Another day, another foreign subsidiary of a U.S. company caught shipping stuff to Iran. This time it’s the Luxembourg-based subsidiary of Viking, a leading manufacturer of fire protection systems. The fire extinguishing systems were shipped by the sub through the UAE (natch!) to Melli Etfae Iran Co. (National Iranian Safety & Fire Fighting Company).

An interesting twist here is that the subsidiary made the shipment notwithstanding direct orders from the COO of the U.S. parent company that shipments to Iran required a license. Indeed, this order was given the subsidiary less than a week before the first illegal shipment. Even so, under settlement agreements with both companies, the Bureau of Industry and Security (“BIS”) fined the parent $22,000 and the subsidiary $44,000. The exports came to light when a freight forwarder figured out what was going on and blew the whistle.

Several observations seem in order. First, fining the parent company after it had properly instructed the subsidiary that the shipments required a license seems harsh. After all, what more was the parent to do? Fly to Luxembourg and lock the staff in the basement?

Second, both the parent and the subsidiary were required by BIS to conduct an internal compliance audit substantial similar to BIS’s Export Management System Review Module. I don’t recall having seen this requirement imposed since it was imposed in the settlement agreement with Norman, Fox & Co. back in November 2005. It’s too early to judge, but I wouldn’t be surprised, based on the two Viking settlements, if we see this requirement cropping up more frequently.

Assistant Secretary of Commerce Christopher Padilla testified on Friday at a hearing on export controls held by a subcommittee of the House Foreign Affairs Committee. Most of the testimony was devoted to the current hobby-horses of Padilla’s Bureau of Industry and Security, including, of course, the agency’s emphasis on end users rather than on destination country. Two things, however, stuck out.

First, Padilla’s choice of an illustrative example of a dual-use good was interesting:

A good example is this triggered spark gap. Triggered spark gaps, which resemble empty spools of thread, are in fact high-speed electrical switches capable of sending synchronized, high-voltage electronic pulses. They have two principal uses: to break up kidney stones and to detonate nuclear weapons.

That’s not a very good explanation of the uses of a triggered spark gap (which, by the way, are covered by ECCN 3A228.b). Triggered spark gaps are used in flashlamps, pulsed CO₂ lasers, “crowbar” protection circuits, and a number of other common industrial applications. To say that nuclear detonation and lithotripsy are the two principal uses of triggered spark gaps is, frankly, misleading. And it is of more than a little concern when an agency like BIS which is required to be conversant in technical matters doesn’t fully understand what it is regulating.

But not everything about Padilla’s testimony deserved a boo and a hiss. The second thing I noted in his testimony deserves a cheer:

We are also planning a draft proposal that would introduce a standard format for all U.S. Government screening lists. Our goal is to have a more complete continuum of information – from the Unverified List through the Entity List to the Denied Persons List – available for exporters to use in screening potential customers.

Of course, like all other instances of proposed inter-agency cooperation, I’m filing this proposal under “I’ll believe it when I see it.” OFAC has zealously guarded its prerogative to have entries on the SDN list which are nothing more than a common name and, perhaps, a country of residence.

And while we’re talking about needed proposals for U.S. government screening lists, why doesn’t someone propose the next logical step? You know, one list in one place. How hard would that be?