DATE=9/16/98
TYPE=BACKGROUND REPORT
NUMBER=5-41387
TITLE=DEFENSE FRAUD
BYLINE=PAMELA TAYLOR
DATELINE=WASHINGTON
CONTENT=
VOICED AT:
INTRO: THE SENTENCING LAST MONTH OF TWO OFFICIALS OF A U-S
ELECTRONICS COMPANY HAS EXPOSED THE POTENTIAL DANGERS IN ALLOWING
UNAUTHORIZED COUNTRIES TO MANUFACTURE SENSITIVE MILITARY
TECHNOLOGY. IN THE CASE OF ELECTRODYNE, IT GAVE MANUFACTURERS IN
UKRAINE SPECIFICATIONS FOR COMPONENTS OF A SECRET AIRBORNE RADAR
SYSTEM; THE UKRAINIAN FIRMS BUILT THE COMPONENTS AND THEN SHIPPED
THEM BACK TO ELECTRODYNE AT A MUCH LOWER PRICE THAN IT WOULD HAVE
COST THE COMPANY IF IT HAD MANUFACTURED THE RADAR SYSTEMS IN THE
UNITED STATES. IN AN INTERVIEW WITH VOA, THE SPECIAL AGENT WHO
UNCOVERED THE FRAUD, SAYS THE U-S CUSTOMS SERVICE IS AGAIN SEEING
A SIMILAR PATTERN OF EVENTS AND IS INVESTIGATING OTHER DEFENSE
CONTRACTORS. VOA'S PAMELA TAYLOR HAS MORE:
TEXT: LAST MONTH TWO OFFICIALS OF THE NEW JERSEY BASED
ELECTRODYNE CORPORATION PLEADED GUILTY TO SMUGGLING MILITARY
PARTS MADE IN UKRAINE BACK INTO THE UNITED STATES FOR USE IN
ADVANCED U-S RADAR AND OTHER MILITARY SYSTEMS. THE OFFICIALS
DENIED THEIR ACTIONS COMPROMISED U-S SECURITY AND ARE APPEALING
THEIR SENTENCES, BUT THE U-S DISTRICT JUDGE IN THE CASE (ALFRED
LECHNER) SAID THE FIRM HAD 'EXPOSED, AND EXPOSES, AMERICAN TROOPS
TO THE DANGERS ASSOCIATED WITH THE COMPROMISE OF WEAPONS
COMMUNICATIONS AND RADAR SYSTEMS USED DURING COMBAT.'
U-S CUSTOMS SPECIAL AGENT ERIC CARON, WHO FIRST UNCOVERED
EVIDENCE OF THE FRAUD FIVE YEARS AGO BY GOING THROUGH
ELECTRODYNE'S GARBAGE DUMPSTER, SAYS THE CUSTOMS SERVICE IS NOW
FINDING EVIDENCE OF SIMILAR ACTIVITIES BY OTHER U-S DEFENSE
COMPANIES THAT ARE DOING BUSINESS WITH DEFENSE CONTRACTORS IN THE
FORMER SOVIET REPUBLICS . MR. CARON SAYS THE BACKGROUNDS OF
THESE CONTRACTORS -- AS WELL AS THE CONNECTIONS THEY HAVE IN THE
UNITED STATES -- IS OFTEN A CAUSE FOR CONCERN:
// ACT ONE //
A LOT OF THE COMPANIES IN RUSSIA ARE CONTROLLED DIRECTLY
OR INDIRECTLY BY ORGANIZED CRIME AND BASICALLY ITS FOLKS
HERE, LIVING IN THE UNITED STATES WHO ACT AS BROKERS FOR
OUR MANUFACTURERS. THEY SPEAK THE LANGUAGE, THEY HAVE
CONTACT WITH FOREIGN COMPANIES, THEY KNOW HOW TO ACQUIRE
WEAPONS, BE IT AK-47'S OR A RADAR SYSTEM. THEY ARE
WORKING DOMESTICALLY AS WELL AS INTERNATIONALLY, AND I
THINK YOU'LL BE SEEING MORE OF THIS TYPE OF ACTIVITY AS
THE MONTHS AND YEARS GO BY.
// END ACT //
AGENT CARON SAYS ALTHOUGH THE U-S CUSTOMS SERVICE PREVENTED ANY
COMPROMISE OF NATIONAL SECURITY IN THE ELECTRODYNE CASE, HE IS
WORRIED ABOUT THE DAMAGE THAT COULD BE DONE TO THE UNITED STATES
BY COMPANIES THAT HAVE NOT YET BEEN EXPOSED:
// ACT TWO //
WE HAVE OUR SONS AND DAUGHTERS OPERATING VERY
SOPHISTICATED MILITARY EQUIPMENT. AND THIS COUNTRY
OPERATES LARGELY ON ITS ABILITY TO OPERATE
SOPHISTICATED, HIGH TECH SYSTEMS WITH THE CONFIDENCE
THAT THEY ARE SAFE AND SECURE AND ACCURATE. WE DON'T
NEED INFERIOR RUSSIAN OR UKRAINIAN COMPONENTS BEING PUT
INTO OUR MILITARY SYSTEMS.
// END ACT //
AGENT CARON SAYS THERE IS ALSO THE VERY REAL CONCERN THAT
IMPOVERISHED DEFENSE CONTRACTORS IN THE FORMER SOVIET BLOC MAY
SELL SENSITIVE MILITARY COMPONENTS TO THE HIGHEST BIDDER, WHETHER
TO AN EMBARGOED COUNTRY OR A TERRORIST ORGANIZATION.
ASKED ABOUT THE POTENTIAL THREAT TO U-S NATIONAL SECURITY POSED
BY CASES LIKE ELECTRODYNE, PENTAGON SPOKESMAN SUSAN HANSEN WOULD
ONLY SAY THAT THE CASE HAD BEEN DEALT WITH BY THE PROPER
AUTHORITIES OF THE FEDERAL GOVERNMENT. SHE SAID SHE WOULD NOT
SPECULATE ABOUT OTHER DEFENSE CONTRACTORS, SAYING THE PENTAGON
HAS REPRESENTATIVES ASSIGNED TO INVESTIGATE ALL DEFENSE
CONTRACTORS AND THEIR WORK. (SIGNED)
NEB/PAM/KL
16-Sep-98 1:43 PM EDT (1743 UTC)
NNNN
Source: Voice of America
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