Archive for the ‘BIS’ Category


May

27

Universal Jurisdiction: Export Denial Order Edition


Posted by at 8:07 pm on May 27, 2014
Category: BISSyria

Aramex Employee via http://www.aramex.com/content/uploads/109/243/46240/MainBanner_EXP.jpg [Fair Use]BIS recently announced a consent agreement with Aramex Emirates under which Aramex agreed to cough up $125,000 in connection with its export of network equipment from the U.A.E. to Syria. Of course, for the few of us remaining that do not believe that the U.S. Government can exercise jurisdiction over everyone anywhere in the world whenever it wants, the interesting question is this: why did a company in the U.A.E. get tangled up over a shipment from the U.A.E. to Syria that was legal under U.A.E. law?

At issue were network devices and software classified as ECCN 5A002 and 5D002. In the Order, BIS then has this to say:

Under the widely-known U.S. trade embargo against Syria, no item subject to the Regulations may be exported or re-exported to Syria without a Department of Commerce license, with the exceptions of certain medicines and food, as set forth at all times pertinent hereto in General Order No. 2.

General Order No. 2 notes that the prohibitions of the embargo on Syria are described in section 746.9 of the EAR, which indeed prohibits all exports and re-exports except “food and medicine” by everyone in the universe. (Don’t get confused by section 742.9 which describes another set of restrictions on Syria which would permit exports of certain EAR99 items but which have been superseded by 746.9 and is just kept in the EAR to confuse ordinary people and to keep lawyers employed.)

So, even though the EAR says that foreign persons can’t re-export items from their own country to Syria, why would anyone pay any attention to this, particularly where the export was not illegal under the laws of their own country? An attempt by the U.S. to extradite someone for such an export might not be entertained by his local courts simply because the U.S. asserts that the item originally came from the United States.

BIS’s hammer here is more likely the export denial order. Even if it has no criminal jurisdiction and no ability to enforce or collect administrative fines in such cases, it does have the power to impose an export denial order which would forbid persons within its jurisdiction from exporting anything to Aramex. That might deliver a significant economic blow to a freight forwarder and logistics provider like Aramex. In that case a $125,000 fine might appear to be a good deal.

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May

14

The Case of the Missing FLIR


Posted by at 11:23 pm on May 14, 2014
Category: BISCriminal Penalties

HRC Series Flir Camera via http://www.flir.com/uploadedImages/CS_EMEA/Products/HRC_series/HRC.png [Fair Use]Last week a federal grand jury in Illinois indicted Bilal Ahmed on charges that he attempted to export a FLIR HRC-U thermal imaging camera, classified as ECCN 6A003.b.4.b, to Pakistan without the required license from the Bureau of Industry and Security (“BIS”).

Reading the criminal complaint, which is the most detailed statement of facts in the case, reveals a few somewhat strange holes in the government’s case. Basically, the only evidence that the government has that Bilal Ahmed exported or even attempted to export anything was a box that they searched at a UPS store addressed to a company in Pakistan that had an invoice for the camera and, apparently, nothing else.

The complaint starts by describing the negotiations between Ahmed and a used-goods seller to buy an HRC-series thermal imaging camera. After payment was made, the camera was shipped to the address of Ahmed’s company Trexim Corporation, in Schaumburg, Illinois. Federal agents then followed Ahmed from his home in Bolingbrook, Illinois, to a FedEx office in Bolingbrook, Illinois. The complaint does not indicate what, whether a box or a letter or anything else, Ahmed took the FedEx store and there is absolutely no indication of what he might have shipped from there. Going to a FedEx store can hardly constitute evidence of an illegal export

Subsequently Ahmed contacted the seller and indicated that he had received the camera, that it was in bad condition, and that he wanted a case for it. An agreement was made to send him the case. The case was shipped to Schaumburg and agents then followed Ahmed again, this time from his office in Schaumburg to a UPS store in Elk Grove village. After Ahmed left, the agents inspected the contents of the box, which was addressed to Pakistan and labeled NLR, and found an invoice for the HRC camera. No other contents of the box were mentioned in the criminal complaint beyond the invoice. If the camera case was in there, you would think that the criminal complaint would, perhaps, mention it since it would be the only solid evidence that the camera, for which the case would have been destined, had been shipped to Pakistan.

So, you may wonder, where is the camera or any evidence that it was exported? The agents apparently failed to inspect the package at the Bolingbrook FedEx, and when they did get around to looking at the box at the Elk Grove Village UPS all they found of any interest was an invoice. That is apparently why Ahmed is charged only with attempted export, but there doesn’t seem to be any evidence of any attempted export of the camera either. I guess the idea is that sending the invoice alone was an attempted export, a far-fetched notion at best.

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Apr

29

Bad Times for Timchenko


Posted by at 9:45 pm on April 29, 2014
Category: BISEntity ListOFACRussia SanctionsSanctionsSDN List

Gennady Timchenko via http://www.timchenkofoundation.org/en/about/trustees/1/ [Fair Use]The Bureau of Industry and Security (“BIS”) yesterday added thirteen companies to the Entity List as part of new sanctions against Russia. Many of these companies are connected to Gennady Timchenko who was added to the SDN List in the first round of sanctions and whom we have discussed previously on this blog. Under the Export Administration Rules, licenses are required for exports of all items “subject to the EAR” (i.e., U.S. origin items or foreign produced items with specified percentages of U.S. content) to anyone placed on the Entity List. BIS has said that there will be a presumption of denial for license applications to export items to the thirteen companies newly added to the list.

