Jul

24

Mugabe’s Scottish Castle in the Sky


Posted by at 6:16 pm on July 24, 2014
Category: Economic SanctionsOFACSanctionsZimbabwe Sanctions

By User:Bigwikiaal (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3AEilan_Donan_Castle%2C_Scotland_2013-09-12_12-29.jpg

The Herald, a Mugabe mouthpiece owned by the Zimbabwean government, recently criticized former British Prime Minister Tony Blair in two articles for reported comments the UK made to justify the imposition of sanctions against Zimbabwe.  Referring to “illegal sanctions,” The Herald cited an article in the “Journal of African Studies” that quoted former South African president Thabo Mbeki as saying that UK officials told him, presumably sometime in the early 2000s, that Zimbabwean president Robert Mugabe owned a Scottish castle and had UK bank accounts that the UK intended to freeze, only to allegedly tell Mbeki later that the UK could not locate the Scottish castle or the accounts but still intended to impose sanctions in any event. (Perhaps the UK momentarily confused Mugabe with Idi Amin who once offered to be the King of Scotland.)

The article in question appeared in the June 2014 edition of the Journal of Southern African Studies and was by Blessing-Miles Tendi a frequent writer on UK-Zimbabwe relations and lecturer at Oxford.  Professor Tendi did in fact cite to a discussion he had with Mbeki in 2011, during which Mbeki said that “Britain” and “Tony’s people” made such statements about Mugabe’s assets and that the British later admitted to finding no castle in Scotland or Mugabe accounts in the UK.  Tendi went on to describe a UK decision to freeze Mugabe’s assets as “devoid of rationality” inasmuch as the UK knew these assets did not exist.  (Interestingly, Tendi also asserts that Mbeki claims that British plans to invade Zimbabwe were thwarted by Mbeki’s decision not to let Britain use South Africa as a staging point for the invasion.)

Tendi and The Herald are misinformed about the UK sanctions.  In addition to freezing any current or future Mugabe’s assets in the UK, the sanctions also prohibit anyone from making any economic resources available to Mugabe or his co-sanctioned cronies.  If the UK believed that Zimbabwe was engaged in human rights abuses and suppression of democracy, as most countries and international organizations still believe, it would not be “devoid of rationality” to conclude that prohibiting financial assistance and freezing future assets are warranted to end such abuses and suppression.

Although Tendi and The Herald are misinformed as to the scope of UK economic sanctions law, the more important take-away from this curious vignette is the allegation that a country like the UK may have hastily taken to other countries its case for sanctions, even in small part, based on its own misinformation.  Imposing economic sanctions on identified targets are swift government decisions with immediate effects that are many times based on information that the target itself can’t readily confirm or deny.  The only administrative due process afforded to a foreign sanctions target in the United States is an “administrative reconsideration” of OFAC’s decision by … OFAC.  As we noted earlier this year, OFAC reconsiderations are no easy task and some petitioners are taking claims to U.S. courts to obtain removal from the SDN list.  Although Mugabe does not have a strong case for reconsideration and not likely to make one, other sanctions targets may, and should at least try, if the circumstances warrant.

 

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Jul

23

Be Careful What You Like on Facebook


Posted by at 4:40 pm on July 23, 2014
Category: BISCriminal Penalties

Facebook Profile Photo of Viacheslav Zhukov https://www.facebook.com/viacheslav.zhukov.7[Fair Use]
ABOVE: Viacheslav Zhukov


A Savannah resident, Viacheslav Zhukov, has been charged in a superseding indictment with export violations and false statements in connection with rifle scopes that he mailed from Savannah, Georgia, to Russia without the required license from the Bureau of Industry and Security (“BIS”). He is being held without bond awaiting trial.

As this blog has often noted, a frequent challenge in export prosecutions is establishing that the defendant knew that his unlicensed export was illegal. U.S. export laws are, as we all know, complicated; and a Russian immigrant might not know that mailing rifle scopes to Russia without a license would be illegal.

As the false statement count suggests, there is some evidence that Zhukov may have known that the exports required a license from the U.S. government.  Zhukov allegedly filed a Customs Declaration with the U.S. Postal Service saying that the boxes contained a “cardboard box, a model battle tank, and men’s jeans.” Telling customs that you’re mailing a “cardboard box” to Russia probably is more or less an open invitation to having your shipment detained and inspected, which may well be how he was caught.

