U.S. Dept. of State - IIP: The United States and China

Text: McDonnell Douglas Fined for Violating Export Control Laws
(Sent machine tools to China with false statements on end use)

The Commerce Department issued a press release November 14 announcing it is imposing a $2.12 million civil penalty on McDonnell Douglas Corporation for using false statements in exporting machine tools to the People's Republic of China.

The release states that Assistant Secretary of Commerce for Export Enforcement Michael J. Garcia issued the order imposing the penalty, which is the largest permitted for the alleged export control violations.

Garcia's action terminates a six-year investigation into exports of machine tools to China between 1994 and 1995.

The Commerce Department charged that McDonnell Douglas "submitted license applications containing false and misleading statements about the end-use and end-user of the machine tools."

The Commerce Department said the exports "violated the conditions of U.S. export licenses issued to the company."

Garcia said the case "demonstrates that the Commerce Department will hold exporters strictly accountable for misrepresentations made in securing export licenses and for abiding by the terms and conditions of licenses once issued."

The release noted that in a related case concluded in May 2001, the Commerce Department had imposed a $1.32 million civil penalty and a denial of export privileges on a group of Chinese government-owned companies and their U.S. affiliates that had received the machine tools from McDonnell Douglas.

For Immediate Release
November 14, 2001

Commerce Department Imposes $2.12 Million Civil Penalty
on McDonnell Douglas for Alleged Export Control Violations

The Department of Commerce today imposed a $2.12 million civil penalty against McDonnell Douglas Corporation of St. Louis, Mo., as part of a settlement of charges that the company violated federal export control laws. The penalty is the maximum fine possible for the alleged violations.

"This settlement concludes a six-year investigation with the second-largest civil fine ever imposed by the Commerce Department in an export control case," noted Under Secretary of Commerce for Export Administration Kenneth I. Juster.

The Order imposing the penalty, issued by the Assistant Secretary of Commerce for Export Enforcement Michael J. Garcia, terminates a six-year investigation into exports of machine tools to China between 1994 and 1995. The Department alleged that McDonnell Douglas submitted license applications containing false and misleading statements about the end-use and end-user of the machine tools. The Department also alleged that the exports violated the conditions of U.S. export licenses issued to the company.

In a related case concluded in May, the Department had imposed a $1.32 million civil penalty and a denial of export privileges on a group of Chinese government-owned companies and their U.S. affiliates that had received the machine tools from McDonnell Douglas.

In addition to the civil penalty, the Order and settlement agreement require that McDonnell Douglas' parent company, The Boeing Company, assume responsibility and liability for all exports under the Commerce Department's jurisdiction made or to be made by McDonnell Douglas.

Assistant Secretary Garcia commented that "this case demonstrates that the Commerce Department will hold exporters strictly accountable for misrepresentations made in securing export licenses and for abiding by the terms and conditions of licenses once issued."

The investigation was conducted by the Office of Export Enforcement's Intelligence and Field Support Division in the Department of Commerce's Bureau of Export Administration.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)