Keithly Instruments International Corp. (KIIC), located in Bangalore, India has been charged with one violation of evasion. The charging letter describes a scheme devised by KICC’s manager at the time, Mugar Ashok to export electronic instruments classified as 3A992 and EAR99 from the company’s US parent company to the Vikram Sarabhai Space Center (VSSC), who is currently designated on BIS’s Entity List (Supplement No. 4 to Part 744).
Ashok’s plan was to have VCCS order the classified items from another Bangalore company, Rajaram Engineering, Inc. instead of from KIIC. Rajaram Engineering would purchase the US-origin instruments from KIIC and then sell them to VSSC. The charging letter states, “At the times KIIC and Ashok put this structure into place, they were aware that a Department of Commerce license was required for the export of US origin items to VSSC.” Ashok also explained the licensing situation to Siddabasappa Suresh, owner of Rajaram Engineering by describing that if Rajaram Engineering’s name was placed as the purchaser of the electronic instruments no license would be required as long as no reference to VSSC as the actual end user was put on any of the purchasing documents. Ashok specifically told VSSC to place orders for the items with Rajaram Engineering, Inc. and not with KIIC.
Rajaram’s owner eventually expressed interest to Ashok that he wanted to become a licensed distributor for KIIC’s US parent company which would throw a wrench in Ashok’s plan because Rajaram Engineering would then be required to obtain reexport licenses for items intended for Indian listed entities. Ashkok quickly told Rajaram Engineering to continue to do business as they had been and maintain that Rajaram Engineering was the exclusive purchaser and end user of KIIC’s US parent company’s electronic instruments, committing one violation of evasion (764.2(h)).
KIIC agreed to pay of $125,000 in its settlement agreement with BIS. I will note that the charging letter never stated if any illegal reexports occurred, but I am assuming they did since the charging letter described Rajaram’s owner’s interest in becoming distributor since he was already illegally distributing KIIC’s products. I am quite surprised that with such an elaborate scheme set up only one charge of evasion was alleged, I am sure there is much more to the story than the charging letter states.
Order: http://efoia.bis.doc.gov/exportcontrolviolations/e2145.PDF
