Aug
19

A Giant Problem for OFAC and the NBA

Posted by Clif Burns at 8:06 pm on August 19, 2008
Category: General

Congressman John MurthaWho knew that they had giants in Iran? More specifically, who knew that Iran had a 7′2″ basketball player named Hamed Ehadadi. The NBA did, that’s who. And faster than you can say “Yao Ming,” several NBA teams were doing what NBA teams do to lay claim to a guy who can touch the hoop without even jumping.

Enter the lawyers. Last Friday, legal counsel for NBA sent an urgent letter to all NBA teams, telling them to cool their heels. According to the letter:

We have been advised that a federal statue prohibits a person or organization in the United States from engaging in business dealings with Iranian nationals.

And, of course, the NBA rapidly filed an application for a license from OFAC for the talks to continue, an application which is likely to be granted, if for no other reason that it will be hard for a 7′2″ guy to do anything sneaky once in the U.S.

But the NBA letter and last-minute application may not be the buzzer beater that it seems. According to the Yahoo Sports news report that broke the story of the NBA’s license application:

After going unselected in the 2004 NBA draft, Ehadadi became a free agent eligible to sign with any team.

Look, if Ehadadi was signed up for the 2004 draft, the horses have already left the barn, so to speak. For the draft to work, Ehadadi had to file a draft declaration and that draft declaration had to be communicated to each of the NBA teams participating in the draft. That certainly looks like a prohibited transaction with an Iranian national to me, although it’s possible that the NBA had an OFAC license permitting Ehadadi’s participation and the news report didn’t mention it.

UPDATE: A further thought on Ehadadi being in the 2004 Draft. Maybe the NBA can try to rely on the information exception. Since Ehadadi was never signed, it remained simply the provision of information about his availability. Thoughts on this argument, anyone?

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10 Comments »

  • “Reductio ad absurdum.”

    Comment by John Liebman — August 19, 2008 @ 8:10 pm

  • I highly doubt the NBA had a license for the 2004 draft, since they had just been “advised that a federal statue prohibits a person or organization in the United States from engaging in business dealings with Iranian nationals.” I think you are correct that the proverbial cat is out of the proverbial bag, this should be interesting to watch!

    What’s next for OFAC?

    It’s bad enough it took them 24 months to realize that a bunch of little leaguers from the Northeast were not going to Cuba to teach the Cubans how to make WMD or worse how to through a Vermont Curve Ball!

    Comment by Frank — August 20, 2008 @ 9:32 am

  • Was he in Iran when he dealt with the NBA in 2004? If he was on travel outside of Iran, he was not a prohibited party.

    Comment by CariN — August 20, 2008 @ 1:31 pm

  • All players become automatically eligible for the draft in the calendar year they turn 22 (last year everyone without NCAA eligibility born in 86, etc). So Ehadadi probably didn’t even know he was in the draft in 2004, but that’s why he is now unrestricted, cause no one selected him.

    Comment by Jonathan Givony — August 20, 2008 @ 1:53 pm

  • Thanks, Jonathan, for the link on how the draft works. Under section 1((b)(ii)(G)(1) an international player such as Ehadadi was automatically eligible in the year that he turned 22. Otherwise, under G(3) he needs to declare interest or, under(G)(2), sign with a professional non-NBA team in the U.S.

    The problem with this is that Ehadadi’s DOB is 5/19/1985 and so he wouldn’t be 22 within the calendar year of the draft. So that means if he was in the draft he was so under (G)(3) by written declaration given that (G)(2) is inapplicable to Ehadadi on its face.

    Comment by Clif Burns — August 20, 2008 @ 2:41 pm

  • Jonathan, based on what you’ve uncovered it looks like the news report I cited that he was in the 2004 draft was probably wrong.

    Comment by Clif Burns — August 21, 2008 @ 12:42 pm

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