Sep

28

A Question of Control

Posted by at 8:00 pm on September 28, 2011
Category: OFAC

Oh, no!!!One more point should be made about the Al Haramain case that I discussed yesterday. And this point should strike fear in the heart of all but the most foolhardy.

In holding that OFAC had sufficient evidence to designate the Al Haramain Islamic Foundation (“AHIF”) as a specially designated global terrorist and block all its funds and assets, the Ninth Circuit said this:

Al-Buthe is a designated person. Al-Buthe exercises control over AHIF-Oregon because he is on its board of directors. EO 13,224 authorizes the designation of an entity that is controlled by a designated person. EO 13,224, § 1(c). It is, therefore, a valid reason to designate AHIF-Oregon based on Al-Buthe’s control. We agree with the district court that substantial evidence supports this reason.

Say what? Al-Buthe exercises control over AHIF because he is on the Board?? It will certainly come as a surprise to many directors (and, no doubt, their boards) that they single-handedly control the boards on which they serve.

Where I wonder does this end? Can OFAC designate an employee of a company and then hold that the company is an SDN because that employee “controls” the Company?

There appears to be other evidence that OFAC relied upon, particularly with respect to an alleged link of AHIF to Chechnyan terrorism, but the court’s language set forth above is both troubling and counter-intuitive.

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Copyright © 2011 Clif Burns. All Rights Reserved.
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One Comment:

Clif,

While the Ninth Circuit’s opinion states simply that “Al-Buthe exercises control over AHIF-Oregon because he is on its board of directors,” this seems to be sloppy writing, as the District Court opinion underlying this appeal identified additional factors in finding control. Specifically, the District Court stated

“I upheld the organization’s designation on the “owned or controlled” prong not just because Al-Buthe is on the board, but because other indicia of Al-Buthe’s control is present such that the government could have a rational concern about Al-Buthe acting through AHIF-Oregon. He was more heavily involved with AHIF-Oregon than was Al-Aqil. Not only was Al-Buthe one of the founders, but he was its treasurer and was one of only two people with access to its bank account. He raised funds from Saudi Arabian sources and disbursed those funds to AHIF-Oregon and he was the individual who delivered the money to AHIF-SA for use in Chechnya. Additionally, he continues to be heavily involved with the organization. In fact,even now, he is the source, or the fundraiser, of much of the money the organization has used to pay its attorneys.”

Comment by Mike Gurdak on September 28th, 2011 @ 10:18 pm