MTAG: TAIWAN EXPORT CONTROL: CASE REPORTS

S E C R E T SECTION 01 OF 02 TAIPEI 002925

SIPDIS

SIPDIS

STATE FOR EAP/TC AND ISN/MTR

E.O. 12958: DECL: 08/22/2026
TAGS: MTCRE PARM TW ECCT
SUBJECT: MTAG: TAIWAN EXPORT CONTROL: CASE REPORTS

REF: A. STATE 138062

B. STATE 79175

C. 05 TAIPEI 683

D. TAIPEI 2701

E. TAIPEI 2800

Classified By: AIT DDIR Robert Wang, REASONS 1.4 B/C


1. (S) Summary: AIT delivered ref A responses on export
license applications to Taiwan's Bureau of Foreign Trade
(BOFT) on August 23. BOFT reported on its investigation of
the Dah Lih Machinery Industry Company and the Roundtop
Machineries Industries Company Ltd (ref B). AIT has
forwarded the report to EAP/TC and ISN/MTR. The Taoyuan
Prosecutors' Office has provided AIT with details regarding
the recent trial of Taiwan proliferator Tony Hsieh (ref C).
BOFT reported that the Ministry of Justice Investigation
Bureau (MJIB) is willing to tap Ching Hwee Company phone
conversations (ref D). End Summary.

U.S. Responses
--------------


2. (S) AIT delivered the five responses contained in ref A
to BOFT Export Control Task Force Head Wally Su and discussed
the comments provided on each case. Su was pleased we
provided a response for case WA060626111548007 even after 25
days and said a U.S. response was needed for BOFT to close
the case. Su said he would consult with the exporter
regarding the options for handling case WA060719095717005.
He said there have been other cases denied an export license
because of the Siemens controller used on the Taiwan machine
tool, and some exporters had questioned why sophisticated
Siemens controllers could be exported from Germany to Iran,
but not from Taiwan to Iran.

Investigation Results
--------------


3. (S) In a letter dated August 16, BOFT provided the
results of its investigation into exports to Iran by the Dah
Lih Machinery Industry Company and the Roundtop Machineries
Industries Company Ltd as requested ref B. AIT has sent an
informal translation of the letter and accompanying documents
via email to EAP/TC and ISN/MTR. The investigation found 22
exports of machine tools from Roundtop to Iran, but none from
Dah Lih. The report notes that the exports were not SHTC and
at the time of the exports there was no derogatory
information on the Iranian importer. The report concludes
that no violation of Taiwan's export control regulations
occurred.

Successful Prosecution of Proliferator
--------------


4. (S) In early August, the Taoyuan District Court sentenced
Taiwan businessman Tony Hsieh (Jin-yieh) to a six-month jail
term and three-year probation for violation of Article 27 of
the Taiwan Trade Act which deals with smuggling. Hsieh was
arrested in February 2005 after AIT urged Taiwan authorities
take legal action against Hsieh for his 1999 attempt to
smuggle Scud B missile parts to Libya. BOFT's Su noted that
according to his colleagues in Libya (presumably Taiwan trade
officials),Hsieh was a well-known Taiwan businessman in the
Middle East who had made his fortune in textiles, then added
to his fortune by shipping arms hidden among the textiles.
Su said there was a rumor that Hsieh had brokered arms deals
for Taiwan's Ministry of National Defense.

MJIB Willing to Monitor Phone Conversations
--------------


5. (S) As reported ref C, BOFT suspects Ching Hwee is
deliberately circumventing export control restrictions on
trade with North Korea through the use of intermediary
companies and territories, but has not been able to collect

TAIPEI 00002925 002 OF 002


the evidence that would be necessary for prosecution. AIT
has urged BOFT to examine Ching Hwee's financial and
communications records to explore possible ties with North
Korean-linked companies or bank accounts. Recently, BOFT
told AIT that the MJIB has expressed a willingness to monitor
Ching Hwee phone conversations in order to collect evidence
that it knows its exports are going to North Korea.

YOUNG