On September 18, BIS entered an order against Mohammad al-Mashan and and order against the Mohammad al-Mashan Group denying both of them export privileges for ten years. The Mohammed al-Mashan Group is a Kuwait-based exporter of molds made from recycled plastics.

The denial arises from allegations that on two occasions al-Mashan and his company, both located in Kuwait, transferred an uncooled infrared camera to an individual in the U.A.E. in violation of the conditions of the BIS export license under which the camera had been shipped to al-Mashan and the al-Mashan Group. That license had a condition prohibiting re-transfer or export of the item without a further license from BIS.

The extended time line of this proceeding is interesting. The re-exports in question occurred in October 1999 and February 2000. The charging letter didn’t issue until October 25, 2004. A default judgment on the charging letter was not issued by the ALJ until August 30, 2006. The denial order was signed on September 18. As of today, however, BIS has yet to add al-Mashan and the al-Mashan Group to the Denied Parties list.

Some of the delay was consumed by the three unsuccessful attempts by BIS to mail the charging letter to al-Mashan in Kuwait. Still it seems that if al-Mashan were truly of significant concern to BIS the agency could have been more diligent.

The failure to add al-Mashan and the al-Mashan group to the Denied Party list is equally baffling. When OFAC announces a new SDN, that entity is usually added immediately to the SDN list. Given the BIS delay in adding parties to the Denied Parties list, exporters should probably also check the list of recent orders found in the BIS Electronic Reading Room as well as the Denied Parties list.

Supermicro, Inc., a computer hardware manufacturer based out of San Jose, California, pleaded guilty on Monday to a criminal export violation and agreed to pay a criminal penalty of $150,000. Supermicro admitted that on or about December 28, 2001, it shipped 300 motherboards, worth just under $30,000, to a company in the U.A.E. knowing that the motherboards would be immediately re-exported to Iran. At the time of the export, the motherboards were subject to National Security controls and required a license for export to Iran.

Previously, on September 7, Supermicro and BIS agreed to settle claims made by BIS in a charging letter alleging violations arising out of other exports by Supermicro that were destined to Iran. The charging letter lists exports by Supermicro of motherboards, superservers and computer chassis. Supermicro settled these allegations in the charging letter by an agreement to pay a civil penalty of $125,400.

Interestingly, the exported computer chassis referred to in the BIS charging letter are EAR99, i.e. not subject to a BIS license requirement. BIS premised the violations for the exports of the chassis on EAR § 746.7 which notes that OFAC authorization is required for shipments to Iran under the Iranian embargo. Failure to obtain that authorization for an EAR99 item was then viewed by BIS as a violation of EAR § 764.2(a).

UPDATE: Richard Pettler, a partner at Fragomen, Del Rey, Bernsen & Loewy in San Francisco and counsel to Supermicro, contacted me to provide additional details that were not in the press accounts that I relied on. This post has been updated to reflect his comments.

Nebraska-based Springer Magrath Co. pleaded guilty to criminal export violations and agreed to pay a $50,000 fine for its shipment of cattle prods to South Africa in 2002 without a license. Cattle prods and other discharge type arms such as stun guns are controlled by ECCN 0A985 and require a license for all destinations except Canada.

Springer Magrath is an agricultural supply house for cattle ranchers, selling such products as calf feeders and calf adoption powder, so it is safe to assume that the people there had never heard of the Commodity Control List prior to their visit from federal authorities. Frankly, many people who have heard of the Commodity Control List might be equally surprised that cattle prods appear on the list. And with good reason. Although cattle prods are, admittedly, often used as devices of torture, they are widely available from sources outside the U.S.