COMMITTEE ON WAYS AND MEANS

DAN ROSTENKOWSKI, Illinois, Chairman

ROBERT J. LEONARD, Chief Counsel and Staff Director PHILLIP D. MOSELEY, Minority Chief of Staff

SUBCOMMITTEE ON OVERSIGHT

J.J. PICKLE, Texas, Chairman

CONTENTS

Press releases of March 28 and April 11, 1991, announcing the hearings.

WITNESSES

U.S. Department of Defense, Henry D. Sokolski, Deputy for Non-Proliferation

Policy, Office of the Assistant Secretary for International Security Affairs;

Peter M. Sullivan, Assistant Director, Defense Technology Security Admin-

istration; and Richard Speier, Office of Non-Proliferation Policy.

U.S. Customs Service:

Page

2

8

Steven C. Davis, Senior Special Agent, Sacramento, Calif..

David E. Burns, former Special Agent, Sacramento, Calif..

Dennis J. Bass, Senior Special Agent, Baltimore, Md.......

116

130

164

Hon. Carol Hallett, Commissioner of Customs; and John C. Kelley, Direc-

tor, Strategic Investigations Division

414

U.S. Department of Commerce:

Frank W. Deliberti, Director, Office of Export Enforcement, Bureau of

Export Administration; and Leonard S. Patak, Special Agent in Charge

of Export Enforcement, Dallas, Tex......

214

Frank W. Deliberti, Director, Office of Export Enforcement, Bureau of

Export Administration; Randall Sike, Special Agent in Charge; and

Jerry M. Hobbs, Special Agent, Office of Export Enforcement, San Jose,

Calif..

242

Hon. Kenneth A. Cutshaw, Deputy Assistant Secretary for Export En-
forcement, Bureau of Export Enforcement, and Iain Baird, Director,
Office of Export Licensing

483

U.S. Department of the Treasury, R. Richard Newcomb, Director, Office of
Foreign Assets Control, Office of Enforcement..

356

U.S. Department of State, Charles A. Duelfer, Deputy for Defense Trade to
the Assistant Secretary, and Director, Center for Defense Trade, Bureau of
Politico-Military Affairs....

542

Bryen, Stephen D., Silver Spring, Md. (former Deputy Under Secretary of
Defense for Trade Security Policy and Director, Defense Technology Securi-
ty Administration)

29

Casperson, Robert J., C-TEK Computers, Inc., Kirkland, Wash

283

Helmy, Abdelkader, Lompoc, Calif..

134

Hinkleman, Leslie, Alcolac International, Inc., Baltimore, Md..

194

Moody, Hon. Jim, a Representative in Congress from the State of Wisconsin....

Moore, Portia R., San Francisco, Calif (former assistant U.S. attorney for the

Western District of Washington)......

345

259

Mukkar, Shiv Mohan, Raybrook, N.Y

289

Stark, Hon. Fortney Pete, a Representative in Congress from the State of

California

314

APPENDIXES

A. U.S. General Accounting Office, letter dated April 12, 1991, from Allan I.

Mendelowitz, Director, International Trade, Energy, and Finance Issues....

B. U.S. Department of State, letter dated April 26, 1991, from Janet G.

Mullins, Assistant Secretary, Legislative Affairs

C. Hon. Richard L. Thornburgh, letter dated April 22, 1991, from Chairman

J.J. Pickle, Subcommittee on Oversight, Committee on Ways and Means...

597

603

615

D. U.S. Department of Justice, letter dated April 25, 1991, from W. Lee Rawls,
Assistant Attorney General, Office of Legislative Affairs....

E. U.S. Department of Justice, letter dated May 24, 1991, from W. Lee Rawls,
Assistant Attorney General, Office of Legislative Affairs..

F. Hon. Richard L. Thornburgh, letter dated June 12, 1991, from Chairman
J.J. Pickle, Subcommittee on Oversight, Committee on Ways and Means...
G. U.S. Department of Justice, letter dated August 1, 1991, from W. Lee
Rawls, Assistant Attorney General, Office of Legislative Affairs.

