Archive for the ‘Syria’ Category


Mar

13

Does Anything Exported to the UAE Ever Stay There?


Posted by at 10:24 pm on March 13, 2012
Category: BISCriminal PenaltiesSyria

Afton, WyomingAn Afton, Wyoming man, Matt Kallgren, was sentenced, on January 23, 2012, to three years probation with the first four months in home confinement on charges that he exported EAR99 diesel truck parts to Syria. Of course, since criminal penalties weren’t enough in this case, the Bureau of Industry and Security (“BIS”) piled civil charges on top of the criminal prosecution. Now BIS has announced a settlement of the civil charges pursuant to which Kallgren agreed to a $75,000 penalty and a three-year denial order, both of which were suspended for three years provided that he commits no further export violations and complies with the terms of his criminal sentence.

According to the charging papers, Kallgren was contacted by a Syrian company in 2006 which was seeking to purchase civilian diesel engine parts. When Kallgren attempted to ship the parts, his “normal freight forwarder” (which according to this local newspaper account was UPS) told him that items couldn’t be shipped to Syria. He then used a freight forwarder recommended by the Syrian buyer to ship the parts to Syria by transshipping them through the UAE.

Miraculously Kallgren was subsequently the, er, beneficiary of an “Outreach” visit from Immigration and Customs Enforcement Agents who, allegedly, advised him on the U.S. laws prohibiting exports to embargoed destinations. (Another case which shows that the appropriate response to an “Outreach” visit is to call your lawyer.) Kallgren shipped a second order of parts via the UAE to Syria which, in a similarly miraculous fashion, were seized by Customs on their way out of the country. Allegedly, Kallgren doubled down and told Customs that the parts really were destined for the UAE. Really. I promise. Pay no attention to those commercial invoices.

Kallgren’s company Powerline Components, which shares Kallgren’s home address, also agreed to settle separate charges relating to these shipments. Under that settlement, Powerline agreed to a $60,000 fine and a three-year denial order. The denial order, but not the fine, was suspended.

Finally, in what appears to be a related case, R.I.M. Logistics agreed to a $50,000 fine to settle charges that it aided and abetted an export of EAR99 diesel parts to Syria via the UAE. Although that settlement does not mention Kallgren or Powerline, the timing and subject matter strongly suggests that these were the same exports that got Kallgren and Powerline in trouble. Interestingly, there is not a single allegation in the charging letter that it had any knowledge that the export to the UAE was ultimately destined to a customer in Syria. One might suspect that R.I.M. was the freight forwarder recommended by the Syrian customer, in which case R.I.M. might have had knowledge of the ultimate destination of the export. But without making that assumption, and based on the face of the charging documents, R.I.M. was held to be absolutely liable for its customer’s misdeeds whether or not it had any knowledge of them.

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Copyright © 2012 Clif Burns. All Rights Reserved.
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Aug

26

OFAC Issues General Licenses for Exports of Certain Services to Syria


Posted by at 5:32 pm on August 26, 2011
Category: OFACSyria

Bashar al-AssadWhen I earlier reported on the latest round of Syria sanctions, which now prohibit exportation of services to Syria, I noted that the executive order did not contain typical exceptions for services that are generally permitted in the case of sanctioned countries, such as limited legal services and, lately, certain Internet-related services. And because the restriction on export of services to Syria was new, the Syria sanctions regulations of the Office of Foreign Assets Control (“OFAC”) did not contain those exceptions either. So, for example, providing a Twitter account to a Syrian or allowing a Syrian to post a YouTube video would violate the executive order.

OFAC responded quickly and released several general licenses, dated August 18, 2011, which cover some of the usual exceptions. General License No. 1 covers the provision of goods and services to the diplomatic missions of Syria and their employees in the United States subject to certain restrictions.

General License No. 2 covers the provision of legal services and parallels the provisions normally included in other sanctions regulations. That general license permits, for example, representing the government of Syria or other Syrian persons named as defendants in U.S. legal actions and providing advice to the Syrian government or other Syrian persons on compliance with U.S. laws. The new general license would not, however, cover providing legal services to a French company with respect to business it is conducting in Syria.

General License No. 4 permits exportation of services normally incident to exportation or re-exportation of goods to Syria that have been licensed by the Department of Commerce’s Bureau of Industry and Security.

Finally, General License No. 5 permits the provision of services incident to the exchange of personal communications over the Internet. This would include services relating to instant messages, email, social networking, video and picture sharing and blogging, provided the services are provided without charge and are not provided to the Government of Syria or other blocked persons.

