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BIS Goes After Shipping Clerk
Posted by Clif Burns at 5:59 pm on June 1, 2007
Category: BIS
The Bureau of Industry and Security (“BIS”) just published on its website a settlement agreement with someone who appears to been simply a shipping clerk at Universal Technology, Inc. Back in June 2006, BIS entered into a Settlement Agreement with Universal Technology arising out of charges that the company had shipped high-tech electronic components classified under ECCN 3A001 to China without the required license. Under the Settlement Agreement, the Company agreed to pay a $170,000 fine, personally guaranteed by the owners of the company, and agreed to a twenty-year denial of export privileges.
Fast forward to May 2007 and we have another Settlement Agreement arising out of the Universal Technology exports. In this Settlement Agreement with an employee of Universal Technology, BIS states that:
In his capacity as an employee of Universal Technology, Inc., James Ji prepared, or assisted in the preparation of, invoices, shipping documents and other materials related to these transactions.
Mr. Ji agreed to a $46,000 fine, $44,000 of which was suspended on condition that Mr. Ji does not commit any further export violations for a one-year period.
Granted we don’t know exactly what Mr. Ji did at Universal Technology. He may have done more and had more knowledge than one who simply prepared, or assisted in preparing invoices, shipping documents and related materials. But if that is all that he did, and that is, after all, the only allegation, then what is gained by spending time fining a shipping clerk? Why punish a private for the general’s mistakes?
That question is particularly compelling where the shipping clerk is being expected to understand that a particular electrical component is listed on the Commerce Control List. I might have some sympathy if this case involved shipping to someone on the Entity List, since checking that list is something that, at least, is conceivably within the reasonable competency of a shipping clerk. And if there were some evidence that the clerk was aware of the Entity List. But that wasn’t the case.
And if Mr. Ji was simply a shipping clerk, $2,000 is a hefty chunk of change.
UPDATE: Diligent readers and commenters Stephanie and Rafael provided information, not provided by BIS, that indicates that Mr. Ji was more than a shipping clerk. According to the criminal complaint filed against Mr. Ji:
Beginning sometime prior to December 1999, and continuing to on or about January 1, 2004, defendant ZHONGHE JI, a/k/a “James Ji†(“James Jiâ€) was Vice President of UTI. In this capacity, JAMES JI handled purchase orders, price quotations and technological aspects of UTI’s business (including analyzing technical requirements for orders), as well as correspondence with customers in the PRC.
If Mr. Ji did all that, the $2,000 fine seems, well, a little low.
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19 Comments:
Two thousand might be the best choice for someone who presumably doesn’t have the means for what would be a very costly defense.
[Off-topic comment deleted by blog owner.]
Looks like they got your Generals as well – not only as guarantors of the corporate civil penalty but as recipients of denial orders. See E991 and E993.
As well they should have, Slinger
Of course they should. But punishing the general does not excuse the sins of the foot soldier, which your entry seems to suggest (assuming, of course, that the “clerk” was aware of what he was doing – I doubt OEE would have pursued this absent some “bad behavior” on the part of the clerk.
I clearly said that if the clerk had more knowledge than one might imply from filling out shipping documents, then a penalty would be appropriate. The brunt of my criticism is that BIS’s penalty documents didn’t allege that he did have such knowledge and only alleged that he prepared shipping documents.
Do you believe that BIS would have pursued a lowly clerk if he had not done more? The charges were Causing, Aiding or Abetting the Exportation of Electronic Components to the People’s Republic of China With Knowledge That Violations Would Occur.
Note the “with knowledge” portion.
This case raises questions about the BIS approach to vicarious liability. There may be shipping clerks who have an independent knowledge of the EAR, but the overwhelming vast majority of shipping clerks receive whatever education in the EAR they have either from their employers or through third parties at their employers sponsorship. If the clerk violated direct corporate instructions, then why not follow the example of the Model Penal Code and the Federal Sentencing Guidelines by giving the corporate employer exculpatory credit for having a rogue employee. If, on the other hand, the employee lacks the requisite knowledge to support a criminal case, why fine him at all when you have already taxed the employer who instructed him. This case is just very troubling. I don’t think you would have seen this result back when Mark M. was director of OEE. Back when the world was young and Mark and I were investigative team leaders at Commerce, fining individuals was reserved for the rare case when a corporate officer or senior manager was responsible for the violation.
