[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Notices]
[Page 10671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5715]


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DEPARTMENT OF STATE

[Public Notice 2752]


Office of Defense Trade Controls; Reinstatement of Eligibility To 
Apply for Export/Retransfer Authorizations Pursuant to Section 38(g)(4) 
of the Arms Export Control Act

AGENCY: Department of State.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the Department of State has 
rescinded its policy of denial and suspended its statutory debarment 
against the Armaments Corporation of South Africa, Ltd. (Armscor); 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 Sec. 127.11(b) of the International Traffic 
in Arms Regulations (ITAR) (22 CFR Parts 120-130).

EFFECTIVE DATE: February 27, 1998.

FOR FURTHER INFORMATION CONTACT: Philip S. Rhoads, Chief, Compliance 
and Enforcement Branch, Office of Defense Trade Controls, Department of 
State (703-875-6644).

SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA and Section 
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 Section 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 
Sections 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 in response to 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).
    Denel was not named in the indictment. Denel came into being when 
the South African Government restructured Armscor to separate the 
acquisition function from the manufacturing function. Armscor was 
assigned responsibility for procurement and acquisition, while Denel 
was assigned responsibility for production and manufacturing. Denel was 
therefore included in the Agreement Between the Government of the 
United States and the Government of the Republic of South Africa 
Concerning Cooperation on Defense Trade Controls. The company Kentron 
(Pty) Ltd., which had a separate legal status as a subsidiary of 
Armscor at the time of the indictment, has since become a division of 
Denel.
    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).
    Section 38(g)(4) of the AECA permits reinstatement of eligibility 
to apply for export/retransfer authorizations on a case-by-case basis 
after consultation with the Secretary of the Treasury and after a 
thorough review of the circumstances surrounding the conviction or 
ineligibility to export and a finding that appropriate steps have been 
taken to mitigate any law enforcement concerns.
    In accordance with these authorities, effective February 27, 1998, 
the policy of denial for all export license applications and other 
requests for approval involving Armscor and Denel and its divisions 
(including Kentron (Pty) Ltd.) has been rescinded and debarment has 
been suspended. 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 in the 
export or transfer of defense articles, related technical data, and 
defense services subject to Section 38 of the AECA and the ITAR.

    Dated: February 27, 1998.
William J. Lowell,
Director, Office of Defense Trade Controls, Bureau of Political-
Military Affairs, U.S. Department of State.
[FR Doc. 98-5715 Filed 3-3-98; 8:45 am]
BILLING CODE 4710-25-M