Cabela’s, the mammoth hunting and outdoor supplies retailer, was recently smacked with an equally mammoth $680,000 fine by the Bureau of Industry and Security (“BIS”). The fine was paid by Cabela’s to settle charges that it exported rifle scopes without a BIS license. According to the BIS press release, Cabela’s engaged in 76 unlicensed exports of rifle scopes between 2004 and 2005 to such destinations as Argentina, Brazil, Canada, Chile, Finland, Ireland, Malaysia, Malta, Mexico, Pakistan, the Philippines, South Africa, Sweden, and Taiwan. BIS also alleged that Cabela’s failed to file shipper’s export declarations for these unlicensed exports.

In 2007, the publicly-traded firm had over $2.3 billion in revenues and earned almost $90 million in profits. The $680,000 fine is substantially higher than the normal BIS fine, even after the penalty increase passed by Congress last year. BIS likely took the company’s size into account in reaching a penalty that wouldn’t be easily forgotten.

Another reason for the high fine is that this isn’t Cabela’s first time at the export rodeo either. In 2005 Cabela’s settled similar charges relating to 685 unlicensed exports of rifle scopes between 1999 and 2000 and agreed to pay a $265,000 fine to BIS. It seems likely that the exports involved in the current settlement occurred, at least in part, after BIS had informed Cabela’s of its investigation of the 1999-2000 exports.

Notwithstanding these run-ins with BIS, the website for Cabela’s still says nothing about the requirement for export licenses for rifle scopes to most destinations. Ironically, however, the website’s terms and conditions state that customers leaving product reviews agree not to submit any content that “violates any law, statute, ordinance or regulation (including, but not limited to, those governing export control. …)” Perhaps the company should worry less about whether product reviewers are violating export laws and more about whether its own sales and shipping departments are violating those same laws.

The Office of Foreign Assets Control (“OFAC”) announced today that it was eliminating the general license for so-called U-turn transactions involving Iran. A U-Turn transaction, formerly permitted under section 560.516(a)(1) of the Iranian Transaction Regulations, is one which starts and ends with an offshore, non-US, non-Iranian bank.

For example, an Iranian entity could direct Deutsche Bank in Berlin to transfer funds from the Iranian entity’s Deutsche Bank account in Berlin to Banque National de Paris in Paris. This might be done, for example, to pay for goods purchased by the Iranian entity in France. If the transaction was in dollars, it would likely transit Deutsche Bank’s U.S. correspondent bank or some other bank in the United States, and the U-Turn exception would permit that to occur. Now that U-turn transactions are no longer permitted, the U.S. bank will reject the transaction.

Prior to this action, OFAC had blocked U-turn transactions involving two Iranian banks — Bank Saderat and Bank Sepah. The current action eliminates all U-Turn transactions involving all persons and entities in Iran. The most likely effect of the new rule is to encourage Iran to seek to settle its transactions in Euros or currencies other than the U.S. dollar.

“Warning, Warning!!”

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The Electronic Freedom of Information Act Reading Room on the website of the Bureau of Industry and Security (“BIS”) has been recently updated and now includes anti-boycott warning letters for 2008. I’m not certain when the 2008 warning letters appeared on the BIS website, but I’m pretty certain it was after our recent post on BIS’s confusing position regarding the reportability of requests that can be satisfied by a certification by an agent of a shipping company. BIS takes the position that a request for certification that a ship is eligible to enter into certain ports becomes reportable under the anti-boycott regulations if the request allows the certification to be provided by an agent for the shipping company.

Three warning letters for 2008 are now posted in the EFOIA reading room, and two of them involve agent certifications. One states that the following language is reportable:

CERTIFICATE ISSUED BY THE CARRIER/MASTER OR THEIR AGENT CERTIFYING THAT THE CARRYING VESSEL/AIRLINE IS ALLOWED BY ARAB AUTHORITIES TO CALL AT ARABIAN PORTS/AIRPORTS AND IS NOT SCHEDULED TO CALL AT ANY ISRAELI PORT/AIRPORT DURING ITS VOYAGE TO THE UNITED ARAB EMIRATES.

The other singles out this language as reportable:

A certificate from the ship-owner, master or agent of vessel … stating the following: The vessel is eligible to enter into the ports of UAE in conformity with its law and regulations.

Neither of these letters provides any detail as to why these contractual requests are reportable under the anti-boycott regulations, stating only

All U.S. persons are required to comply with the Regulations.

Call me old-fashioned, but it seems to me that a “warning” letter ought to actually provide a warning and explain why the conduct at issue is a violation. Otherwise, just what is the agency “warning” anyone about? Reporting contractual provisions completely identical to the language in the warning letter? That’s not very helpful.

And, frankly, I’m baffled as to why these letters are so cagey in this regard. It certainly wouldn’t be that hard for BIS to say that the language of section 760.5(a)(5)(viii) exempts from the reporting requirements requests from the “owner, master, charterer, or any employee” of a ship as to eligibility to enter specific ports but not requests that permit such a certificate not only from those parties but also from agents of those parties.