Federal Express has agreed to pay to the Bureau of Industry and Security (“BIS”) a penalty of $370,000 in connection with charges that it aided and abetted one export and five attempted exports between 2004 and 2006 without required export licenses. Three of the attempted exports were to Syria and the other two were to the Mayrow Trading Company in Dubai which had been subjected to a license requirement by BIS in General Order No. 3 issued on June 5, 2006. The remaining violation, and the only actual export, involved a shipment to a company in China on BIS’s Entity List.

Interestingly, the Settlement Agreement only provides for the payment of the $370,000 fine. There are no provisions, as are now often seen in these agreements, requiring enhanced compliance procedures or export audits.

A spokesman for FedEx, speaking today to a Memphis newspaper, described the violations as “inadvertent and very limited.” This certainly makes sense for the attempted Mayrow exports, which occurred in July 2006, only a month after General Order No. 3 imposed the license requirement on exports to Mayrow. Because Mayrow and the other companies listed in General Order No. 3 were not immediately put on the lists that exporters customarily checked, the FedEx error here is understandable.

The statements from the FedEx spokesman also indicate that the exports were discovered and stopped by the government based on the Automated Export System filings made by FedEx in connection with the shipments. That being the case, it is clear that FedEx had not attempted to disguise what it was doing and that its own compliance procedures had not flagged the problematic shipments.

The settlement documents provide no indication as to what actions, if any, were taken against the FedEx customers that initiated these shipments.

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