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Archive for the ‘BIS’ Category

Feb

28

The iPhone Cometh

Posted by Clif Burns at 7:33 pm on February 28, 2012

ABOVE: Online Micro HQ

Last week the Bureau of Industry and Security released Settlement Agreements it entered into with Massoud Habibion, Mohsen Motamedian, and Online Micro LLC in connection with computers exported to Iran through an intermediary in the UAE. Online Micro and Habibion agreed to suspended ten-year export denial orders with no fine. Motamedian agreed to a $50,000 fine with no denial order.

The charging papers for Mr. Habibion once again reveal the real reason for the so-called outreach visits by BIS personnel when it noted that Habibion “knew” that the exports required a license because

BIS Special Agents conducted an outreach visit to Habibion in January 2010, during which the Special Agents informed Habibion that unlicensed exports of computers to the UAE with knowledge that the ultimate destination of the items was Iran constituted a violation of the Regulations.

As I’ve said before, don’t permit BIS agents to conduct an “outreach” visit at your company without your lawyer being present because if something ever happens down the road they are going to say that they informed you it was illegal during an outreach visit. You also can politely decline outreach visits.

Of course, there’s more to this story than the BIS civil charges which were simply piled on top of criminal charges here. According to a DOJ press release, Messrs. Habibion and Motamedian pleaded guilty to criminal charges related to the export of the computers to Iran. One interesting detail sticks out in the press release. Apparently, the computers that were sent to Iran were Dell computers. When people in Iran started calling Dell on service issues, the company conducted an investigation which led back to Online Micro and its principals. Moral of this part of the story: if you’re going to sell stuff illegally to Iran, sell stuff that doesn’t break down.

But wait! There’s even more and it involves a nasty divorce, a wife seeking revenge and an iPhone. Some of the government’s evidence consisted of allegedly incriminating entries on Mr. Habibion’s iPhone. According to an unintentionally, but irresistably, amusing pleading filed by Mr. Habibion’s lawyers, the phone was grabbed from Habibion’s wife at a school function for their daughter. She told him that she had “thrown it down a canyon” so that rather than changing the password on the phone he just got a new one. Habibion’s wife then turned it over to ICE after it had been downloading Mr. Habibion’s emails while connected to WiFi. The defense also claimed that Habibion’s wife added false information that would incriminate him in the prosecution. For good measure they also claimed that the notes in the iPhone which allegedly revealed sexual philandering by Habibion with both males and females were forged by Habibion’s wife for benefit of the divorce proceedings. Second moral of this story: make sure you have a happy home life before shipping a boatload of computers to Iran.

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Feb

2

Russkies No Longer Bullish on Dual Use . . . Cows

Posted by Clif Burns at 8:17 pm on February 2, 2012

Category: BIS • General

Virginia P. Holstein Well, who would have thought that a Google news search on “dual use exports” would turn up a WaPo story on the export of bulls from Virginia to Russia? Or that the story would talk about “dual use cows”? I certainly did not, which is what mooo-ved me to write this post.

According to the story, twenty-nine Holstein bulls have already been exported to Russia and another thirty are to follow. The bulls are set to, er, revitalize (at least that’s what the kids call it now) Russian Holstein dairy herds. The need for bulls with that certain American panache was explained as follows in the story:

Russian farmers want American bulls to improve dairy-herd genetics in a land hampered first by collective farming, then by the collapse of the Soviet Union. …

Instead of raising dairy cattle for milk and beef cattle for meat, Soviet collective farms had â€œdual-useâ€ cattle, which would be milked for a while, then killed for meat, Osipenko said. Those one-size-fits-all cattle may have embodied an egalitarian ideal, but both milk and meat were mediocre, said Osipenko, a native of Ukraine who recalled his mother boiling beef for hours in a fruitless attempt to tenderize it.

After the Soviet Union collapsed, many dairy herds were all but wiped out as hungry Russians consumed them for food.

â€œThere was a terrible crisis, apparently, and they pretty much ate their seed stock,â€ said Patrick Comyn, a large-animal veterinarian with the private Virginia Herd Health Management Services who worked on the deal.

And that’s where the exported bulls come in. I am sure that the Virginia bulls will be delighted, to the extent that bulls can be delighted in the first place, that they are fulfilling both a carnal and a patriotic duty.

Of course, these mail-order American husbands may never have seen their wealthy Russian wives if they had been horses because, as all export geeks know, export of horses by sea (ECCN 0A980) requires a license from the Department of Commerce. Personally, I think this is another example of wanton discrimination against American cows in favor of American horses which are spared from both the dinner table and long ocean voyages.

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Jan

18

Mystery Solved (Maybe)

Posted by Clif Burns at 6:29 pm on January 18, 2012

Category: BIS • DDTC

MMIC In a post back in December titled “Imaginary Numbers,” I noted that the list of commodity jurisdiction determinations by the Directorate of Defense Trade Controls had some puzzling entries:

Three entries on the list, two for a high mobility electron transistor (â€œHMETâ€) and one for a microwave monolithic integrated circuit (â€œMMICâ€), indicate that the correct classification for these items is ECCN 3A982. The problem is that there is no ECCN 3A982, and there has never been, at least that I could find.

Well today I came across a notice of a final rule by the Bureau of Industry and Security, dated January 9, 2012, and effective on the same date, which creates a new ECCN 3A982 for HMETs and MMICs. Of course, the mystery remains as to how the DDTC could classify something as ECCN 3A982 before the ECCN actually existed, but I suppose that only bothers people concerned about the rule of law and other minor details.

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Jan

5

FedEx Agrees To Pay $370,000 Export Penalty

Posted by Clif Burns at 8:04 pm on January 5, 2012

Category: BIS

FedEx 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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Dec

13

Call Kevin Wolf

Posted by Clif Burns at 7:24 pm on December 13, 2011

Category: BIS • Export Reform

ABOVE: Kevin Wolf

Who says you never have gotten to talk to an Assistant Secretary of Commerce? Tomorrow, Wednesday, December 14, 2011, you can dial up Kevin Wolf at 2:00 p.m. to discuss the White House’s current export reform proposals. The dial-in number for the conference calls will be 1-877-389-6079, Participant Code: 905168. BIS has announced that this will be the beginning of a weekly series of calls on export reform with Assistant Secretary Wolf that will take place each Wednesday at 2:00 pm EST.

There’s only one small catch: Questions for Kevin should be sent in advance of the call to [email protected] with a subject line of â€œTeleconference questions.â€ This is to avoid having someone from the Howard Stern show hijack the teleconference with inappropriate questions. (That, of course, isn’t the real reason, but it would be a good one.)

The stated purpose of these calls is “to foster public understanding of the initiative and to assist interested parties to prepare more informed comments.” I have been told by a reliable source that so far BIS has received almost no comments on these proposals and that BIS is very much interested in input from the export community. There are three public notices relating to the export control reform initiative with comment periods that are still open: the comment period for the notice on aircraft and related parts closes on December 22, 2011 (i.e. almost tomorrow) and the comment period for the notices relating to gas turbine engines and military vehicles closes on January 20, 2012.

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Archive for the ‘BIS’ Category

The iPhone Cometh

Russkies No Longer Bullish on Dual Use . . . Cows

Mystery Solved (Maybe)

FedEx Agrees To Pay $370,000 Export Penalty

Call Kevin Wolf

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