Archive for the ‘OFAC’ Category



OFAC and the Passion Fruit of the Poisoned Tree

Posted by at 5:07 pm on July 29, 2014
Category: Narcotics SanctionsOFAC

By A_Flama (Own work) [CC-BY-SA-2.0 (], via Flickr Campofresco, Inc., a Puerto Rican fruit juice processor and packager, has agreed to pay to OFAC $27,000 in connection with its purchase of passion fruit juice and pulp from a Colombian company designated under OFAC’s narcotics trafficking sanctions. This may represent the only time someone has been broken the law by buying fruit juice from a drug dealer.

Of course, when you look into this further, it’s not clear that “Frutas Exoticas Colombiana S.A.” — the Specially Designated Narcotics Trafficker (“SDNT”) involved — is in fact a drug dealer. Leaving aside that the OFAC notice announcing the settlement botched the name of the SDNT involved, which is actually (and more grammatically) Frutas Exoticas Colombianas S.A., the drug dealers in question have been out of the picture since 2005, when the Colombian Government kicked out Lorena Henao Montoya, the widow of narcotics trafficker Ivan Urdinola Grajales, and took over their holdings in Frutas Exoticas.  The Colombian government did this in response to OFAC’s designation order several months before in an effort to keep the company alive and to protect its innocent workers and their families. So, in fact, this case involves getting fined for buying passion fruit juice from the Colombian government.

OFAC knows this, of course, and issued a release stating that it would consider licenses on a case-by-case basis for dealings with Frutas Exoticas. This doesn’t help Campofresco, which, of course, did not apply for a license in the first place. Still it raises a number of questions. To begin with, what would OFAC look at on this case-by-case basis now that the government owns Frutas Exoticas? The type of fruit juice involved? Pineapple versus passion fruit? (Passion fruit, I suppose, being presumptively evil for the name, if nothing else.) The party of the President of Colombia? His birthdate and astrological sign?

The biggest question, of course, is this: what remains to be served by keeping a company once owned by narcos, but now seized and owned by the government, on the list at all? The answer appears to be that nothing is served unless the idea is to punish the Colombian workers who harvest the fruit and mash the pulp for the bad judgment of having been employed by a company once owned by a narcotics trafficker.

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New Russia Sanctions

Posted by at 4:19 pm on
Category: OFACRussia Designations

OFAC just announced the addition of the three banks to the Sectoral Sanctions Identifications List (“SSIL”). As with the banks previously added to the SSIL, U.S. companies and individuals are prohibited in dealing in loans longer than 90 days or equity for these three banks.

BANK OF MOSCOW (f.k.a. AKTSIONERNY KOMMERCHESKI BANK BANK MOSKVY, OTKRYTOE AKTSIONERNOE OBSCHCHESTVO; a.k.a. JOINT STOCK COMMERCIAL BANK – BANK OF MOSCOW, OPEN JOINT STOCK COMPANY), 8/15 Korp. 3 ul. Rozhdestvenka, Moscow 107996, Russia; Bld 3 8/15, Rozhdestvenka St., Moscow 107996, Russia; SWIFT/BIC MOSW RU MM; Website; Email Address; alt. Email Address; BIK (RU) 044525219; Registration ID 1027700159497; Government Gazette Number 29292940; [UKRAINE-EO13662].

RUSSIAN AGRICULTURAL BANK (f.k.a. OTKRYTOE AKTSIONERNOE ROSSISKI SELSKOKHOZYAISTVENNY BANK; a.k.a. ROSSELKHOZBANK; a.k.a. ROSSIYSKI SELSKOKHOZYAISTVENNY BANK OAO; a.k.a. RUSSIAN AGRICULTURAL BANK OAO), 3, Gagarinsky Pereulok, Moscow 119034, Russia; 3 Gagarinsky per., Moscow 119034, Russia; SWIFT/BIC RUAG RU MM; Website; Email Address; Registration ID 1027700342890; Government Gazette Number 52750822; [UKRAINE-EO13662].

