Author Archive


Oct

27

Lobbyist for Sudan Indicted


Posted by at 8:57 pm on October 27, 2009
Category: Sudan

Khartoum, the movieRobert J. Cabelly, a D.C.-based lobbyist, has been indicted for violations, among other things, of the International Emergency Economic Powers Act in connection with lobbying and other activities he was alleged to have engaged in on behalf of the Government of Sudan. A copy of the indictment can be read by clicking here.

Under the Sudanese Sanctions Regulations, lobbying services can only be provided to the Government of Sudan under a license granted by the Office of Foreign Assets Control. The odd thing about this case is that Cabelly had applied for and obtained a license to provide such lobbying services. The violations alleged by the indictment related to services performed before and after the period of validity of the license as well as services performed during the validity of the license that allegedly exceeded the scope of the license.

In May 2005, Cabelly applied for an OFAC license seeking permission to provide “strategic counsel, public relations and government relations” services to Sudan. The application specifically noted that Cabelly would not be providing advice on trade and investment promotion “which is not appropriate at this time.” On July 11, 2005, OFAC issued the license which specifically stated that it did not authorize activities which involve “commercial projects in Sudan or any other activities which would benefit Sudan or persons located therein.”

The indictment’s allegation of pre-license activities seems to find its sole support in an email sent by Cabelly to Sudan two days after the license was issued. That email asked Sudan for a payment of $70,000 to compensate him for the past four months of work provided to the Government It seems reasonable to assume that Cabelly may have erroneously believed that a license was necessary only to cover payment for his services. This would explain why Cabelly waited until after the license was granted to discuss the compensation issue.

The activities during the validity of the license appear to involve, among other things, Cabelly’s assistance to various investors and companies interested in investing in oil exploration and production in Sudan. One of these companies, identified in the indictment only as “French Oil Company — Soudan” is thought to be, and likely was, French oil giant Total SA.

Once Cabelly’s activities in Sudan became known, he came under pressure to stop providing services to Sudan. A 2006 Washington Post article details leaflets that were stapled to trees in Cabelly’s Capitol Hill neighborhood taking him to task for his representation. Representative Frank Wolf got out his pitchfork and torch and joined the crowd of protestors, going so far as to write Condi Rice to complain about Cabelly being given the license to represent Sudan. Wolf was apparently unaware that the license came from OFAC, which is part of the Treasury Department, and not from the State Department. (Just because someone makes laws doesn’t mean that he actually has to understand them.)

In February 2007, Cabelly informed OFAC that his contract with Sudan was over and requested that his OFAC license be terminated. Even so, the indictment alleges that Cabelly continued to provide services to the Government of Sudan and to companies doing business in Sudan, including activities to assist Sudan Airways to acquire an aircraft from a “Bahrain aircraft acquisition company.”

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Oct

23

ITAR? What’s An ITAR? Is It Like an iPod?


Posted by at 1:33 pm on October 23, 2009
Category: DDTCITARPart 129

Military Hovercraft

Psst. Have I got a deal for you. For only $65 million you can be the owner of a military landing hovercraft — complete with guns, compartments for three tanks, space for 170 troops and nuclear and CBW shelters. It can be yours in just 4-5 months and will ship from Eastern Europe. And it’s for sale on the website of Portland Yacht Sales, which bills itself on the site as engaged in “International Yacht and Ship Brokerage.”

To be clear, of course, I’m not really trying to promote the sale of this landing vehicle to any of my readers. In fact, you’ve probably guessed that my reason for bringing up this unusual web offer would be to wonder whether the State Department’s Directorate of Defense Trade Controls (“DDTC”) has thrown the book — or rather thrown Part 129 of the International Traffic in Arms Regulations (“ITAR”) — at Portland Yacht yet.

Part 129 requires that companies acting as brokers of defense articles — and this is pretty clearly a defense article under USML Category VI(a) — must register with DDTC, and I have a sneaking suspicion that Portland might not have done that. But there’s more. There is that pesky requirement that you have to obtain a license from DDTC before you can broker “significant military equipment” (“SME”) valued at more than $1 million. Category VI(a) naval vessels are clearly defined as SME and $65 million is more than a few dollars north of $1 million. And I’m guessing that Portland doesn’t have the brokerage license either.

