Bureau of Political-Military Affairs; Rescission of Statutory Debarment and Reinstatement of Eligibility To Apply for Export/Retransfer Authorizations Pursuant to Section 38(g)(4) of the Arms Export Control Act; Armaments Corporation of South Africa Ltd. (Armscor) and the Denel Group (Pty) Ltd. (Denel)

AGENCY:

Department of State.

ACTION:

Notice.

SUMMARY:

Notice is hereby given that the Department of State has fully rescinded the statutory debarment against the Armaments Corporation of South Africa Ltd. (Armscor) and 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 § 127.11 of the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130).

EFFECTIVE DATE:

July 14, 2004.

FOR FURTHER INFORMATION CONTACT:

Robert W. Maggi, Managing Director, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State (202) 663-2700.

SUPPLEMENTARY INFORMATION:

Section 38(g)(4) of the AECA and § 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 § 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 §§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 based upon 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).

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).

A Federal Register notice was published on March 4, 1998 (63 FR 10671), that rescinded the policy of denial and temporarily suspended the statutory debarment against Armscor and Denel in accordance with section 38(g)(4) of the AECA. The temporary suspension of the statutory debarment was consistent with the Agreement Between the Government of the United States of America and the Government of the Republic of South Africa Concerning Cooperation on Defense Trade Controls (the Agreement). The Agreement provided that the companies would establish internal compliance programs and further required that the companies would make available an amount of money equivalent to suspended civil fines to the South African Government to support the effective implementation of its national export control regime.

Section 38(g)(4) of the AECA permits rescission of debarment after consultation with the Secretary of the Treasury and after a thorough review of the circumstances surrounding the conviction and a finding that appropriate steps have been taken to mitigate any law enforcement concerns. After thoroughly reviewing the steps Armscor and Denel have taken with respect to the establishment of internal compliance programs and supporting the effective implementation of a national export regime, the Department of State has determined that Armscor and Denel have taken the appropriate initiatives to address the causes of the violations and to mitigate any law enforcement concerns.

Therefore, in accordance with section 38(g)(4) of the AECA and section 127 of the ITAR, effective July 14, 2004, the debarment against Armscor and Denel is fully rescinded. 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, without prejudice, in the export or transfer of defense articles, related technical data, and defense services subject to section 38 of the AECA and the ITAR.