U.S. Fines Digital $1.5 Million
By Peter T. Kilborn
The New York Times
Washington -- Sept. 4, 1984 -- The Commerce Department announced today that it had fined the Digital Equipment Corporation, a leading American computer company, $1.5 million for export law violations that may have allowed the Soviet Union to obtain one or two of its computers. It was the largest monetary penalty ever imposed for export violations.
The exported machines are high- powered minicomputers that can be used for military purposes, according to the Commerce Department, which ordered the penalty. It was unclear whether any Digital machines had actually reached the Soviet Union.
The company, which is based in Weston, Mass., denied any wrongdoing and said it had agreed to pay the fine to avoid inconvenience to its customers and long litigation. The fine will be reduced $400,000, to $1.1 million, if Digital does not violate any export laws in the next three years.
The Commerce Department said Digital had violated the Export Administration Act restraints on doing business with companies that have been known to buy militarily sensitive American products and resell them to the Soviet Union and its allies.
The department said that between August 1981 and January 1983, Digital's West German subsidiary, DEC G.m.b.H., ''made numerous sales of DEC computers and computer-related equipment to Richard Mueller, through his firm Deutsche Integrated Time.''
Mr. Mueller, the department said in a statement, had earlier been denied privileges to deal in American exports because he had re-exported American goods to the Soviet Union in violation of the law. He was indicted in California in 1979 by a Federal grand jury in connection with a shipment of semiconductor manufacturing equipment to the Eastern bloc.
''They were doing business with someone they should not have been doing business with,'' said Daniel Landa, a Commerce Department spokesman. Richard Berube, a Digital spokesman, said that the company did not realize initially that Mr. Mueller controlled Deutsche Integrated Time.
Variety of Applications
Mr. Berube said the machines involved were part of the company's VAX 11-780 series, which are general-purpose ''superminis'' priced from $250,000. They can be used for a variety of applications, including tracking missiles, when tied to other sophisticated devices and when equipped with similarly sophisticated programs.
The machines in this case are similar to the ones seized in West Germany and Sweden last November, just hours before they were to be shipped to the Soviet Union. But the department said this case involved transactions that occurred before the others were seized.
Government investigators said in March that Digital appeared blameless in the November case, although the company had manufactured the computers involved. The machines had been legally shipped by a New York company to an affiliated concern in South Africa. From there, they were illegally diverted in an attempt to ship them to the Soviet Union, the investigators said.
Some of the machines were seized in Hamburg, West Germany, and others were stopped at their next transfer point, the Swedish port of Helsingborg. Mr. Mueller's name had been found on documents pertaining to the November shipment, and he had been sought for questioning.
'No Evidence' of Shipment
In the case disclosed today, the Commerce Department and Digital said they did not know whether one or more VAX-series machines had been delivered to the Russians. ''But there is no evidence to suggest that they did,'' Mr. Berube said.
In a statement, Digital said its ''willingness to settle does not in any way represent an admission of wrongdoing.'' It added, ''The company chose to settle now to avoid continuing inconvenience to its customers and to avoid lengthy and costly litigation.''
Since the earlier seizures, the Commerce Department has subjected Digital to far closer scrutiny in authorizing export sales than other companies, requiring Digital to obtain an export license for each shipment. With today's agreement, Digital was granted renewal of the far less cumbersome two-year general distribution license.
Mr. Landa at the Commerce Department said the civil penalty imposed on Digital was by far the largest ever assessed for violation of the export act.
Copyright 1984 The New York Times Company