New laws could levy huge fines for military products

TECHNOLOGY FIRMS which export products which end up being used for military purposes could face fines of up to €10 million under new legislation which has just been enacted.

The Control of Exports Act 2008 also provides additional powers to the Revenue Commissioners and Customs to conduct audits of companies that are believed to be in breach.

The legislation covers products which are "dual-use", ie they can be used for both civilian and military purposes. Iona Technologies was investigated in 2003 when it was revealed its software was part of the systems being used to fire Tomahawk cruise missiles.

The new Act significantly expands on previous legislation and covers intangible goods such as digital downloads and even provision of advice over the phone.

"This means that software developers are in fact exporters," said Damian McCarthy, a partner with PricewaterhouseCoopers. "If they are involved in a venture with a developer in India for example, the technology which flows from Ireland to India in the course of developing the software may be controlled.

"If an Irish software developer e-mails, faxes or even discusses detailed technical information over the telephone with his colleague in India, those activities are an export of technology and may need an export licence which is issued by the Department of Enterprise, Trade and Employment."

The legislation also gives Minister for Enterprise Mary Coughlan new powers to introduce secondary legislation, which is expected to include a requirement for exporters to demonstrate and internal compliance programme.

Kathryn Raleigh, director of ICT Ireland, the lobby group for the technology sector, says member companies of her organisation "advocate internal compliance to ensure they know where their products are going to".

ICT Ireland represents some of Ireland's largest technology exporters. Raleigh said it was looking at organising workshops to ensure all its members were aware of their obligations. McCarthy said any firm engaged in research and development or technical services should be aware that they may now have obligations under the Act.