Page

616

617

624

627

636

690

772

849

880

ADMINISTRATION AND ENFORCEMENT OF U.S. EXPORT CONTROL PROGRAMS

THURSDAY, APRIL 18, 1991

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON OVERSIGHT,

Washington, D.C.

The subcommittee met, pursuant to notice, at 9:36 a.m., in room 1100, Longworth House Office Building, Hon. J.J. Pickle (chairman

of the subcommittee) presiding.

[The press releases announcing the hearings follow:]

(1)

FOR IMMEDIATE RELEASE

THURSDAY, MARCH 28, 1991

PRESS RELEASE #6

SUBCOMMITTEE ON OVERSIGHT

COMMITTEE ON WAYS AND MEANS

U.S. HOUSE OF REPRESENTATIVES

1135 LONGWORTH HOUSE OFFICE BLDG. WASHINGTON, D.C. 20515

TELEPHONE: (202) 225-5522

THE HONORABLE J. J. PICKLE (D., TEXAS), CHAIRMAN,
SUBCOMMITTEE ON OVERSIGHT, COMMITTEE ON WAYS AND MEANS,
U. S. HOUSE OF REPRESENTATIVES,

ANNOUNCES SUBCOMMITTEE INVESTIGATION INTO
THE ADMINISTRATION AND ENFORCEMENT OF

U.S. EXPORT CONTROL PROGRAMS

The Honorable J. J. Pickle, (D., Texas), Chairman of the Subcommittee on Oversight, Committee on Ways and Means, U.S. House of Representatives, announced today that the Subcommittee on Oversight has been conducting an investigation into the administration and enforcement of U.S. export control programs involving the Middle East. The Subcommittee will examine U.S. Customs Service (Customs) enforcement activities in the area, and review specific cases involving the activities of Customs and the Department of Commerce associated with their enforcement of the U.S. export control laws.

The Subcommittee is also examining the Department of the Treasury's (Treasury) Office of Foreign Assets Control (OFAC) which administers trade and financial sanctions against selected foreign countries. OFAC is currently developing a list of foreign individuals and firms who have been designated as agents of the Iraqi Government, and who will be prohibited from doing business with U.S. persons or companies. The Subcommittee will consider this OFAC list and other OFAC activities to determine what additional measures could be taken by Treasury to stem the proliferation and spread of weapons of mass destruction. Also, the Subcommittee will review Treasury's overall role in formulating, implementing, and enforcing trade and financial sanctions against Iraq and other Middle-Eastern countries which may pose a threat to the security of the United States.

Hearings on these matters have been tentatively scheduled for April 18 and May 1, 1991. The Subcommittee will issue a press release early next month announcing the date, time, and place of these hearings and the witnesses invited to appear before the Subcommittee.

In announcing the investigation, Chairman Pickle stated: "Over the past several years, U.S. companies have sold Iraq computers, electronics equipment, machine tools, chemicals, and other supplies worth billions for use in Iraqi programs to develop nuclear weapons, missiles, and poison gas. Some of these sales were made with the approval of Uncle Sam. What Saddam couldn't obtain legally, he acquired through sophisticated Iraqi underground purchasing networks that made extensive use of dummy corporations and international merchants of death. I am particularly concerned that some U.S. individuals and corporations, directly or indirectly, have assisted Saddam in his efforts. Saddam managed to exploit the export control systems in the U.S. and other industrialized nations to build weapons factories and procure the raw materials necessary to make weapons of mass destruction.

"Iraq is just part of the problem. The proliferation of chemical, biological, nuclear, missile technology, and materials represents an immediate threat to the security of the world community. The Subcommittee's investigation hopes to shed some light on who is acquiring sophisticated technology, machinery, and other dangerous materials, how potential adversaries are able to circumvent U.S. export control laws, and the overall effectiveness of the U.S. export control system.

"Unless efforts are made to improve the Federal Government's ability to recognize illegal acquisition attempts, countries like Iraq will continue to succeed in getting chemical, biological, and nuclear capabilities with our help. The question remains whether U.S. export control systems are a match for a potential adversary who is desperately bidding to develop a sophisticated weapons arsenal."