I’m sure that Portland Yacht will say it never even heard of this ITAR-thingy and never dreamed in its wildest dreams that selling a $65 million dollar vessel with anti-aircraft artillery, nuclear shelters, and room for 3 tanks and 170 troops to foreign governments would be, er, subject to some silly regulations. I mean, really, it’s not that different from selling an SUV to the French Embassy, right?

[Hat tip to reader Garrett Steele for pointing this sale out to me.]

UPDATE: Portland Yacht took down the webpage offering the military hovercraft for sale. We took a pdf snapshot of the page before it disappeared, which you can see by clicking here.

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Oct

21

German Container Ship Caught Violating U.N. Sanctions on Iran


Posted by at 7:49 pm on October 21, 2009
Category: Iran Sanctions

Hansa IndiaHansa India, a ship owned by Hamburg-based Leonhardt & Blumberg and chartered by that firm to the Islamic Republic of Iran Shipping Lines (“IRISL”), was boarded earlier this month in the Gulf of Suez by U.S. troops, who discovered AK-47 ammunition that Iran was exporting in violation of U.N. sanctions. The eight containers of ammo were believed to be destined for the Syrian army or the militant group Hezbollah. German authorities intervened and requested that the U.S. Navy divert the Hansa India to Malta where Maltese customs officials seized the cargo.

Lloyd’s List reports today that German prosecutors searched the offices of Leonhardt & Blumberg looking for evidence relating to the sanctions-busting shipment.

“I regret that bullet casings [sic] have been carried on the ship, but there was no possibility for me to prevent that,” Frank Leonhardt told Lloyd’s List.

I don’t know, but maybe not chartering the ship to IRISL might have been a good start at preventing illegal weapons shipments.

The standard charter contract includes a ban on carrying such cargo. Mr Leonhardt added that he was in talks with the charterer and that IRISL had put the responsibility for the incident on the freight forwarder.

As loyal readers know, we here at Export Law Blog are never shy about blaming freight forwarders for export violations, but I think IRISL is pushing it here. A more credible argument would be that somehow or other a shipment of pistachios had miraculously metamorphosed into bullets and cartridges.

Interestingly, although the Office of Foreign Assets Control (“OFAC”) added what it thought were all the IRISL’s vessels to the SDN list, thereby prohibiting U.S. persons from having any transactions with the listed vessels, the Hansa India was not among them. Interestingly this suggests that there may be a number of vessels chartered to IRISL that aren’t listed. Because IRISL is itself sanctioned, dealing with these chartered vessels could also be seen as a violation of OFAC rules even though the vessel itself hasn’t been placed on the SDN list.

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Oct

20

Menos Telefonos Para Mas Personas


Posted by at 7:56 pm on October 20, 2009
Category: Cuba Sanctions

mas_telefonos

Recent rule changes adopted in April and designed to remove certain sanctions imposed on telecommunications to Cuba had been met with complete silence by the Cuban government. Until last weekend, that is.

According to a story in GlobalPost.com, the director of international operations for the Cuban telephone monopoly, rebuffed the White House’s overtures with a “thanks, but no thanks.” Well, more accurately, leave out the “thanks.” The response was pretty much limited to “no.”

[D]uring an official government newscast Saturday, ETECSA international operations director Vivian Iglesias said there were two major obstacles to such a partnership: some $160 million in frozen funds that the U.S. government seized from ETECSA in 2000, and trade restrictions imposed by the 1992 Cuban Democracy Act, which forces Cuba to pay U.S. companies through third countries, incurring additional transaction fees.

“It may seem like the Obama administration has expanded communication possibilities,” said Iglesias. “But we know that unless restrictions like the (Cuban Democracy Act) and others that have been tightened since 1992 don’t change, there can’t be any normal communication.”

