Apr

7

BIS Sets New Record for Detail in a Charging Letter


Posted by at 8:57 pm on April 7, 2010
Category: BISIran Sanctions

Cooling TowersAqua Loop Cooling Towers, a California-based supplier of cooling equipment to power plants, recently agreed to a ten-year denial order and a $100,000 fine to settle charges by the Bureau of Industry and Security (“BIS”) arising out of charges of illegal exports of, and a conspiracy to export, EAR99 goods to Iran. The items involved were filament winding machines and rolls of hog hair filter media. (For those perplexed about exports of hog products to a Muslim country, hog hair filters are not made from hog hair, at least they aren’t anymore.)

More interesting than the charges themselves and the agreed settlement is the unusual amount of detail that BIS put into the charging letter and the associated documents. Typically a charging letter says, for each count, that on A date B company violated C rule by exporting item D, classified as ECCN 0X000, to country Y. Each count rarely exceeds a short paragraph. In this instance, the Charging Letter, while many pages short of the length of, say, Marcel Proust’s À la recherche du temps perdu, is quite detailed and, certainly, a step in the right direction. Greater detail in charging letters provides more notice to the export community as to how BIS interprets its own regulations.

The charging letter tells a story of a contact made by Parto Abgardan, a Tehran-based manufacturer of cooling towers, with Aqua Loop to procure items for shipment to Tehran. The president of Aqua Loop replied that he was “more than happy if I can be of assistance on your purchase of filament winding machines.” Upon contacting a distributor of those items, the Aqua Loop president reported back:

I should emphasize that I found this lady a bit reluctant on the subject of export the unit [sic] to Iran, but she sound [sic] OK to work with us, if we do not mention any thing [sic] about Iran.

Later Aqua Loop’s president reported that the only way he could get the items to Iran was through a Gulf state:

I am trying to find a way to send the components that I promised to you. Unfortunately after many unsuccesssful [sic]attempts, I came to a conclusion that the only was to open this channel is what you were thinking, and if I understood correctly, you are going to have some kind of agent or office in one of the Gulf countries. I tell you this that I would have no problem getting a container to my place and loading to a steam ship toward Dubai. . . . Many shipping companies express that you shouldn’t have any major problem getting the goods to Tehran from Dubai

Finally, the charging letter notes that Aqua Loop’s president had told a BIS special agent that he was aware that it was illegal to ship goods to Iran through third countries, noting that the practice was called “diversion.” Not surprisingly, the Aqua Loop president agreed individually to a ten-year denial order and a $100,000 penalty suspended for ten years provided that no export violations were committed by him during that period.

If you clicked on the link earlier in this post to Parto Abgardan’s website (which appears only to work in Internet Explorer and not to work in either Firefox or Chrome), you may have noticed something interesting. Abgardan claims to have a “sister factory in the USA.” Here’s a screen grab (with highlighting added by me) showing that claim.

Screen Grab

And on its website Abgardan gives as its U.S contact information the same address, telephone number and fax number as shown on Aqua Loop’s contact page. Here’s another screen grab if your browser doesn’t like Abgardan’s website:

Screen Grab

I would have thought they would have changed that by now.

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3 Comments:


They also share the same Yin and Yang style logo.

Comment by Jim Dickeson on April 8th, 2010 @ 11:07 am

Great story. I especially like the part where the distributor had a “don’t ask – don’t tell” attitude of diversion to Iran. Frankly, I hope BIS sends someone to knock on their door.

Comment by John.perser@exportsafe.com on April 8th, 2010 @ 2:42 pm

The greater detail in the charging letter raises questions about the consistency of the government’s enforcement policy. One wonders why these folks got off with a civil penalty whereas other more indirect and insubstantial acts resulted in criminal prosecutions. Compare this case in which there was alleged to be a knowing direct transshipment through Dubai, to the case of US v. Gas Tech where the defendant company simply provided the EAR99 design to a Canadian company that manufactured gas processing equipment that it sold to an English company that installed it in Iran. Or even worse, US v. Alavi, where the defendant was an engineer who took his laptop with him when he visited his family and showed his younger relatives who were students some simulation software (previously classified EAR99), but did not actually transfer the software or any data. Prosecutorial discretion is one thing, but when the there is such a wide disparity in alleged misconduct between some criminal defendants and some civil respondents, such discretion becomes abuse. Rather than focusing on transfers of technology that might be of some use to Iran’s proliferation effort or even its conventional military, one gets the sens that OEE and OFAC enforcement policy is directed at “low-hanging fruit”, i.e., little guys without resources, so they can plus up their body count.

Comment by Hillbilly on April 9th, 2010 @ 9:53 am