Slinger,again, I said that it was possible that he had knowledge. But I also noted that the charging documents didn’t present any factual allegations to explain how a shipping clerk had such knowledge. But I repeat myself.
Gentlemen:
Perhaps someone should look at the charging letter. I believe Slinger’s comments are well founded. The lead-in to Charges 1-8 does state “with knowledge” as he/she argues.
Cliff, are you suggesting that BIS charged “with knowledge” but actually did not have supporting facts? If they had no such facts, why would they bring that charge?
BIS may have had supporting facts for its charge. And it may not have had supporting facts. I don’t proceed from the assumption that the agency is infallible. It is certainly possible that BIS’s notion of the evidence supporting knowledge by the clerk might not withstand scrutiny.
If it did have evidence for the somewhat surprising conclusion that a shipping clerk had knowledge that the item he was shipping required a license, it didn’t share those facts. BIS would do itself and the export community a favor by providing more transparency into its processes, particularly in a case like this where the notion that a shipping clerk might also be a student of the CCL isn’t immediately obvious.
Cliff:
Your outside lawyer bias betrays you! Such a conclusion is not “surprising” at all. My personal experience at 6 companies is that shipping clerks at MANY companies have been trained and have access to company export matrices that provide all the essential ingredients to determine necessary export requirements.
I don’t believe that anyone is assuming that the agency is infallible. But unlike you, I am unwilling to assume the opposite (and what you seem to be inferring), that BIS is a bunch of buffoons who are using boilerplate charging documents and that the “with knowledge” charge was not supported.
Perhaps, BIS refrained from providing further details at the requeest of the company or the employee.
You ask us to assume and conclude, as Mr. Deal often does, that, in the absence of 100% of the facts, that the agency is acting in an unconstitutional manner, is incompetent, has no supporting evidence, etc. Quite an extreme position, and one that is not supported by the facts of this case (even with the limited record we have).
As an example, you have a very detailed statement of facts (accepted by the company and the government) in the ITT case. What would you offer us from the ITT case?
Charles, you both misspell my name and misconstrue my comments.
And, readers, we’ve caught a sock puppet. It would appear that “Charles” and “Slinger” are one and the same person, since Charles/Slinger share the exact same IP address in Dallas/Fort Worth. Oh, and Charles/Slinger’s employer is a pump and valve manufacturer which also just happens to be in Dallas/Fort Worth (well Irving, to be precise), which we also know from the IP Address of an earlier comment left while on his work computer. Since Charles is Slinger and vice versa, this explains, of course, why “Charles” comes rushing to Slinger’s defense:
I believe Slinger’s comments are well founded. The lead-in to Charges 1-8 does state “with knowledge†as he/she argues.
The “he/she” bit is especially disingenuous. This sort of dishonesty is reason to be banned from commenting. Buh-bye.
Unfortunately, I believe that there may be many “shipping” clerks out there who have some basic knowledge of the EAR and are not supported by management. In fear of losing their employment, these shipping clerks just “do as they are told”. My advice to those shipping clerks – get another job, as you are on the hook for signing the export documents.
ps/ Good detective work – imagine that, being debarred from commenting…gotta love it!
Agreed, Ladyx. That is also a possible explanation here as well. But, we’ll never know with any certainty what exactly happened.
I’ve been writing export software for about 7 years now. In regards to US regulations and documentation, I find it absolutely amazing that often I know far more about processes and requirements than the people who will be creating the documents using the software.
hln
We train our shipping clerks that they are personally liable for shipping items that go contrary to their training when a license is required.
Good for BIS!
Although the detailed discussion above was interesting and entertaining, a quick review of the UTI case would indicate Mr Ji was VP at UTI … so I guess he was a bit more than a clerk.
Stephanie, if Mr. Ji was VP at UTI, then that would, of course, make BIS’s case stronger. But I can’t find any evidence that he was a VP. There is no mention that he held that capacity in the charging documents against him. You say that a quick review of the UTI case would reveal that but I can’t find Ji’s name in the UTI decision that I linked. I confirmed that using the search function of Acrobat, which doesn’t find Ji’s name there either.
I’m not saying that you might not be right. I do make mistakes. (Gasp!) But could you share with us more specifically where you found your evidence that Mr. Ji was a VP of UTI?
