At last, on Christmas Eve, a federal holiday, the New York Times finally releases its analysis of documents it received from the Office of Foreign Assets Control (“OFAC”) as a result of its Freedom of Information Act request relating to licenses granted for exports to sanctioned countries such as Iran. The result? The reporters throw themselves on the fainting couch because a company has exported cupcake sprinkles to Iran, presumably on the notion that this will enrich the Iranian government and aid its nuclear program. I suspect that this conclusion may have prompted the Times editors to publish the story on a federal holiday when five people besides myself will be reading the newspaper. It keeps the laughter down.

The principal problem with Jo Becker’s story is her complete misunderstanding of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”), legislation which permits a wide variety of exports to sanctioned countries. She seems to believe that the act restricts such exports to humanitarian aid and then uses that misconception to criticize OFAC for licensing the aforementioned cake sprinkles as well as — and this is not a joke — popcorn, hot sauce, chewing gum, cigarettes, food coloring and sugar.

The problem is that TSRA isn’t restricted to humanitarian aid. It permits the exports of agricultural commodities, medicine and medical devices without reference to whether the New York Times or Ms. Becker thinks the product is humanitarian aid. All of the aforementioned products seem to fit clearly within the definition of agricultural commodities. Even if food coloring might not, does Red Dye No. 2 have some role in uranium enrichment which nuclear scientists have so far missed?

I’ll be writing more about the article over the coming days. I still have Christmas shopping to finish. But two other things deserve immediate comment.

First, the article is oddly silent about the large volume of licensed exports to Cuba under TSRA. This, at a very minimum, suggests an odd ideological bent by Ms. Becker. The article argues that food sales to Iran indirectly benefit the government of Iran, an argument that has traditionally also been made to support the Cuba blockade. The new foreign policy adopted by the Times would appear to be “Castro good, mullahs bad.”

Second, a note at the end of the article states, without any apparent realization of the hypocrisy involved, that “Ron Nixon contributed reporting from Washington, and William Yong from Tehran.” Unless Mr. Yong works for free, lives under a bridge in Tehran, and subsists solely on air, the New York Times is doing business in Iran at the same time it is whipping up a tsunami of outrage about other companies doing business there.

There is, however, one good side to the Times reporting. As part of the article, the Times includes a detailed summary of a number of the licenses granted and the reason they were granted. This information, which has heretofore been zealously guarded by OFAC, which prefers to operate under cover of darkness, will be of immense use to export compliance officers and lawyers because they reveal a number of broader rationales that the agency has used to grant non-TSRA licenses.

FULL DISCLOSURE: Both my law firm and I have represented companies named in the story and have obtained licenses permitting those companies to export items to Iran under TSRA.

Dandle, to most of you, is a verb meaning to dance a small child up and down on one’s knee. Others, particularly regular readers of this blog, will recognize it as the surpassingly odd name of an Islamic Republic of Iran Shipping Lines (“IRISL”) cargo ship formerly known as Twelfth Ocean, which was rechristened the Dandle by the Iranians after the vessel was placed by the Office of Foreign Asset Controls (“OFAC”) on its Specially Designated Nationals and Blocked Persons List (“SDN List”).

The news media was all over yesterday’s announcement by OFAC of new sanctions against various entities in Iran, but it was baffled by, and largely ignored, a General License issued at the same time yesterday by OFAC with respect to the Dandle and its equally oddly named sister ship, the Decritive. The General License states:

effective December 21, 2010, all transactions are authorized related to the arrest, detention, and judicial sale of the MV Dandle (a.k.a. Twelfth Ocean, IMO No. 9209348), and the MV Decretive (a.k.a. Sixth Ocean, IMO No. 9349679), which were identified as blocked property on September 10,2008, under the names Twelfth Ocean and Sixth Ocean, respectively (the “Vessels”), pursuant to Executive Order 13382 of June 28,2005 (70 FR 38567, July 1,2005) (“E.O. 13382”). Such transactions include, but are not limited to, bidding on the purchase of the vessels; paying deposits; providing financing, insurance, or funding in connection with the purchase; and, in furtherance of the arrest, detention, and judicial sale of the Vessels, providing vessel management services; providing port agency services; purchasing of bunkers; repairing or modifying the Vessels for commercial use; providing crewing; and hiring surveyors to inspect the vessels.

With a little snooping around I learned from a Financial Times article (free registration required) that five IRISL ships have been arrested by creditors over loan disputes in Singapore, Hong Kong and Malta. And according to this screen grab from tracking site marinetraffic.com, the Dandle appears to be sitting in Malta at the moment. I can’t locate the Decretive.

Without this General License, which expires on January 31, 2012, no U.S. person could participate in any judicial sale by the creditors of the arrested vessel due its being on the SDN list and blocked as a result. The General License also indicates that after the judicial sale the new owner may show evidence of its ownership of the vessel to have it unblocked. Why there is no license permitting participation of U.S. persons in the judicial sales of the other three vessels is, at least to me, completely unclear.

Nigeria has reported that it has intercepted a shipment of weapons from Iran in violation of U.N. Sanctions and plans on reporting the intercepted exports as required by the U.N. resolutions enacting those sanctions. The shipment, which originated from the Iranian port of Bandar Abbas, contained rocket rounds, rifles, grenades and explosives. The boxes, which were intercepted by Nigerian security agents at the Nigerian port of Apapa, were labeled “building materials.”