VTB BANK OAO (f.k.a. BANK VNESHNEY TORGOVLI ROSSIYSKOY FEDERATSII, CLOSED JOINT-STOCK COMPANY; f.k.a. BANK VNESHNEY TORGOVLI RSFSR; f.k.a. BANK VNESHNEY TORGOVLI, JOINT-STOCK COMPANY; f.k.a. BANK VNESHNEY TORGOVLI, OPEN JOINT-STOCK COMPANY; a.k.a. BANK VTB OAO; a.k.a. BANK VTB, OPEN JOINT-STOCK COMPANY; a.k.a. JSC VTB BANK; f.k.a. VNESHTORGBANK; f.k.a. VNESHTORGBANK ROSSII, CLOSED JOINT-STOCK COMPANY; a.k.a. VTB BANK, OPEN JOINT-STOCK COMPANY), 29, Bolshaya Morskaya str., St. Petersburg 190000, Russia; 37 Plyushchikha ul., Moscow 119121, Russia; 43, Vorontsovskaya str., Moscow 109044, Russia; SWIFT/BIC VTBRRUMM; Website; Registration ID 1027739609391 (Russia); Tax ID No. 7702070139 (Russia); Government Gazette Number 00032520 (Russia); License 1000 (Russia); [UKRAINE-EO13662].

In addition, one entity was added to the SDN List under the Ukraine sanctions. U.S. companies and individuals are prohibited from all transactions with this company.


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Mugabe’s Scottish Castle in the Sky

Posted by at 6:16 pm on July 24, 2014
Category: Economic SanctionsOFACSanctionsZimbabwe Sanctions

By User:Bigwikiaal (Own work) [CC-BY-SA-3.0 (], via Wikimedia Commons

The Herald, a Mugabe mouthpiece owned by the Zimbabwean government, recently criticized former British Prime Minister Tony Blair in two articles for reported comments the UK made to justify the imposition of sanctions against Zimbabwe.  Referring to “illegal sanctions,” The Herald cited an article in the “Journal of African Studies” that quoted former South African president Thabo Mbeki as saying that UK officials told him, presumably sometime in the early 2000s, that Zimbabwean president Robert Mugabe owned a Scottish castle and had UK bank accounts that the UK intended to freeze, only to allegedly tell Mbeki later that the UK could not locate the Scottish castle or the accounts but still intended to impose sanctions in any event. (Perhaps the UK momentarily confused Mugabe with Idi Amin who once offered to be the King of Scotland.)

The article in question appeared in the June 2014 edition of the Journal of Southern African Studies and was by Blessing-Miles Tendi a frequent writer on UK-Zimbabwe relations and lecturer at Oxford.  Professor Tendi did in fact cite to a discussion he had with Mbeki in 2011, during which Mbeki said that “Britain” and “Tony’s people” made such statements about Mugabe’s assets and that the British later admitted to finding no castle in Scotland or Mugabe accounts in the UK.  Tendi went on to describe a UK decision to freeze Mugabe’s assets as “devoid of rationality” inasmuch as the UK knew these assets did not exist.  (Interestingly, Tendi also asserts that Mbeki claims that British plans to invade Zimbabwe were thwarted by Mbeki’s decision not to let Britain use South Africa as a staging point for the invasion.)

Tendi and The Herald are misinformed about the UK sanctions.  In addition to freezing any current or future Mugabe’s assets in the UK, the sanctions also prohibit anyone from making any economic resources available to Mugabe or his co-sanctioned cronies.  If the UK believed that Zimbabwe was engaged in human rights abuses and suppression of democracy, as most countries and international organizations still believe, it would not be “devoid of rationality” to conclude that prohibiting financial assistance and freezing future assets are warranted to end such abuses and suppression.