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Copyright © 2011 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Aug

18

Yet More Sanctions on Syria


Posted by at 9:44 pm on August 18, 2011
Category: Syria

SyriaThe White House, hoping to speak loudly and to shake a big stick, issued today an executive order imposing yet another round of sanctions on Syria. Although exports of goods to Syria have been prohibited since the passage of the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003, this new round prohibits, among other things, the exportation of services to Syria.

The new Executive Order does not define “exportation of services,” but this term has previously been defined by the Office of Foreign Assets Control (“OFAC”) in connection with other sanctions regulations. Section 560.410 of the Iranian Transaction Regulations defines the exportation of services as the provision of services in the United States or outside the United States by a United states person where the benefit is received in Iran. If any services are provided to the Government of Iran, the benefit of those services is presumed to be received in Iran.

Presumably this same definition will be adopted to apply to Syria. This will broadly prevent, for example, a U.S. person from being employed, with or without compensation, in Syria. A U.S. travel agency cannot book flights to, or hotel rooms in, Syria. A U.S. Law firm cannot provide legal advice to a French company doing business in Syria. Provision of a Twitter account or other social networking services by a U.S. Company to a Syrian will violate the new order. Whether typical exceptions that permit many of these activities in other sanctioned countries remains to be seen.

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Copyright © 2011 Clif Burns. All Rights Reserved.
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Mar

9

Some Things Change; Some Things Don’t


Posted by at 9:14 pm on March 9, 2010
Category: Cuba SanctionsIran SanctionsSudanSyriaTechnology Exports

Twitter Keeps Iran AfloatHere’s what has changed at OFAC. Yesterday OFAC announced a general license for Iran and Sudan that would permit export of

certain services and software incident to the exchange of personal communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging.

To be eligible the services must be offered free of charge and any software must be EAR99, not subject to the EAR, or mass market software classified under ECCN 5D992. Also, the exporter must not have any reason to believe that the services or software is destined to be used by the government of Sudan or Iran. A similar license was announced for Cuba but it only covered services since BIS controls exports of software to Cuba. Any bets on how long it will take for BIS to act to permit these software exports to Cuba? BIS action will also be necessary for similar exports to Syria.

And here is what hasn’t changed at OFAC. Today OFAC announced that it spent untold tens of thousands of taxpayer dollars to fine some poor schlub $575 for buying Cuban cigars over the Internet. I have to assume that this single cigar purchase will provide funds to the current Cuban government that will keep it in power for about five minutes longer than otherwise would have been the case thereby justifying all the government expense involved in imposing the fine.

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Copyright © 2010 Clif Burns. All Rights Reserved.
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Feb

17

Don’t Believe Everything You Read in Newsweek


Posted by at 8:31 pm on February 17, 2010
Category: Syria

Bashar al AssadAndrew Tabler, who works for a Washington-based think tank on the Middle East wrote a column in today’s web-edition of Newsweek on the appointment by the Obama administration of a new Ambassador to Syria — the first since 2005 — and what that might mean for U.S. sanctions on Syria. According to Tabler the sanctions have economically crippled Syria, and Syria is now “fanatical about ending U.S. sanctions (which, Damascus has only just admitted for the first time, are truly damaging).”

In trying to explain how U.S. sanctions have economically damaged Syria, Tabler gets into the weeds of export law and the Export Administration Regulations (the “EAR”) and, frankly, doesn’t come out smelling like roses:

[T]he regime had to ground most of its civilian air fleet—as well as President Assad’s personal jets—because the sanctions forbid the sale of spare parts without an export license. (Sanctions classified anything with more than 10 percent American content as an American product, and since U.S. companies dominate the aerospace industry, even third-party retailers from other parts of the world couldn’t sell the parts to Syria.)

This is clearly a reference to the de minimis rule in section 734.4 of the EAR which, for sanctioned countries, only exempts exports to sanctioned countries with less than 10% controlled U.S. content, not exports with less than 10% of all U.S. content. According to the Guidelines for De Minimis Rules set forth in Supplement 2 to Part 734, controlled content consists of content in the item that has an Export Control Classification Number (ECCN) requiring a license to the sanctioned country in question. There are plenty of items that might be parts of exported items that aren’t controlled content to Syria, so Mr. Tabler’s misstatement of the applicable regulations is a significant error in this regard and suggests that more items are subject to the Syria sanctions than is in fact the case.

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Copyright © 2010 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)