The companies added to the entity list are the following:

Stroytransgaz Holding, located in Cyprus; Volga Group, located in Luxembourg and Russia; and Aquanika, Avia Group LLC, Avia Group Nord LLC, CJSC Zest, Sakhatrans LLC, Stroygazmontazh, Stroytransgaz Group, Stroytransgaz LLC, Stroytransgaz-M LLC, Stroytransgaz OJSC, and Transoil, all located in Russia.

The Volga Group is owned by Timchenko and itself owns Aquanika, Avia Group, Avia Group Nord, Transoil, Sakhatrans and Stroytransgaz. The only company on the list not connected to Timchenko is CJSC  Zest, which is a leasing company owned by Rossiya Bank.

Interestingly, if you are on pins and needles about whether Justin Timberlake will perform at Hartwall Arena in Finland, the Volga Group, owned by Timchenko, is the vehicle by which Timchenko owns 50 percent of Hartwell Arena. Volga Group, like all of the thirteen companies listed above that have been added to the Entity List, was added yesterday by the Office of Foreign Assets Control to the SDN List. So Justin Timberlake fans planning on heading to Helsinki might want to see if they can get refunds.

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Apr

18

Oh, The Places You’ll Go!


Posted by at 3:25 pm on April 18, 2014
Category: BISIran SanctionsOFAC

By Alec Wilson [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/awilson154/12221595055/sizes/l
N604EP in Zurich last January (Alec Wilson via Flickr, CC-BY-SA-2.0)

According to an article in the New York Times, and a picture snapped by one of its reporters in Tehran, a U.S. registered corporate jet with a discreet U.S. flag painted on the tail and with the registration number N604EP was spotted three days ago on the runway of Mehrabad Airport in Tehran, Iran. At first, apparently not having seen the photographic evidence, Director General of Tehran’s Mehrabad Airport Nasrollah Mansouri Shirazi told the Tasnim News Agency, an IRGC-affiliated group, that no U.S. planes had landed at his airport. (Baghdad Bob is alive and well at the Mehrabad Airport!)

The appearance of the U.S. plane in Tehran has, of course, resulted in a whirlwind of speculation about what it is doing there. As the Times correctly points out, its unlikely to be a covert diplomatic mission what with the U.S. flag emblazoned on the tail and the jet sitting in full daylight in a spot where a reporter could snap a photograph. (Such trenchant observations are why the New York Times is, after all, the U.S. newspaper of record.)

The whole affair has the Bank of Utah, which owns the plane in trust for some shadowy and undisclosed investors, all flustered.

Brett King, one of its executives in Salt Lake City, said, “We have no idea why that plane was at that airport.

Mr. King, who helps run the bank’s trust services business, said the bank had no “operational control” or “financial exposure” to any of the planes.

For his part, Mr. King said Thursday in an interview that he was trying to get to the bottom of the aircraft’s presence in Tehran. “The Bank of Utah is very conservative, and located in the conservative state of Utah,” he said. “If there is any hint of illegal activity, we are going to find out and see whether we need to resign” as trustee.

If the jet was in Iran without authorization, the Bank, as the legal owner of the plane, is going to have a hard time trying to wash its hands of the matter simply by resigning as “trustee” and trying to walk away from the issue. It will certainly need to demonstrate to federal regulators that it took all necessary steps in its dealings with the mysterious owners to prevent them from flying the plane to embargoed destinations without authorization.

One final amusing note is that the New York Times cannot figure out which agency needed to authorize the plane to land in Iran:

Under United States law, any American aircraft would usually need prior approval from the [Treasury Department's Office of Foreign Assets Control] to go to Iran without violating a complicated patchwork of rules governing trade.

In the case of this particular aircraft, powered by engines made by General Electric, the Commerce Department typically would have to grant its own clearance for American-made parts to touch down on Iranian soil.”

Er, no, the license from OFAC would be enough. If the Times reporter spent a few moments with Google he would have easily found the Commerce Deparment saying this:

Although BIS maintains license requirements for Iran, OFAC is responsible for administering most Iran sanctions. You are not required to seek separate authorization from BIS to export or reexport an item subject to both BIS’s Export Administration Regulations (EAR) and OFAC’s Iranian Transactions and Sanctions Regulations (ITSR) (31 CFR Part 560). However, you will also violate the EAR if you do not obtain an OFAC authorization if one is required.

I guess the fact-checkers at the Gray Lady aren’t what they used to be. . . .

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Mar

27

BIS Halts Processing on All Export Licenses for Russia


Posted by at 12:28 pm on March 27, 2014
Category: BISDDTCRussia Sanctions

A notice that further processing of all export licenses for CCL items to Russia just appeared in the last several days in the slider on the home page of the website for the Bureau of Industry and Security (“BIS”):

(I’m posting a screenshot because there is no reliable permalink to the slider image).

Existing licenses are not affected; only license applications that were not granted as of March 1, 2014, are covered by this policy. Compare this to the U.K. action which suspended all existing licenses and applications for military and dual-use items destined for the Russian military “which could be or are being deployed against Ukraine.” The State Department has not yet taken action on licenses and applications for USML items to Russia, although possible action in that regard is rumored.

UPDATE: DDTC has just posted this on the home page of its website:

The Department of State has placed a hold on the issuance of licenses that would authorize the export of defense articles and defense services to Russia. State will continue this practice until further notice.

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