Archive for April, 2013


Apr

30

The Bad News Is You’re Still on the SDN List


Posted by at 6:37 pm on April 30, 2013
Category: Burma SanctionsEconomic SanctionsOFACSanctionsSDN ListZimbabwe Sanctions

U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released (DefenseImagery.mil, VIRIN 090202-N-0506A-310) [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ARobert_Mugabe%2C_12th_AU_Summit%2C_090202-N-0506A-310.jpg
ABOVE: Robert Mugabe

OFAC last week issued its first general license for U.S. sanctions relating to Zimbabwe. The license authorizes for the most part “all transactions involving Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe.” Both banks, however, are on OFAC’s SDN List.

Since the two banks have been and remain on the SDN List, the license does not unblock the banks’ property interests that had been blocked as of the date of the license. OFAC issued a similar general license in February of this year authorizing dealings with four banks in Burma but kept the banks on the SDN List and continue to block the banks’ property interests blocked prior to the license. A major development from these licenses is, of course, giving U.S. exporters local banking options that were previously unavailable and without them likely stymied business development in those countries.

Exporters should also take note, however, of how OFAC’s easing of sanctions through these licenses has an onerous side-effect on U.S. companies. If a company’s policy is to determine whether to deal with entities or individuals based on their presence on the SDN List or other relevant sanctioned party lists, the authorization granted to deal with listed banks through these general licenses would go unnoticed. Exporters now must check all the lists they routinely do as well as stay on top of licenses issued by OFAC to know whether someone has, from most exporters’ perspectives, been in effect delisted.

If these SDN-lite designations continue, exporters will either need to monitor closely OFAC’s daily activity or make sure their screening software is doing so for them, at least if they want to be sure they are not unnecessarily limiting their export opportunities.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Apr

29

The Mysterious Case of Professor Atarodi


Posted by at 11:47 pm on April 29, 2013
Category: Criminal PenaltiesIran Sanctions

Mojtaba Atarodi http:/http://atarodi.sharif.ir (Fair Use)
ABOVE: Mojtabi Atarodi

Back in January 2012, this blog first reported on the strange case of Mojtabi Atarodi, a professor at Tehran’s prestigious Sharif University of Technology who was arrested in December 2011 the moment he landed in Los Angeles on the way to a medical appointment with his brother’s cardiologist. Several months later Atarodi was released on bail with a requirement that he wear a tracking device and remain under house arrest at his brother’s home in the United States.

The charges against Atarodi were (and still are) unclear, but Sharif University shortly after the arrest released a statement that Atarodi was accused of trying to buy basic laboratory equipment. The United States government has never released a statement on the case, which has remained sealed and still does not appear on PACER more than a year after Atarodi’s arrest. PressTV, an Iranian media outlet, reported in January 2013 that Atarodi had been sentenced to 56 months in jail, although I was unable to find any other news story confirming this report.

Just as mysteriously as he was arrested and, perhaps, sentenced, Professor Atarodi has now been released and has returned to Iran. The professor traveled to Tehran by way of Oman, which reportedly was engaged in negotiations to release Atarodi. The government of Oman stated that he had been released for “humanitarian reasons.” The United States government has issued no statement on Atarodi’s release.

The PressTV report on Atarodi’s arrival in Tehran quoted Atarodi as saying:

The US authorities knew about my academic background. Even the prosecutor general told me I should have never been arrested, jailed or tried in the first place. He said he was embarrassed to put me on trial, but he had no choice. He said he did it after receiving orders from Washington.

Even though I have reservations about whether the prosecutor said he was “embarrassed” to put Atarodi on trial, the complete silence by the U.S. government on this case, and the fact that the case still remains sealed, certainly invites speculation that the case against Atarodi may have been, shall we say, less than stellar.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Apr

26

No Apps For Ayatollahs


Posted by at 1:10 pm on April 26, 2013
Category: Iran SanctionsOFAC

Ayatollah Phone (original work from public domain and fair use elements)Samsung has just announced that, as of May 22, it is shutting off access from Iran to its mobile phone app store. The move, announced in an email to customers, was somewhat vague about the reason for the decision, citing only “legal barriers.”

I’m not so sure what those “legal barriers” are that would mandate shutting down the store entirely. To begin with, Samsung, which is  headquartered in South Korea, is not a U.S. person and isn’t subject to U.S. sanctions on Iran. One can be quite sure that no U.S. persons are involved in Samsung’s dealings in Iran, particularly since Samsung appears to want to continue to sell its phones and other electronic devices in Iran.

Even more perplexing, of course, is trying to reconcile the company’s stance with the general license issued by OFAC in 2010 authorizing the export to Iran of certain services and software incident to the exchange of personal communications over the Internet. The guidance issued by OFAC on that general license makes crystal clear that “free mobile apps related to personal communications” fall within the license. The guidance also announces “a favorable licensing policy” for license applications to permit export of paid mobile apps relating to personal communications to Iran.

Perhaps the real culprits here are the Angry Birds, the Bad Piggies, and the Fruit Ninjas. It is probably safe to say that these popular mobile device games, whether free, freemium or paid, do not relate to personal communications over the Internet and aren’t covered by either the general license or the favorable licensing policy. Rather than sanitizing the store by eliminating those pesky games, Samsung just decided to chuck the whole thing. And, of course, there may also be practical reasons why it was hard to keep the fingerprints of U.S. persons employed by Samsung off the app store.

