The Bureau of Industry and Security (“BIS”) issued a non-standard 180-day denial order against various entities, including Iran Air and Ankair, in connection with what BIS believes to be the imminent sale of a Boeing 747 from Ankair to Iran Air. The non-standard denial order provides, in part, that no person may take any action to assist Iran Air in the acquisition of the aircraft in question or to service that aircraft. The denial order also prohibits Ankair from engaging in any transaction related to the aircraft.

Here’s a picture of the jet in question, which was once used by Martinair Cargo, parked at Schiphol in May 2008 prior to its delivery to ACT Airlines, a Turkish cargo airline based in Istanbul. How the 747 then wound up in the hands of Ankair, a charter passenger airline, is unclear.

But the involvement of Ankair in this transaction necessitates a completely off-topic digression into the history of Ankair and the story of its misconceived logo. Ankair was once World Focus Airways. An MD-83 which World Focus leased to and operated for AtlasJet crashed in November 2007 on its approach to an airport in Isparta, Turkey, killing all 57 people on board.

Because of the negative publicity generated by the crash, the company sought to re-brand itself as Ankair, short for Anka Air. Anka derives from the Turkish word for phoenix – anka kuÅŸu. As if the image of resurrection from the ashes wasn’t sufficiently unfortunate in light of the crash that led to the re-branding, the airline’s logo (pictured below) has been the object of mirth given the striking similarity between the phoenix that precedes Ankair and the letter “W.”

If this little bit of history piques your interest in Ankair, rest assured that the non-standard denial order wouldn’t prohibit you from flying on one of Ankair’s charter flights.

The Bureau of Industry and Security (“BIS”) released yesterday a Settlement Agreement with Engineering Dynamics, Inc., a Louisiana-based company that writes and distributes computer-assisted design software used for the design of oil and gas drilling platforms and rigs. Under the Settlement Agreement, Engineering Dynamics admitted to a one-count charge that it had conspired with an individual in Brazil who would sell the company’s software to customers in Iran. Engineering Dynamics agreed to pay $132,791.39.

As we reported in a prior post, two officers of Engineering Dynamics are currently subject to criminal charges in connection with the same sales of the software to Iran. A copy of the criminal information filed against them can be found here, and it provides considerably more information on what happened than the BIS Settlement Agreement and related materials.

Upon my initial review of the criminal information, I expressed some skepticism in my earlier post that the two individual defendants — and, by extension, the company — should be held liable for the actions of their “distributor” in Brazil. Upon re-reading the criminal information, it seems to me that there is ample evidence here to support a conspiracy charge, at least if the facts alleged in the information are true.

To begin with, the company’s Brazilian distributor was really more a commissioned agent than a distributor, and that is significant. If a U.S. company sells its products to a distributor, who then resells those products without the U.S. company’s knowledge to a proscribed destination, it may be difficult to prove that the U.S. company was aware of the resale. However, in this case the Brazilian agent was paid a commission and then directly remitted the funds back to Engineering Dynamics. Additionally, the criminal information alleges a number of instances of communications between the U.S. company and the Brazilian agent about the customers in Iran.

This is also the second reported case subject to the new $250,000 penalty provision. Interestingly, BIS charged only one violation of the rules — a conspiracy count — even though multiple counts could have been charged for the various shipments to Iran through Brazil. Various BIS officials have said that under the new penalty scheme they will be less likely to pile on counts, and this provides some confirmation of that.

While everyone in the export community is enjoying a little schadenfreude over the Department of Defense’s inadvertent export of nuclear missile fuses to Taiwan, we shouldn’t lose sight that there are still plenty of civilian exporters that might want to tighten up their own compliance programs, assuming that they even have them. Case in point a California-based microwave electronics company profiled in this article in its local newspaper the El Dorado Hills Telegraph. The company, Genesis Microwave, has every reason to have a good export compliance program not only because it produces dual-use goods subject to the Export Administration Regulations, but also because one of its employees recently pleaded guilty to providing dual-use microwave technology to foreign companies without a license.

Here is what the company’s CEO Santiago Cutia, Jr., had to say about the application of U.S. export laws to his products:

“It’s really hard,” Cutia said. “When I see a request for quotation from a country on the National Security List, I know we would need to acquire an export license. For example, take a company from Iran. First, you need an end-user statement, who’s going to be using the product. Then, you have to submit it to the federal Bureau of Industry and Security.”

This must be done not just company by company that a U.S. firm might want to deal with, but rather contract by contract. The same government-approved Irani company that a U.S. firm sold to six months ago can call, and the entire licensing work must be repeated for each new contract, Cutia said.

I’m sure it will come as something of a surprise to BIS that it is approving exports of dual-use technology to companies in Iran. Note to export control compliance officers: make sure your CEO does more than sign the first page of the compliance program and actually reads it before talking to reporters about export regulations.

The article has one other gem, presumably also conveyed by the CEO to the reporter:

Federal tech-export regulations run to 61 pages, double-column.

In our dreams.

The Bureau of Industry and Security (“BIS”) issued a Temporary Denial Order on March 17, 2008, against Balli Group PLC and other related U.K. companies, the Armenian air carrier Blue Airways (a/k/a Blue Sky), and Iranian air carrier Mahan Air (which BIS erroneously calls “Mahan Airways”). The TDO arises out of the apparent lease (or sub-lease) of Boeing 747s to Mahan. These aircraft, which had once been in the United Airlines fleet, had been leased by Balli Group subsidiaries initially to Blue Airways and then sometime in 2006 had been leased by the Balli subsidiaries (or subleased by Blue Airways) to Mahan.

The TDO states that Balli had told BIS that the aircraft were not going to be leased or subleased to Mahan, although “open sources” showed that the aircraft, “identifiable by serial number and tail number were under the control of Mahan Air. The TDO also noted that Balli had refused to comply with an order to return the aircraft to the United States pursuant to section 758.8(b) of the Export Administration Regulations. (I can imagine the bemusement of the British companies when a U.S. agency demanded that they should return aircraft owned by them without compensation to the United States. I don’t think they said “no,” rather they probably said “not bloody likely.”)

Although the TDO doesn’t describe the “open sources” that it refers to, it appears that the arrival of the Blue Sky 747s in Tehran was first noted by Iranian “plane spotting” website www.iraviation.com, and then picked up on a large U.S. aviation-enthusiast forum www.airliners.net. The website www.airfleets.net also picked up the transfer of the aircraft. All this goes to show what should be fairly obvious: it’s really hard to hide a 747.