This appears to represent significant backtracking by Cuba on how to deal with the blocked funds. The blocked funds, which date back to 1966, represent funds owed by U.S. telecom carriers to Cuba for local carriage of calls originating in the United States. After the U.S. permitted payment of these local carriage charges to Cuba on a going-forward, but not retroactive, basis, Cuba attempted to recover the blocked funds with a 10 percent tax on calls to Cuba from the United States, even when routed through a foreign telecom company. Until the April regulations, U.S. authorities had refused to permit payment of this 10 percent tax, which ultimately led to Cuba’s suspension of direct telephone service between the United States and Cuba.

Now instead of seeking to recoup the funds incrementally through the tax, Cuba appears to want the U.S. to unblock the funds immediately. The problem here is that some of the blocked funds were released to pay judgments against the Cuban government obtained by the U.S. survivors of a Cessna flown by an American anti-Castro group into Cuban airspace and shot down by Cuba in 1996. Now that payment of the recoupment tax is permitted, the only reason that Cuba has moved the goal posts would appear to be that it’s not particularly interested in permitting direct calls from the U.S. to Cuba in any event.

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Oct

19

Unguided Missile Attacks


Posted by at 3:04 pm on October 19, 2009
Category: BISDDTCMTCR

Bill Gertz's ScreamA headline in last Thursday’s Washington Times portentously warned: “EXCLUSIVE: Obama loosens missile technology controls to China.” The sub-head was “Fulfill Your Final Wishes. Nuclear Apocalypse Expected Tomorrow!!” Well, not really, that wasn’t the actual subhead, but it could have been, given the stern warnings in the article about the supposed dangers of the White House’s actions.

The reason for the doomsday tone was likely that the Washington Times reporter Bill Gertz wrote a story about something that he didn’t really know anything about. Indeed, he probably would have had a better chance of writing an accurate story if he had reported instead on, say, aspectual features of the verb and the relative position of the locatives in Mandarin Chinese.

Let’s roll the tape:

President Obama recently shifted authority for approving sales to China of missile and space technology from the White House to the Commerce Department — a move critics say will loosen export controls and potentially benefit Chinese missile development.

About the only thing in that sentence that is true is the phrase “critics say,” the rest being sadly misinformed. Items on the Missile Technology Control Regime (“MTCR”) are, depending upon whether the MTCR item is on the United States Munitions List (“USML”) or the Commerce Control List (“CCL”), licensed either by the Department of State’s Directorate of Defense Trade Controls (“DDTC”) or the Department of Commerce’s Bureau of Industry and Security (“BIS”). Items on the USML are licensed by DDTC and are subject to the embargo in section 126.1 of the International Traffic in Arms Regulations (“ITAR”), meaning, of course, that none of these items will be approved for export to the PRC. Items on the CCL are licensed by BIS and those license are considered on a case-by-case basis by BIS. Nothing in the bemoaned action by the Obama administration changed any of that or shifted any licensing authority over MTCR items from State to Commerce

The action that the Washington Times is referring to is a Presidential Determination made on September 29 that delegated to the Commerce Department the President’s obligation to certify to Congress under section 1512 of the National Defense Authorization Act of 1999, 22 U.S.C. § 2778 note, that exports to China of missile and space technology won’t be detrimental to the U.S. space industry or measurably improve the missile or space launch capabilities of the PRC. This is a certification that is made after DDTC or BIS has already approved the export, so the White House action here didn’t shift the authority to approve at all.

Nor did the White House’s action shift, as a practical matter, the obligation over section 1512 certifications from State to Commerce. Given the embargo on shipping USML items to China, the only MTCR items being exported now are items that have already received an export license from BIS. As a result, any section 1512 certifications made by the White House on those exports were undoubtedly made in consultation with the Secretary of Commerce and, no doubt, highly influenced by the findings by BIS and the Secretary of Commerce made in order to justify the export of the MTCR items to China. The White House delegation is really nothing more than a formal delegation of what already had been effectively delegated to Commerce prior to the September 29 Presidential Determination. Suggestions that this change is effective to handing over U.S. nuclear missile technology to Beijing are, simply put, crazy talk, more likely informed by the Washington Times‘s political agenda than by any actual understanding of export law.

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Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)