The Technobanditry Debate

EXPORTING high technology has been a crime only since 1949, the dawn of the Cold War era. Following the first successful Soviet A-bomb test, the U.S. government passed the Export Control Act, aimed at curbing transfers of strategic materials to the Soviet Union. That year it also joined its NATO allies in forming a coordinating committee for multilateral export controls, an international force to prevent the proliferation of state-of-the-art technology.

But despite a stream of export legislation enacted since then--the Battle Act of 1951, the 1969 Export Administration Act, even a 1983 law requiring Soviet diplomats to notify the Department of State before traveling to the Silicon Valley--the KGB and other East Bloc agents have proved aggressive and resourceful in their pursuit of American technology, U.S. defense experts say.

Indeed, military analysts estimated in 1986 that 150 of the Soviet Union’s most advanced weapons--including its versions of the Blackjack bomber and the Sidewinder air-to-air missile--incorporate technology pirated from the West. By pursuing proven Western equipment, defense analysts say, the Soviets have been able to skip costly research and development and have cut the technology gap with the United States substantially.

What keeps the Soviet Bloc nipping at the heels of the United States is a sophisticated supply network that often begins in California. Federal investigators say that frequently, shell corporations purchase equipment from unwitting aerospace or microelectronics companies. In most cases, they say, the equipment has been falsely labeled, then transported to neutral nations, such as Switzerland or Austria, that trade freely with Warsaw Pact nations. Such a network allegedly enriched convicted technobandits Werner Bruchhausen and Tony Maluta, whose Torrance company, Continental Technology Corp., netted nearly $10 million between 1975 and 1985. The company sold to the Soviets everything from ultra-sophisticated surveillance equipment to an entire silicon-chip manufacturing plant.

The election of Ronald Reagan in 1980 brought both a tightening of domestic restrictions on technology transfer and a push to get Western European nations to adhere to American restrictions and to police exports more vigorously.

Yet, in recent years, Congress has been at odds with the Reagan Administration over its implementation of the Export Administration Act. Many members of Congress, as well as businessmen involved in high technology, believe the administration has gone too far in its definition of what should be deemed privileged. “You have technology on the blacklist, such as personal computers, which are easily available anywhere in the world,” says a staffer to one congressional trade oversight committee. A 1987 study by the National Academy of Sciences agreed, saying that U.S. national security was not well served by the current crackdown. “The scope of U.S. security export controls undermines their effectiveness,” contended the panel, which included Bobby Ray Inman, a former director of the National Security Agency and ex-deputy director of the CIA.

In response, says Paul Freedenberg, Undersecretary of Commerce for Export Administration, the administration has begun cutting back the list of prohibited technology. Still, he condemns such Congressional proposals as one that calls for eliminating 40% of the items on the list as nothing short of “dangerous.”