Japan balances trade and nuke
proliferation
By Masako Toki and Stephanie Lieggi
On Monday, the Tokyo district court handed down a final judgment on four former
executives of the Japanese conglomerate Mitutoyo Corp for export control
violations that were discovered after inspectors from the United Nations'
International Atomic Energy Agency came across a high-tech Mitutoyo measuring
device at a nuclear-related facility in Libya in 2003.
The executives, who include the former company chairman and president, received
suspended sentences of up to three years in
prison. They had pleaded guilty. Mitutoyo was also fined 45 million yen
(US$363,000).
They exported some of their devices, which can be used in producing nuclear
weapons, to a subsidiary in Malaysia via Singapore between October 2001 and
July 2005 without obtaining government permission. It is believed that some of
the devices may have been moved by the proliferation network of disgraced
Pakistani nuclear scientist Dr Abdul Qadeer Khan.
The Japanese government is expected to announce administrative penalties in the
case soon. The ultimate decision about how harshly to punish the company itself
will come down to a simple balance: justice versus economics. In Mitutoyo's
care, the economic interests are wide-ranging.
The facts in the case are straightforward. In the early 1990s, Mitutoyo
experienced a dip in profits which company executives, including the four who
were prosecuted, blamed on Japan's export controls.
Tokyo had increased restrictions on dual-use items capable of providing
material support to weapons of mass destruction programs to countries such as
Iran, Libya and North Korea. Much of Mitutoyo's measuring equipment fell under
these tightened restrictions and could be used in uranium enrichment.
To get around the limitations, a group at Mitutoyo backed by high-level
executives developed a software program that made its measuring equipment
appear less accurate than it was, and thus, in the eyes of potential customs
inspectors, not in need of a license. The software was code named COCOM, after
the multilateral export control regime of the same name.
With the program in place, Mitutoyo willfully shipped advanced measuring
devices without a license to various countries. Japanese investigators said
there was a possibility the devices may have been obtained by countries like
Iran and North Korea for their nuclear programs.
According to estimates, 10,000 highly accurate precision measuring devices were
exported in this way. Most of the items likely ended up in benign, civilian
operations. However it is impossible to determine how many may have ended up
assisting various nuclear weapons programs.
Under Japanese law, Mitutoyo could face an export ban. In November of last
year, another company - Seishin Enterprises - received a two-year ban for
illegal missile-related exports to Iran. While the seriousness of Seishin's
crimes pale in comparison to Mitutoyo's serial violations, the likelihood is
low that Mitutoyo will receive an equally stiff punishment.
Mitutoyo is a multinational corporation with offices and operations in over 26
countries with about a 30% share of the global market in precision measuring
devices. There has been some concern within industry circles that whatever
punishment the Japanese government hands down, the effect on the supply chain
for many companies with few other viable alternatives to Mitutoyo may be
significant.
However, these fears are likely unwarranted. While Mitutoyo's crimes were
severe and its contriteness less than convincing, the Japanese government will
very likely inflict a more moderate punishment than it did on Seishin.
The United States government, which has pressured governments to strengthen
enforcement of such export controls to prevent the proliferation of sensitive
materials, has kept silent in this case.
This is in part not to embarrass Tokyo, a consistent Washington ally on many
security issues. However, the US defense industry is also a regular Mitutoyo
customer and the Pentagon likely has similar concerns as other buyers about the
ability of other manufacturers to fill any potential supply gap.
In Mitutoyo's case, economics will inevitably overshadow justice. Had the
transfers simply been a case of sloppiness or willful ignorance, then weaker
sanctions could be acceptable.
However, Mitutoyo's actions were taken in disregard for the law and general
global peace and security concerns. As such they warrant a stronger response.
Punishment with teeth would have a clear deterrent effect on other companies
tempted to willfully circumvent national export controls. If Japan and the US
want to ensure that other companies do not take the same path, it is imperative
that strong justice is served for Mitutoyo.
Stephanie Lieggi and Masako Toki are research associates at the
Center for Non-proliferation Studies In Monterey, California.
(Copyright 2007 Stephanie Lieggi and Masako Toki.)
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