The discovery of one of the largest illegal weapons caches in the United States reverberated yesterday from Washington to Mexico, as the investigation into its origin and destination continued. The shipment of arms, confiscated from a San Diego warehouse last weekend, has fueled the debate over the future of the Port of Long Beach, where the weapons entered the United States. It also has renewed concern over U.S. Customs inspection practices that enabled the arms to be transported to the border undetected. In Mexico, leaders worried that part of the shipment, which was intended for Mexico City, may already have crossed their border. They stepped up checkpoint inspections and scrambled to allay fears. The two truckloads of weapons were discovered last weekend by warehouse workers and seized by the U.S. Customs Service. They included thousands of grenade launchers and disassembled parts of automatic M-2 carbine rifles. Sources inside the U.S. Customs Service said that as many as four more truckloads are missing. The containers, which sources said were labeled as strap hangers and hand tools, were traveling as "in-bond" cargo. That means they were not opened or inspected by U.S. Customs in Long Beach before they moved down the freeway to the border. Customs has had no official comment on the arms seizure, which was reported by The San Diego Union-Tribune yesterday, other than to say that an investigation is under way and leads are being pursued worldwide. Gen. Jose Luis Chavez Garcia of the federal police force in Tijuana said his agency is working with his country's military at three checkpoints east and south of Tijuana to make sure arms shipments are blocked. "We are receiving support from the army to prevent any kind of trucks passing through with contraband weapons," he said. In Washington, spokesmen for Congressmen Brian Bilbray, R-Imperial Beach, and Randy "Duke" Cunningham, R-Escondido, touted the arms seizure to bolster concerns over the planned takeover by a Chinese company of a new cargo terminal slated to be built on the site of the old Long Beach Naval Station. "This has opened a lot of questions about the whole issue of the lease of the Long Beach facility to a Chinese company," said John Woodard, spokesman for Bilbray. He said Bilbray is concerned because the China Ocean Shipping Co., (COSCO) which was granted the naval station lease, is not only linked closely to the Chinese government, but one of its ships was used last year to smuggle 2,000 AK-47s into San Francisco. A spokeswoman for the Long Beach port said the fears are unfounded because COSCO has been a good tenant there for more than a decade. Patrick McSwain, Cunningham's chief of staff, said his boss believes the whole customs system has to be tightened up. Cunningham had asked the House Government Reform and Oversight Committee to include this incident in a larger investigation of the issue of turning the former naval station over to COSCO, McSwain said. Both Cunningham and Congressman Duncan Hunter, R-El Cajon, have asked the Navy to delay transferring the base to COSCO pending a national security investigation. But dismay over the arms was most apparent in Mexico yesterday, where officials tried to address fears that arms believed to have been part of the shipment may have made it across the border. They said they learned of the problem by reading the Union-Tribune story. Rodolfo Ponce Diaz, Mexico's customs administrator in Tijuana, said Mexican law requires that one of every ten shipments crossing the border is inspected. "A computer determines if the merchandise will be inspected or not. Thus, there is a possibility that a truck could cross without inspection legally. That is how we do it," he said. He said he met with his counterparts at Otay Mesa early yesterday and that, "up to now, they have not told us that (weapons) crossed here." Ponce Diaz said that to his knowledge, no large shipments of weapons have been detected at the Tijuana border. What is found more routinely is the occasional weapon carried across in private vehicles crossing from the United States into Mexico. The two containers of weapons were found in the yard of a San Diego trucking company after sitting for so long they essentially became unclaimed freight. At that point, they were taken to a warehouse to be unloaded and stored. The owner of the warehouse, who asked not to be named, said the containers could have been at the yard for up to a month. Typically, he said, "a container comes off a steamship in L.A. and moves by truck to San Diego. Then someone, the consignee, would clear the merchandise with Customs." It's when that last step, for whatever reason, does not happen within a prescribed time that the containers go to a so-called "in-bond" warehouse. When these containers -- 20 feet long, 8-feet wide and 8-feet high -- arrived, the warehouse owner said, their steel "overseas seals" were in place. The seal on one container was removed so it could be emptied. Inside were cartons of various sizes. Some had been damaged during shipping. When warehouse employees opened the first container, the contents of at least one damaged carton were visible. "What we saw was very little," the owner said. "What I saw was stocks. You can tell a gun stock. There were other gun parts." The warehouse company called Customs "immediately." Customs agents took the cartons away. The incident has opened new criticism of the in-bond system, which allows containers transitting the United States to another country to move through, often without ever being inspected. Much of the Mexico-bound cargo arriving at the ports of Long Beach and Los Angeles moves across Southern California under the U.S. Customs in-bond program. The method, outlined in Title 19 of the Code of Federal Regulations, allows manufacturers to ship goods traveling to a foreign destination to proceed in a controlled process directly through the United States without the imposition of tariffs. Many of the products traveling in-bond through the San Diego area are parts shipped from Asia to Baja California's maquiladora assembly factories. The U.S. Customs Service collects duties on these goods only if they return to the United States, often as part of a completed product. "We roughly estimate that approximately 50 percent of the cargo moving into the Port of Los Angeles and distributed intermodally travels in-bond," said a spokesman for the Los Angeles facility. A Customs official in the San Diego office said yesterday he was unable to supply local information on in-bond goods. The program has long drawn criticism because containers routinely remain sealed as they move from ship to truck to warehouse and across the border. "The whole relationship is built on trust. Customs does periodic inspections," said John Joliffe, who with his wife, Silvia Casas, operates the Casas International brokerage at Otay Mesa. "But Customs is just overwhelmed." Regulations list various products that are prohibited from being shipped in-bond, he said. Weapons like the ones discovered last weekend are among them. The program includes safeguards, Joliffe said. Anyone handling the goods, whether a trucking firm, a customs broker or a warehouse operation, must pay a bond to Customs, which is forfeited if rules are violated. Bonds typically cost $50,000 to $100,000, he said. The goods also must be delivered to a commercial port of entry for processing into the foreign country within a period of 30 days, Joliffe said. Rocky Wilson, owner of the San Diego-based Shaker Express trucking company, said that acting as a bonded carrier carries certain responsibilities. The company must ensure that goods are not delivered or consumed in the United States. When an in-bond shipment is accepted for transport at an entry point, such as the Ports of Long Beach or Los Angeles, both the trucker and a Customs agent must sign a form. A copy is then sent to Washington, D.C. "We're not even allowed to open those boxes without a Customs agent present," he said. When the freight moves across the border out of the United States, another Customs agent must sign and stamp the document, another copy of which also is sent to Washington. "They're very good. If something doesn't match up, right away we get a letter. We have 10 days to account for it," he said. The penalty that can be imposed amounts to 10 times the value of the merchandise.Title: Arms discovery sets off alarms
San Diego Union Tribune March 15, 1997 By Valerie Alvord and Diane Lindquist STAFF WRITERS