A Bad Case of ITAR Non-Compliance - VTA Telecom Corporation

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Jun. 9, 2023
By: Marvin E. McPherson

Export compliance can be complicated; however, some issues can definitely be avoided. The U.S. Department of State reached an administrative settlement with VTA Telecom Corporation to address six violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). The violations involved unauthorized exports and attempted exports of ITAR-controlled defense articles and technical data to Vietnam, a country prohibited from receiving such exports. Specifically, VTA knew that certain defense articles required a license from DDTC to export, but VTA officials either misrepresented the article or the end-use on official documentation. The misrepresentation went as far as undervaluing goods and changing the names of the items with the freight forwarder.

The department noted several aggravating factors;

1.       The company did not disclose any known violations until its former president was charged with                    criminal violations

2.       Personnel’s disregard for ITAR requirements

3.       Senior Management’s participation in the unauthorized conduct.

As part of the agreement, VTA Telecom Corporation will be administratively debarred for three years, meaning they will be prohibited from participating in any ITAR-related activities.

This case underscores how disregard for compliance matters will take a company out of business and may land those responsible in criminal court. Export compliance doesn’t have to be impossible or keep the business from effectively operating.

There are licensing requirements for all sorts of transactions and dealings with defense articles. Defense Articles are any items that are listed on the U.S. Munitions List (USML). The USML is a list of 21 categories of items covering a wide array of products, parts, components, technical data, software and services that are useful in defense applications. These include products in the aerospace, maritime, communications, IT/computer/software, electronics, optical, toxicological/biological and other industries.

If your company is in possession of defense articles, or newly exporting defense articles, ensure that the company is properly registered with DDTC and possesses the proper licenses. Don’t hesitate to contact any attorney if you have any questions regarding the applicability of ITAR related classification designations, registration or licensing.