Needless to say,  it is highly doubtful that whether the Samsung app store is open or closed will have any impact at all on Iran’s nuclear proliferation activities.

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Apr

24

It Takes Two to Argentine Tango


Posted by at 5:10 pm on April 24, 2013
Category: DoJFCPASEC

By WestportWiki (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ARalph_Lauren_Store%2C_NYC.jpg

The U.S. Justice Department announced yesterday that Ralph Lauren Corporation agreed to pay $882,000 to resolve alleged FCPA violations. According to a Justice Department press release, the allegations involved Ralph Lauren trying to secure “improper customs clearance of merchandise” from Argentine government officials, including “clearance of items without the necessary paperwork … [and] of prohibited items” or “avoid[ing] inspection entirely.” The Justice Department alleged that Ralph Lauren employees made bribes through a customs clearance agency using “fake invoices” to justify the payments.

In addition, the U.S. Securities and Exchange Commission announced that, in parallel proceedings, Ralph Lauren agreed to pay $734,846 in disgorgement and prejudgment interest for other related alleged FCPA violations that took place between 2005 and 2009. The SEC also announced that its non-prosecution agreement with Ralph Lauren was the SEC’s first involving “FCPA misconduct.”

While the SEC first is noteworthy, a special spotlight should be shown on Argentina.

Since early last year, the Argentine government has enforced a trade policy World Trade Organization member countries have described to the WTO as a “de facto import restricting scheme” because Argentine law requires non-automatic, government pre-approval on all imports. WTO members have alleged that companies have experienced long delays in getting approval and that some companies report receiving calls from Argentine government officials telling them that they must undertake “trade balancing commitments prior to receiving authorization to import goods.” This “trade balancing” is part of Argentina’s informal adoption of a policy that requires companies seeking to import products to export “dollar for dollar” goods from Argentina or “establish production facilities in Argentina.”

As described to the WTO, the current situation in Argentina sounds ripe for situations like the one involving Ralph Lauren and other U.S. exporters to happen again. Notwithstanding the FCPA’s exception for facilitating payments, situations where foreign government officials require some form of quid pro quo for goods coming into a country need to be examined carefully to determine whether further interactions with the official may implicate applicable anti-corruption laws.  Obviously, if the quid pro quo goes to the government and not the government official, there is not an FCPA issue.  But where the requested quid pro quo is supposed to go to the government official personally, then no matter how tempting is this offer to relieve the U.S. exporter of Argentinian import burdens, the best response may be to leave the dance floor.

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Apr

23

Arms Treaty Foe Cites Export Reform As Reason for Opposition


Posted by at 1:26 pm on April 23, 2013
Category: Arms ExportExport Reform

Baker Spring http://www.youtube.com/watch?v=kY9ZTCu2wWc (Fair Use)
ABOVE:Baker Spring

I don’t know who Baker Spring is, other than some flak for a Washington think tank, but he has, for some reason, decided to join Iran, North Korea and Syria in opposing the U.N. Arms Trade Treaty. According to Baker, the treaty will interfere with the export control reform process:

There are many reasons to dislike the ATT, but one of them … it [sic] that it urges signatories to regulate a wide range of arms exports just as the U.S. reform process is trying to build higher walls around fewer items.

For instance, the new rules on aircraft and turbine engines transfer these items from the strict and inflexible Munitions List, maintained by the Department of State, to the more flexible Commodity Control List, maintained by the Department of Commerce. …

The review process has been meticulous, involving the Departments of Defense, State, and Commerce; the White House; Capitol Hill; industry; allied governments; think tanks; and other interested parties. The specialists in the Administration who have worked in this complex area of federal regulation deserve to be commended for achieving this major milestone in the reform effort. Their work should not be frustrated by uncertainties created by the ATT.

Let’s leave aside for the moment the silliness of this argument given that the White House, which is spearheading export reform, also supports the Arms Trade Treaty. The United States did, after all vote for it. (As did everyone else in the world but North Korea, Syria, and Iran.) If the White House thought that the treaty would gum up export control reform, it’s doubtful it would have supported the treaty.

The bigger problem with Baker Spring’s argument is that he apparently has not read the treaty that he is criticizing or, at least, he does not understand it. The treaty simply requires adherents to impose export controls on the items listed in Article 2, which the United States already does and which it will continue to do whether the item is on the USML or the CCL.

Baker Spring also has not read, or, at least he does not understand, the export control reform proposals that were just adopted. Certainly if he did, he wouldn’t have come up with this whopper quoted above:

For instance, the new rules on aircraft and turbine engines transfer these items from the strict and inflexible Munitions List … to the more flexible Commodity Control List …

Er, no, aircraft and turbine engines are not being transferred to the CCL. Some are and some aren’t. Article 2 of the ATT covers “combat aircraft” and it is safe to say that all those aircraft remain on the USML. As to turbine engines, they are not even covered by the Arms Trade Treaty at all. Article 4 covers “parts and components” such as aircraft engines but only “where the export is in a form that provides the capability to assemble the conventional arms covered under Article 2,” in other words, only when the entire aircraft or other article is exported in the form of disassembled parts and components. An export of a turbine engine by itself obviously fails to meet that criterion.

Somehow I suspect that Baker Spring’s objections to the Arms Trade Treaty are the result of considerations other than the flimsy excuses he proffered in the article at hand.

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(No republication, syndication or use permitted without my consent.)