Cadence Design Systems has plead guilty and will pay over $140 million for illegal exports of Electronic Design Automation (EDA) hardware and technology to the Peoples Republic of China (PRC). This transfer of sensitive U.S. technology included export to entities known to support development of China’s nuclear weapon programs.
Multi Agency Investigation and Enforcement Actions
This enforcement action was was coordinated between the the Counterintelligence and Export Control Section (CES) of the Justice Department’s National Security Division (NSD), and the U.S. Attorney’s Office for the Northern District of California (NDCA). The case involves both criminal and civil charges. The civil charges are being enforced by the Bureau of Industry and Security (BIS) and the Department of Justice (DOJ).
Export Violations
Cadence admitted to engaging in a conspiracy to commit export violations of its EDA tools at least 59 times. These tools, which are subject to the Export Administration Regulations (EAR), were exported, reexported, and transferred by the company’s Chinese subsidiary to listed entities in China without licenses. These exported items and technology were used by the PRC military for nuclear explosion simulations.
Conclusions
The Cadence Design Systems case illustrates a new era of export compliance enforcement in which multiple governmental agencies coordinate efforts to address export compliance and national security issues. Export compliance responsibilities cannot be relegated to a single official within an organization. Instead an effective program must be implemented and supported by top management that stresses due diligence, company wide involvement, training, and program monitoring and review.
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