Jun

14

BIS Charges Company $2 Million For Late Payment

Posted by at 8:15 pm on June 14, 2011
Category: BIS

Don't Mess With BISTalk about late fees. The Bureau of Industry and Security (“BIS”) responded to a payment under a Settlement Agreement that was nine days late by reimposing $2 million dollars of the penalty that had been originally suspended and by accelerating the remaining $5.2 million due under the Settlement Agreement.

The exporter Balli Aviation had agreed to a $15 million penalty in February 2010 in connection with its role in the export of three Boeing 747s to Iran. Under the agreement, the penalty was to be paid in five installments of $2.6 million with payments due on March 1, 2010; September 1, 2010; March 1, 2011; September 1, 2011; and March 1, 2012. The remaining $2 million was suspended for a period of five years upon condition that Balli commit no further export violations during that period and upon “full and timely payment” of the civil penalty.

Balli had made the first two payments on time and in full, but the third payment was made nine whole days late. According to a letter from Balli’s counsel, the late payment was occasioned by cash flow difficulties resulting from late payment to Balli of certain accounts receivable that it was expecting. BIS dismissed these arguments by noting that shortly before the March 1 due date, Balli received a $3 million payment which it applied to an obligation it owed to another creditor. BIS did not argue any prejudice to the agency caused by the late payment other than, apparently, that its feelings were hurt.

BIS ordered that the suspended penalty and the remaining two payments be paid within fifteen days of its order. Nothing in the Settlement Agreement supports the extremely short time period for payment dictated by BIS. Nor does anything part Part 764 of the Export Administration Regulations provide any basis for this time period. If Balli doesn’t come up with the money in the time period, a suspended five-year denial order may, under the agreement, come into effect.

Permalink

Bookmark and Share

Copyright © 2011 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

One Comment:

I’ve said it before but I’ll say again: There is no statutory authority under IEEPA for imposition of denial orders as a sanction. See 50 USC 1705. The Administrative Procedures Act at 5 USC 558(b)provides that:

“(b) A sanction may not be imposed or a substantive rule or order issued except within jurisdiction delegated to the agency and as authorized by law.”

The notion that the Executive Branch has unfettered authority to regulate trade is directly contrary to all constitutional authority.

Comment by Mike Deal on June 16th, 2011 @ 12:43 am