In his Opinion of February 5, 2015 U.S federal judge Richard Leon refused to approve a settlement for sanction violations by the Dutch aerospace firm Fokker Services, daughter of Fokker Technologies Holding B.V with the US Government. Fokker is a key Dutch defence company.
The company was accused of more than 1,100 illegal shipments worth $21 million to Iranian customers, including the military, and to embargoed customers in Sudan and Burma in the period 2005-2010. Fokker agreed to forfeit $10.5 million and pay a civil fine of $10.5 million as a settlement.
But according to judge Leon, this settlement, made in June last year, was too lenient: “It would undermine the public’s confidence in the administration of justice and promote disrespect for the law for it to see a defendant prosecuted so anaemically,” he wrote. He especially referred to the deliverances to Iran to underpin his words.
Fokker cooperated in the investigation and promised to better its life. The US-government left the verification of these promised improvements however to self-reporting of the company. “The [Deferred Prosecution Agreement] DPA does not call for an independent monitor, or for any periodic reports to be made to either this Court or the Government verifying the company’s compliance with U.S. Law” wrote judge Leon, making clear his discomfort: “One can only imagine how a company with such a long track record of deceit and illegal behaviour ever convinced the Department of Justice to agree to that!”
The facts which made judge Leon deny the settlement came from information filed by the US Government. According to these, Fokker Services withheld or falsified tail numbers of planes. Falsely indicated parts were presented as “stock parts” to conceal its customers’ affiliations with U.S. sanctioned countries. The Dutch company deleted references to Iran in materials sent to US companies. Employees were directed to hide activities and documents relating to Iran from US officials. Etc. This policy was at least partly known and approved by the senior management of the Dutch aeronautic company.
US Attorney Machen said: “Fokker treated U.S. Export laws as inconveniences to be ‘worked around’ through deceit and trickery.” In 2008, Fokker had already been warned by Dutch customs that they would not be able to defend the company “if it encountered problems with United States authorities regarding export compliance.”
Although the Attorney gave lip service to strong punishment of companies seeking “profit from violating and circumventing US trade laws” in the end Fokker has hardly been punished. Fokker Services fired a president, reassigned the duties of some of its personnel and promised to train employees in US export controls and economic sanctions. A program which is e.g. available every year in Amsterdam. The company had to pay a fine which was only as high as the value of its illegal transactions, “not a penny more than the revenue it collected from its illegal transactions,” judge Leon stated in his Opinion. The statement by Fokker that the figures are “speculative assumptions and amounts, not based on facts” is clearly inadequate. According to the Washington Post, punishment was minimal because more massive financial penalties would have severely hurt the health of the company and would have been a disproportionate penalty for its conduct. What will happen now must be awaited. Judge Leon remains open to approving a modified plea agreement. Fokker itself decided to file a Notice of Appeal.
Fokker is not just any company. It is part of the Dutch defence establishment, and is strongly linking the US to the Dutch military market. This provides another logical explanation for the fact that, despite the severe violations of US export law, punishment was so minimal. When searching the website of the US Department of Defence on Fokker, one finds as many as 351 results. Fokker is participating in major US weapon programs, such as the F-16, F-35 Joint Strike Fighter, Chinook helicopters, Sea Sparrow and PAC-3 missiles, and is thus part of the Atlantic bond between the US and the Netherlands. In January, it signed its most recent public contract with Lockheed Martin on wing components for the Joint Strike Fighter. Thus a company to handle with prudence.
In any debate on arms exports in the Dutch Parliament it is at least stated once that Dutch arms exports are according to the rules and that Dutch companies are behaving according to the law. This story shows a major Dutch defence company using tricks an deceit to trade its products. A bit more professional scepticism on the side of the Dutch parliament according to the spotlessness of Dutch defence companies would be wiser.
Late February, Fokker Elmo (also a daughter of Fokker Technologies) announced to start to market defence products in a Joint Venture with the Indian company SASMOS HET Technologies Ltd. India is known for its endemic corruption in the defence business. And there is another issue at stake too. As part of the joint venture deal, Fokker Elmo will transfer technology to its Indian partner as and when required. The question is if the end use of this technology will be controlled seriously, and if the Dutch parliament will be critical enough to monitor this.