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Cablegate: Taiwan Investigation of Export Control Cases

VZCZCXYZ0018
RR RUEHWEB

DE RUEHIN #1374/01 2622330
ZNR UUUUU ZZH
R 182330Z SEP 08
FM AIT TAIPEI
TO SECSTATE WASHDC 9966

UNCLAS AIT TAIPEI 001374

STATE FOR EAP/TC, ISN/ECC AND ISN/MTR

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETTC KOMC KNNP KSTC TW IR KN MY CH
SUBJECT: TAIWAN INVESTIGATION OF EXPORT CONTROL CASES

REF: A. 08 TAIPEI 86
B. 08 TAIPEI 141

1. (SBU) SUMMARY. On September 11, the EXBS Advisor met with
officials of the Taiwan Ministry of Justice Investigation Bureau
(MJIB) to get an update on export control enforcement activities.
MJIB officials stated that, since the beginning of 2008, they
referred six (6) cases to the prosecutor's office; one (1) led to
convictions, one (1) resulted in suspended indictment, and four are
pending. END SUMMARY.

CONVICTION

2. (SBU) Trans Merits Co., Ltd. (the Chinese name of the company is
Yang-Sheng): This case, involving exports of precision instruments
and machinery to North Korea through the People's Republic of China
(PRC), was closed in July with convictions against the company and
Mr. Tsai Hsien-tai, a company representative. See reftel A for
report on investigation of the company and principles.

(SBU) The presiding judge imposed a fine of NTD 20,000
(approximately USD 666), or jail time of 40 days, against Mr. Tsai.
(MJIB officials did not have information on whether Mr. Tsai served
jail time or paid the fine.) The judge also imposed a two-year
suspended prison sentence again Mr. Tsai. The judge did not/not
impose travel restrictions on Mr. Tsai as recommended by the MJIB.
(Mr. Tsai was restricted from leaving Taiwan during the
investigation.) The judge imposed a fine of NTD 30,000
(approximately USD 1,000) against the company. In imposing the
penalties, the judge concluded that Mr. Tsai cooperated with the
investigation, the unauthorized export was not intentional, and the
machine tools exported were to manufacture general consumer goods.

(SBU) Note: MJIB officials stated that they were aware of Mr. Tsai's
travel to the PRC via Hong Kong over the summer.

SUSPENDED INDICTMENT

3. (SBU) Ever Build-up Industries Ltd. (the Chinese name of the
company is Chang-Zhu Co.): This case involves export of a tapering
machine, an item on Taiwan's Sensitive Commodity List, to Iran. The
case was referred to the Prosecutor's Office in January and the
Prosecutor's Office closed the case in March. The Prosecutor's
Office suspended the indictment with a fine of NTD 80,000
(approximately USD 2,666). See reftel B for report on investigation
of Ever Build-up. (In reftel B, the Chinese name was incorrectly
translated as Hsu-Zhu Co.)

PENDING

4. (SBU) Roundtop Machinery Industries Co., Ltd (the Chinese name
of the company is Chiao-Fu Machinery Industries Co., Ltd.): This
case involves an export of lathes to Iran through Malaysia. The
case is pending in the Prosecutor's Office. The case was initiated
in March and referred to the Prosecutor's Office in May.

5. (SBU) Yutron Company (the Chinese name of the company is
Yu-Chong Co., Ltd): This case involves an export of design tablets
or pen tablets, items on Taiwan's Sensitive Commodity List, to Iran
through a third country without proper authorization. The MJIB
referred the matter to the Prosecutor's Office in August.

6. (SBU) Atouch Technologies Co., Ltd (the Chinese name of the
company is Yu Hung Co.): This case involves exports of touch-control
screens, commodities on Taiwan's Sensitive Commodity List, to Iran
without proper authorization.

(U) Below is an unofficial AIT translation of an article that
appeared in the Chinese-language Liberty Times on September 4. MJIB
officials confirmed all facts as outlined in the news article.

(SBU) MJIB officials expressed displeasure at the case being made
public at this point, allegedly by the Prosecutor's Office, because
the case is related to other pending investigations.

(U) Begin Text:

Commodities exported to Iran, exporters under investigation.

Cheng Po-Yen, company representative of Atouch Technologies Co.
Ltd.(the Chinese name of the company is Yu Hung Co.), was suspected
of exporting "touch control screens" worth EURO 20,000
(approximately NTD 1 million) high-technology commodities to Iran
four times in the past without authorization. After questioning by
the Shihlin Prosecutor's Office last night, Cheng Po-Yen, company
representative; Chou Chih-Po, customs broker; and I Tai-Ming, sales
representative were released on bail ranging from NTD 50,000 to NTD
100,000(approximately USD 1,590 to USD 3,170).

During questioning, Cheng Po-Yen claimed that he did not know that
Iran was on the list of restricted countries for export control
purposes. Based on information obtained, MJIB expanded the scope of
the investigation.

Bureau of Foreign Trade (BOFT) provided the Shihlin Prosecutor's
Office (SPO) and the MJIB with an official report stating that
exporting SHTC items without proper authorization is in violation of
export control regulations. The SPO and the MJIB stated that Taiwan
export control regulations on SHTC are in line with advanced
countries' regulations, such as the United States. Therefore, prior
permission is required for exports to restricted countries which
include certain Middle Eastern and Communist countries.

End Text.

7. (SBU) Answer Technology Co., Ltd. (the Chinese name of the
company is An Tze Technology Co.): This case involves export of
missile parts to the PRC via Hong Kong. Below is an unofficial AIT
translation of an article that appeared in the Chinese-language
Liberty Times on September 11. The MJIB confirmed all facts
outlined in the news article.

(U) Begin Text:

American-made Hi-Tech commodities for military use exported to
China; Taiwanese exporters face prosecution

Lee Jui-shi and Lee Jui-fan, twin brothers and owners of Answer
Technology Co. Ltd. (the Chinese name of the company is An Tze
Technology Co.), have allegedly made 13 shipments of Strategic High
Technology Commodities (SHTC) to China since 2007. The
American-made analog-to-digital converters were exported to Xing
Hang Yuan Technology (XHY Technology), an arms importer in Shenzhen
City, China. The Shihlin Prosecutor's Office indicted both men
yesterday for violating the Foreign Trade Act. If convicted, they
face up to two years of imprisonment.

The prosecutor indicated that Lee Jui-shi is the O\owner and General
Manager of the company, and Lee Jui-fan is the Vice President. At
the time of the shipments, both men were aware that these
American-made commodities with military specifications, including
analog-to-digital converters, digital-to-analog converters and
microcomputer controllers, were on the SHTC list and were prohibited
from being exported to China. The items were manufactured by ADI.


Both were aware that XHY Technology (the company name was changed to
Fu-Rei Co. at the end of 2007) is an arms broker providing weapon
parts to the arms industry in other countries. Nevertheless, since
2007, the Lee brothers made 13 shipments of these SHTC worth NTD 7.5
million (approximately USD 250,000) to XHY Technology.

End Text


YOUNG

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