Of course, there may be other reasons that Zhukov fibbed about the contents of the box. Perhaps he was hoping to avoid Russian import license requirements or duties. At this point, we have no idea what his explanation will be for providing an incorrect description of the items being exported.

One interesting digression: Mr. Zhukov has a Facebook page (although he’s not able to update it at the moment), and the only thing at all that he says that he likes is an album by Murder Death Kill appealingly titled “F*** With Us And Find Out.”  (The asterisks are not part of the original album title.) That album features songs such as “Kill Yourself,” “People Will Die,” and “Hostility.” I’m sure he now wishes that he liked (at least on Facebook) something more innocuous like Tchaikovsky’s Greatest Hits or the Cole Porter Songbook.

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Jul

23

Comment Notifications


Posted by at 12:26 am on
Category: General

For some reason, there was a period of about a week during which I was not getting notifications of comments pending approval, so there were a number that I just discovered and approved. I am trying to figure out why that happened and fix it. In the meantime my apologies to commenters who were stranded in the moderation queue.

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Jul

21

Strike That: We Actually Meant “For” for “Of”


Posted by at 6:16 pm on July 21, 2014
Category: OFACRussia Sanctions

By Almonroth (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3AU.S._Treasury-3.jpgLast week, we reported that there was some confusion relating to the new Sectoral Sanctions Identifications List inasmuch as OFAC said, in one place, that the prohibitions extended to dealing in equity and 90-day debt “of” and, in another place, it said it extended to dealing in equity and 90-day debt “for” parties on the list. The difference was significant because “of” would seem to connote a narrower restriction and only prohibit U.S. persons from loaning money to or purchasing equity from the parties on the SSIL. On the other hand, “for” would seem to prohibit, in addition, a number of other transactions, such as borrowing money from the party on the SSIL or acting as a broker to purchase stock from third parties for the entity on the SSIL. The SSIL used “of,” whereas the directives issued relating to the SSIL entries used “for.”

Well, sometime within the past several days, someone at OFAC quietly changed “of” on the SSIL to “for.” Given that people can be subjected to massive civil penalties and even sent to jail for engaging in prohibited transactions with entities on the new SSIL, one might have expected OFAC to admit the mistake and provide some clarification for the changed language, rather than simply sneaking onto the list under cover of darkness, making the change, and hoping that no one would notice that there had ever been a problem.

In any event, the SSIL and the directives now use the same language.  If we could only figure out exactly what that language means.

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Jul

17

That Depends On The Meaning Of Of


Posted by at 8:00 pm on July 17, 2014
Category: OFACRussia Sanctions

Putin and Vnesheconombank Chairman Dmitriev http://www.veb.ru/en/press/news/arch_news/index.php?id_19=30398 [Fair Use]
ABOVE: Russian President Putin Meets with Vnesheconombank Chairman V.A. Dmitriev

There is a significant ambiguity relating to the newly-announced Sectoral Sanctions Identifications List (“SSIL”) that we reported on yesterday and which placed Vnesheconombank and Gazprombank, among other Russian businesses, on the new list. There are two sections on the list. The first included financial institutions like Vnesheconombank and Gazprombank and prohibits U.S. persons from transactions covering debt in excess of 90 days and new equity involving these banks. The second included energy companies like the natural gas producer Novatek and prohibits dealings in debt in excess of 90 days but not in equity.

One source of confusion about the scope of these sanctions comes from a difference in wording between the directives issued yesterday by the President pursuant to his earlier Executive Order 13662 and the language on the SSIL which describes the restrictions on the listed entities.  With respects to the banks, Directive No. 1 talks of “new debt of longer than 90 days maturity or new equity for these persons” and the SSIL refers to “new debt of longer than 90 days maturity or new equity of these persons.” With respect to the energy companies, Directive No 2 talks of new debt of longer than 90 days maturity for these persons and the SSIL refers to “new debt of longer than 90 days maturity of  these persons.”

The difference between “for” and “of” in this context is significant. Dealing in equity for someone can include sales of third party equity to that person, unlike dealing in equity of someone, which can only be the equity issued by that person. The same issue occurs with respect to debt “for” and “of” the person, with the former covering not just extensions of credit to the person but also extensions of credit by the person. It is not clear which language controls.

Of course the losers here aren’t the companies on the SSIL; rather the losers are American businesses which lose business opportunities to European and other foreign competitors who are not subject to any restrictions under these sanctions. And the ambiguity about just what these sanctions cover only exacerbates the injury to U.S. businesses that may forego even more opportunities due to the ambiguous scope of the sanctions.

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