The Government Accountability Office released a report last Thursday on the Iran Sanctions and there is, you might say, good news, bad news and old news in the report.

First, the good news. The GAO’s audit of the licensing process of the Office of Foreign Assets Control (“OFAC”) found that all of the licenses that OFAC had granted for exports of food, medicine and medical devices to Iran under the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) were properly granted. The 58 licenses examined by GAO all involved exports of items authorized under TSRA for export to Iran. Additionally, none of the licenses involved exports to anyone on the SDN list.

Next, the bad news.

Treasury cannot provide other agencies or Congress with complete and timely information concerning the licenses it has issued. It cannot do so because it relies on paper-based information systems that cannot be searched to identify licenses for the export of goods to Iran. … In January 2009, an internal Treasury budget request characterized the TSRA information system as a “largely paper-based” system that hinders “the speed, efficacy, reliability, and security of [Treasury’s] licensing, enforcement and compliance activities.” Treasury officials must manually review all TSRA licensing data for Iran to identify licenses that authorize the export of goods. Because the TSRA system is not integrated with Treasury’s primary licensing information system, TSRA licensing officials must manually enter the same data into both systems.

Finally, the old news. GAO discovered that U.S. goods were being successfully exported to Iran through the use of intermediary companies and transshipment of U.S. goods through other countries to Iran.

More than 50 percent of the cases listed involved use of intermediaries in the UAE for transshipment. About 20 percent involved the use of Malaysia and Singapore

Regular readers of this blog will be forgiven if they can’t suppress a yawn while reading these shocking revelations, particularly with regard to the diversion of exports to the U.A.E. Still, GAO’s report should emphasize for exporters that exports to UAE, Malaysia and Singapore deserve extra scrutiny to assure that items aren’t merely transiting those countries on their way to Iran.

A fascinating AP story, which so far has not been picked up by any AP affiliate newspapers, provides detailed information about how 103 pressure transducers made their way from Inficon, a Swiss firm, to Iran where, presumably, they will be used in Iran’s allegedly peaceful uranium enrichment program. The story, not surprisingly, involves a lot of looking the other way by the firms involved followed by numerous declarations that they were shocked, shocked to learn where the transducers were headed.

The transducers’ journey started with an order placed by a Shanghai-based company with a Taiwanese agent for Swiss firm Inficon. The equipment was supposed to be destined to the Shanghai company itself but after it made an initial payment had been made to the Taiwanese agent and the order had been placed by the agent with Inficon, the Shanghai company said that the equipment should be shipped instead to Tehran. When the Taiwanese agent received the shipment from Inficon, it dutifully forwarded the merchandise to Tehran.

The allegedly-neutral Swiss have, of course, denied any responsibility in the matter. The CEO of Inficon calmly told reporters that all the papers were in order:

“The end-user certificate we got did not say Iran,” he said. “The deal was done via a Chinese company. And we have a certificate with the name of a Chinese end-user on it.”

In the next breath he admitted, and most proliferation experts will confirm, that the size of the order was, er, suspicious:

[He] said that before the goods were sent, Inficon reported the transaction to Switzerland’s State Secretariat for Economic Affairs, because the number of transducers raised its suspicions. “We always have the goods checked when it is a big order,” he said. “If someone wants one single device it’s not delicate. But if someone wants 100 at once, that’s very unusual for this type of product.”

The Swiss Government approved the export because, notwithstanding these suspicions, Inficon didn’t “know” that the goods were headed to Iran and therefore the export was legal under Swiss law. It seems to me that this is not the first time that the Swiss have defended weapons exports that went to the bad guys by claiming that they weren’t absolutely one-hundred and twenty percent certain that the goods were headed to the bad guys.

As a cautionary note to U.S. readers and exporters: we don’t live in Switzerland. Burying your head in the sand is not a viable export compliance strategy.