Iran immediately responded with a version of the dog-ate-my-homework excuse:

“A private company which had sold conventional and defensive weapons to a West African country had transferred the shipment through Nigeria,” Foreign Minister Manouchehr Mottaki told reporters, according to Iran’s state-run Press TV.

This hardly settles the matter as to whether the shipment violates U.N.S.C.R. 1747 which says that:

Iran shall not supply, sell or transfer directly or indirectly from its territory or by its nationals or using its flag vessels or aircraft any arms or related materiel

Taking a cue from Baghdad Bob, Foreign Minister Mottaki further elaborated by saying that the whole business was a “misunderstanding” that had all been cleared up by Nigerian authorities. Nigeria said this was, simply put, a lie:

[A] spokesman of the Foreign Affairs Ministry, Ozo Nwobo[,] explained that nothing has been settled as government was yet to finish its investigations over the arms saga.

Don’t be surprised if the next story floated by Mottaki is that the shipment only contained squirt guns and Tickle-Me-Elmos.

The recently-passed Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”) ended the import of Persian rugs into the United States. According to this post in the Wall Street Journal‘s Corruption Currents blog, officials at the Office of Foreign Assets Control (“OFAC”), the office in the Treasury Department responsible for administering the Iran import bans, said that they have received a “surprisingly high number of calls” from people who want to import Persian carpets for personal use.

The post continues by suggesting that OFAC may indeed be inclined to permit imports of Persian carpets for personal use, either under an exception for imports of personal luggage and household goods or otherwise.

Alexandre Manfill, chief of compliance implementation at OFAC, hinted at recent anti-money laundering conference in Washington that, in fact, they do.

He said the office was working on an interpretation of the ban that would allow for the importation of carpets and pistachios for non-commercial use

Such exceptions would be fully consistent with CISADA. First CISADA, in section 103(b)(1)(B), provides that the exceptions provided in section 203(b) of the International Emergency Economic Powers Act (“IEEPA”) would still apply. Section 203(b)(4) permits “importation of accompanied baggage for personal use,” which would seem to include all the Persian carpets you can stuff in your luggage.

But what about importation of Persian rugs as “household goods” or for non-commercial use? Section 203(b) of IEEPA does not extend to non-commercial imports or household goods. As OFAC noted in the notice adopting the rule eliminating the general license for imports of Persian carpets and foodstuffs, Section 103(d) of CISADA permits OFAC to promulgate regulatory exceptions to the import ban. If such regulatory exceptions permit import of items from Iran for commercial use, the agency must submit a report to Congress certifying that the exception is in the national interest. This gives OFAC fairly broad authority to create broad exceptions for imports for non-commercial use, and it looks like it may well do so for non-commercial importation of Persian carpets.

This blog has reported here and here on the export of the Bladerunner 51, a high-speed boat that holds the speed record for circumnavigating Great Britain, from South Africa to Iran. A recent story in South Africa’s Mail & Guardian reports that the Iranian Republican Guard has reverse-engineered the boat and is now manufacturing clones capable of launching missiles and torpedoes. The story also provides some interesting details with respect to a South African company co-owned by Willem Ehlers, a former official of the apartheid-era government of P.W. Botha, that was involved in the export of the boat to Iran.

As this blog noted earlier, the boat was in the possession of South African firm Icarus Marine. The Bureau of Industry and Security (“BIS”) first issued a Temporary Denial Order in January 2009 against Icarus in an effort to persuade the South African government to prevent the export. BIS argued that the boat was subject to U.S. jurisdiction because it was equipped with U.S.-made engines. Because the TDO was faxed to the South African government on a weekend, no one in South Africa took action and the boat was loaded onto an Iranian vessel and shipped to Iran.

Nothing else was done with respect to the shipment until June 28 of this year when Icarus, its owners, and a company called Scavenger Manufacturing (Pty) Ltd were placed on the BIS Entity List by the inter-agency End User Review Committee on the grounds that the individuals and entities had acted contrary to the national security and foreign policy interest of the United States. The M&G article now supplies the missing detail as to why Scavenger was added to the Entity List as a result of this transaction:

The M&G independently verified Scavenger’s central role in the transaction: shipping sources confirmed that it was the “shipper” of the speedboat — the formal term for the party responsible for the cargo — as it transited South Africa.

Scavenger tried to rebuff inquiries from the M&G by claiming that the boat was a “recreational craft” and that its export violated no South African laws or U.N. sanctions.

One of the owners of Scavenger, Willem Ehlers, was a navy commodore who was assigned by the South African Defense Department to P.W. Botha as his private secretary. When Botha was deposed in 1989, Ehlers became involved in arms-brokering, including brokering 80 tons of rifles, grenades and ammunition to the Hutus in Rwanda during the period of Hutu-led genocide in that country. Ehlers argues that he believed the shipment was destined for Zaire and not to the Hutus. Ehlers was also implicated in 1996 shipment of fuel to Angola during the period it was under U.N. sanctions, although he claims not to have been involved in that shipment other than requesting permission for the flights themselves.

Finally, the G&M article indicates that the South African government is now investigating whether the shipment of the boat to Iran violated South African export laws.