The Commerce Department yesterday fined Digital Equipment Corp. $1.5 million for its dealings with a Berlin-born businessman believed to be a leading smuggler of western high-technology products to the Soviet Union.
It was the largest fine ever assessed under the Export Administration Act, Commerce officials said.
Digital Equipment, of Maynard, Mass., was accused of supplying through its West German subsidiary 80 different high-technology products -- including 52 controlled for national security reasons -- to a company run by Richard Mueller. The shipments took place between August 1981 and February 1983.
Mueller, a West German national, has been linked to dozens of cases in which western technology worth millions of dollars has been illegally shipped to the Soviet Union. He is subject to arrest if he is caught in the United States and was denied U.S. export privileges after he was found to have illegally reexported American high-technology products to the Soviets.
Among the shipments from Digital Equipment that aroused national security concerns were two VAX 11-780 computers that the Soviet Union has been trying to obtain, Commerce Secretary Malcolm Baldrige said. It is unclear whether these computers reached the Soviets, but Commerce officials said they did not stay with Mueller's firm, Deutsche Integrated Time.
These computers have military uses that range from guiding missiles to intercepting satellite transmissions.
Acting on a tip last November, U.S. Customs officials broke up the attempted diversion of another Digital Equipment VAX computer to the Soviet Union via South Africa and Sweden. Mueller was also involved in that incident, the government said, though it was not part of the Commerce charges brought against Digital Equipment.
William T. Archey, acting assistant secretary for trade administration, said Commerce investigators believe that Digital's German subsidiary, Digital Equipment GmbH of Munich, should have known that Mueller was in charge of Deutsche Integrated Time.
Nonetheless, Digital said in a statement that its "willingness to settle does not in any way represent an admission of wrongdoing. The company chose to settle now to avoid continuing inconvenience to its customers and to avoid lengthy and costly litigation."
Digital Equipment officials said they were pleased that Commerce granted it a full two-year renewal of its distribution license, which allows it to make multiple sales of sensitive high-technology products. The company had been operating under a series of short-term interim licenses since February.
While there is no direct connection between the fine and the license renewal, industry sources have speculated that the stopgap licenses helped influence Digital Equipment to cooperate with Commerce investigators.
Baldrige said the company volunteered information about its 80 transactions with the Mueller firm and has tightened its internal procedures to avoid future violations.
The Commerce Department agreed to suspend payment of $400,000 of the fine if Digital Equipment's German subsidiary does not commit any violations in the next three years. Even so, the $1.1 million the government will collect remains the largest penalty levied under the Export Administration Act.
If a settlment had not been reached, however, Digital Equipment could have been hit with far larger penalties.
Under the law it could have been fined $100,000 for each of the 52 transactions involving national security-controlled items and $10,000 for each of the 28 other sales, or a potential total of $5.48 million.