Oct
20
BIS Imposes Denial Order on Defunct Company
Posted by Clif Burns at 7:07 pm on October 20, 2010
Category: BIS
Earlier this month the Bureau of Industry and Security (“BIS”) imposed a ten-year denial order on Alphatronx, Inc. on the ground that the company was related to Joseph Pinquet who had been convicted of violating the Arms Export Control Act in connection with his export of military power amplifiers to China without a license. According to BIS, Pinquet was President of Alphatronx and used the company to purchase and ship the military power amplifiers that led to Pinquet’s conviction.
However, from all indications, Alphatronx is, to paraphrase a famous Monty Python skit, passed on, gone to meet its maker. It’s a stiff, bereft of life, resting in peace, off the twig, kicked the bucket, shuffled off the mortal coil, run down the curtain and joined the choir invisible. Alphatronx is an ex-company.
According to Florida Division of Corporations, the company was dissolved for failure to file an annual report in 2009. The company did not respond to BIS’s notice of its intent to impose a denial order on it. Its phone number is disconnected. Its website is dead. Its sole principal is in jail.
It is, I suppose, all well and good for BIS to keep itself gainfully occupied, but imposing this denial order was rather like shutting a barn door to keep a dead horse inside.
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Copyright © 2010 Clif Burns. All Rights Reserved.
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3 Comments:
The larger issue here is the lack understanding of business and legal practices in BIS.
To extend the denial order to “related parties” is in accord with the EAR, but one read of the denial order is that failure of Alphatronx to respond to the written notice raised concerns of potential evasion. That was another reason why the “related” company was added to the Pinquet 10-year denial order. I don’t believe BIS investigated why the company failed to respond to the notice prior to BIS extending the denial order and revoking existing licenses, if any.
It has been my experience that BIS does not take an active role in researching corporate behavior. One reason for this is that few staffers in the licensing and enforcement divisions have backgrounds in business or the law, although lack of these skill sets has been recognized in recent years yet nothing has been done to fill in those gaps in expertise.
A recent example of BIS’ lack of business/legal acumen and its failure to be actively involved in investigating corporate changes was its slow-reaction and inappropriate response to Aviza Technology’s bankruptcy. (See my article, “Suspensions are Wake-Up Call for VEU Program, published in The Export Practitioner, February 2010.)
BIS granted Aviza VEU status in April 2009 despite many reports of the company’s dire financial situation
published on its website and business press. In early June 2009, the company filed for bankruptcy. Subsequently the court ordered the company to liquidate and in late summer approved the sale of essentially all Aviza’s global corporate assets to a Japanese company. The business press reported the developments of the bankruptcy action, details were posted on the company’s website, along with information submitted to the SEC and the bankruptcy court. BIS knew of the bankruptcy action, but failed to be pro-active until December 23, 2009, when it “suspended” Aviza’s VEU status for “unidentified material changes”, yet shipments of controlled items were allowed to continue to the non-existent Aviza until January 6, 2010.
Modern export controls focus on an analysis of end-use and end-users. Most of our licensing staff carry technical credentials, but, without personnel who have a basic understanding of business and legal principles, certain agency decisions will be inapt and unfortunately incorrect.
Once upon a time, a generation ago, Commerce did recruit for business/legal education and experience, sort of the way that the FBI once did. It even sent them to training at SEC and Main Justice. But during one ancient turf war with Customs, Commerce decided it needed to get “more boots on the ground” and started hiring folks who had criminal investigation backgrounds, including some street cops, but little experience with international trade and business. They were more plentiful, were motivated to “move up” to something fancier than drug busts, and didn’t need as much compensation as lawyers or accountants or even MBAs, so Commerce could hire more; but,they didn’t know much about trade and often made assumptions based on popular stereotypes. Now some of these folks were smart and motivated enough to learn eventually, but a lot of them were just ex-narcs who were not particularly well-educated or sophisticated in business matters, and just assumed that anyone who did business with foreigners was suspect.
So, Hillbilly: let me see if I can get this straight. BIS once hired people from business/legal backgrounds, but decided to stop when they formed a corps of 1811 investigators?
Stop making things up.
Most of the BIS agents I know weren’t “street cops” or “narcs,” unless you consider Customs Inspectors and Agents with EXODUS backgrounds as such. And for as long as I can remember, 1811s were/are required to have a four-year degree or better.
You can have your opinions, but not your own facts.