Although Tendi and The Herald are misinformed as to the scope of UK economic sanctions law, the more important take-away from this curious vignette is the allegation that a country like the UK may have hastily taken to other countries its case for sanctions, even in small part, based on its own misinformation.  Imposing economic sanctions on identified targets are swift government decisions with immediate effects that are many times based on information that the target itself can’t readily confirm or deny.  The only administrative due process afforded to a foreign sanctions target in the United States is an “administrative reconsideration” of OFAC’s decision by … OFAC.  As we noted earlier this year, OFAC reconsiderations are no easy task and some petitioners are taking claims to U.S. courts to obtain removal from the SDN list.  Although Mugabe does not have a strong case for reconsideration and not likely to make one, other sanctions targets may, and should at least try, if the circumstances warrant.


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Strike That: We Actually Meant “For” for “Of”

Posted by at 6:16 pm on July 21, 2014
Category: OFACRussia Sanctions

By Almonroth (Own work) [CC-BY-SA-3.0 (], via Wikimedia Commons week, we reported that there was some confusion relating to the new Sectoral Sanctions Identifications List inasmuch as OFAC said, in one place, that the prohibitions extended to dealing in equity and 90-day debt “of” and, in another place, it said it extended to dealing in equity and 90-day debt “for” parties on the list. The difference was significant because “of” would seem to connote a narrower restriction and only prohibit U.S. persons from loaning money to or purchasing equity from the parties on the SSIL. On the other hand, “for” would seem to prohibit, in addition, a number of other transactions, such as borrowing money from the party on the SSIL or acting as a broker to purchase stock from third parties for the entity on the SSIL. The SSIL used “of,” whereas the directives issued relating to the SSIL entries used “for.”

Well, sometime within the past several days, someone at OFAC quietly changed “of” on the SSIL to “for.” Given that people can be subjected to massive civil penalties and even sent to jail for engaging in prohibited transactions with entities on the new SSIL, one might have expected OFAC to admit the mistake and provide some clarification for the changed language, rather than simply sneaking onto the list under cover of darkness, making the change, and hoping that no one would notice that there had ever been a problem.

In any event, the SSIL and the directives now use the same language.  If we could only figure out exactly what that language means.

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That Depends On The Meaning Of Of

Posted by at 8:00 pm on July 17, 2014
Category: OFACRussia Sanctions

Putin and Vnesheconombank Chairman Dmitriev [Fair Use]
ABOVE: Russian President Putin Meets with Vnesheconombank Chairman V.A. Dmitriev

There is a significant ambiguity relating to the newly-announced Sectoral Sanctions Identifications List (“SSIL”) that we reported on yesterday and which placed Vnesheconombank and Gazprombank, among other Russian businesses, on the new list. There are two sections on the list. The first included financial institutions like Vnesheconombank and Gazprombank and prohibits U.S. persons from transactions covering debt in excess of 90 days and new equity involving these banks. The second included energy companies like the natural gas producer Novatek and prohibits dealings in debt in excess of 90 days but not in equity.

One source of confusion about the scope of these sanctions comes from a difference in wording between the directives issued yesterday by the President pursuant to his earlier Executive Order 13662 and the language on the SSIL which describes the restrictions on the listed entities.  With respects to the banks, Directive No. 1 talks of “new debt of longer than 90 days maturity or new equity for these persons” and the SSIL refers to “new debt of longer than 90 days maturity or new equity of these persons.” With respect to the energy companies, Directive No 2 talks of new debt of longer than 90 days maturity for these persons and the SSIL refers to “new debt of longer than 90 days maturity of  these persons.”

The difference between “for” and “of” in this context is significant. Dealing in equity for someone can include sales of third party equity to that person, unlike dealing in equity of someone, which can only be the equity issued by that person. The same issue occurs with respect to debt “for” and “of” the person, with the former covering not just extensions of credit to the person but also extensions of credit by the person. It is not clear which language controls.

Of course the losers here aren’t the companies on the SSIL; rather the losers are American businesses which lose business opportunities to European and other foreign competitors who are not subject to any restrictions under these sanctions. And the ambiguity about just what these sanctions cover only exacerbates the injury to U.S. businesses that may forego even more opportunities due to the ambiguous scope of the sanctions.

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