.800.323.8844
Ragu Rao asked Karni to procure an item from Grove Regulators for re-export to India.
Habib Bank Limited
CDA Civic Centre Branch #602, Islamabad-44000
The bank is referred to in Pakland's purchase order, account number 55676-5 (Humayun A. Khan). The bank is owned by the Aga Khan for Economic Development. (The letter from AJKMC Lithography Aid Society to Pakland said the spark gaps went to the Agha Khan Foundation University and Hospital.)
Liquid Propulsion Systems Centre
Karni sought to procure an accelerometer for this entity, which can be used in missile guidance. This entity is on the Department of Commerce's Entity List of proliferation concern.
National Bank of Pakistan
When Karni shipped the spark gaps to Pakistan, the National Bank of Pakistan was listed as the consignee. The bank probably issued the letter of credit on behalf of Karni's customer to pay him for the spark gaps.
Pakland PME Corportation
Unit #7 & 8, 2nd Floor, Muhammadi Plaza
F-6/4, Jinnah Avenue, BLUE AREA
Humayun Khan of Pakland PME allegedly asked Karni to procure the triggered spark gaps, as well as other controlled items, for export or re-export to Pakistan.
This company is the manufacturer of triggered spark gaps, model GP-20B. At the request of U.S. authorities, PerkinElmer did not put gas into the spark gaps and pinched the ends of their gas intake lines, making them inoperative, before shipping them.
SA 32, Rue Delizy 93694 Pantin Cedex (France) 0148103930 Fax: 0148100808
This company is PerkinElmer's representative in France. The company told Karni he would need certified documentation on the end user of the spark gaps, and a statement that they would not be re-exported from South Africa. Karni may have told Polytec the destination was Pakistan.
Karni's customer for several proposed deals to India.
Setra Systems Inc.
159 Swanson Road, Boxborough, MA 01719-1304
Tel (978) 263-1400 · Toll Free (800) 257-3872
Rao asked Karni to procure a controlled item from Setra for export to India.
In May 2003 Karni inquired with Tektronix about a model of oscilloscope for end use in Pakistan. Tektronix told Karni that he needed an export license and sent him the application, but never heard from him again.
109 Ocean View Drive, Green Point, Cape Town, South Africa
Asher Karni's company.
Vikram Sarabhai Space Center (VSSC), Thiruvananthapuram (India)
Rao asked Karni to get an "absolute capacitance manometer" for this entity. This entity is on the Department of Commerce's Entity List of proliferation concern.