Last month I wrote a post on the consent decree entered into by BIS and EP MedSystems where, among other things, BIS appeared to have fly-specked the differences between a preliminary disclosure and a final disclosure and argued that the differences constituted misrepresentations. That led me to comment that one should think long and hard about the possibility that an export violation will be otherwise discovered by BIS before filing a voluntary disclosure.

This posting apparently created something of a stir over at BIS because Wendy Wysong, Deputy Assistant Secretary for Export Enforcement at BIS, singled out my post in an article (subscription required) written by her and appearing in this month’s issue of The Export Practitioner. You would think that no lawyer in the export bar had ever expressed the opinion that BIS seemed to treat voluntary disclosures more harshly than necessary and certainly more harshly than DDTC and OFAC. Perhaps no one has stood up and said that at the BIS Update Conference, but I’ve certainly heard a number of other lawyers and export professionals express that sentiment.

But the good news is that the figures that Ms. Wysong has released do provide some basis for concluding that BIS does give some more favorable treatment to voluntary disclosures — well, sort of. Here is the data BIS released:

Well, these figures might be encouraging, but it’s hard to tell. The percentages only apply to “VSDs resolved” and not to the larger number of “VSDs filed.” Indeed, the discrepancy in the two figures is somewhat disturbing. Out of a total of 367 voluntary disclosures filed since 2004, only 208, or only 56% have been resolved. Ms. Wysong doesn’t give any reason for this discrepancy, which one would suppose is indicative of a backlog of voluntary disclosures at BIS. That certainly leaves open the possibility that the percentages shown in the table might change substantially once this backlog makes it through the system at BIS.

Another problem with these figures is that they are inconsistent with the second set of figures given by Ms. Wysong in her article. These figures are shown in the table below:

Perhaps there is an explanation for this, but I don’t understand how Table 1 can say that there were 8, 2 and 0 cases with administrative sanctions in 2004, 2005, and 2006 and yet say in Table 2 that there 12, 18 and 28 voluntary disclosure cases that were administratively resolved in those same time periods.

Additionally, Ms. Wysong’s effort to make much of the small number of cases where less than 50% of the maximum penalty was imposed is slightly disingenuous. BIS’s tendency to multiply violations in charging letters is no secret. Each illegal export is seen as a violation of two or three overlapping rules. Indeed, in another article (subscription required) in the same issue of The Export Practitioner in which Ms. Wysong’s article appears, Mark Menefee, former director of BIS’s Office of Export Enforcement, boasts about this practice:

BIS has had a long-standing policy of charging multiple violations arising from a single transaction. I proudly did it, too, when I was director of the Office of Export Enforcement

Mr. Menefee justifies this practice on the ground that “multiple charges result in higher penalties, thereby increasing deterrence.”

That may well be the case outside of voluntary disclosures, but for Ms. Wysong to claim that voluntary disclosures lead to significant mitigations when they have no impact on BIS’s tendency to pile on violations in charging letters misses the point.

The UAE was apparently as surprised as I was by the veiled threats of action delivered at WITA yesterday by BIS Assistant Secretary Chris Padilla. During his speech, Padilla indicated that unspecified sanctions against the UAE were imminent because of diversion of U.S. origin goods from the Emirates to Iran and Syria.

Abdulla Bin Ahmed Al-Saleh, undersecretary of the Ministry of the Economy of the UAE, had this to say:

This is truly a surprising claim and I am sure it will raise many reservations. Actually our cooperation and coordination with several U.S. government departments over this issue is very close and effective. . . .We are very happy with this cooperation and consistently working to make it even stronger.

Not to be overly cynical here but since the UAE trades regularly with Iran and Syria, the occasional diversion of U.S. goods to both those countries really doesn’t ruin anyone’s day in Dubai. So of course they are happy with the current state of affairs.

Illya Antonenko, one of our intrepid associate editors, attended a presentation today at the Washington International Trade Association by Chris Padilla, Assistant Secretary of Commerce for Export Administration. As expected, Mr. Padilla continued to tout BIS’s plans to expand the Validated End User (VEU) concept to China and beyond, with India being the next country on BIS’s radar screen. We have previously expressed our view here at ExportLawBlog that national sovereignty issues may complicate, if not prevent, the kind of in-country inspections by USG officials that the VEU process contemplates.

Of more interest, in our view at least, was the appearance by Mr. Padilla of stepping up the rhetoric about BIS’s concerns with the UAE. Avid readers of BIS consent orders — and there must be some of you out there other than me — have no doubt noticed that Dubai seems to be the current transshipment point of choice for exporters hoping to sneak things into Iran or other sanctioned destinations.

The Assistant Secretary repeated several times his concerns over the UAE’s “alarming lack of oversight” that has led to repeated diversions of shipments at the ports in Dubai and Abu Dhabi to Iran and Syria. He said that if the UAE does not adopt and implement an export control regime within months, then the US will take some steps, although he did not specify what steps might be taken. According to Mr. Padilla, the US has talked to the UAE for years about this issue and provided technical assistance to the Emirates to assist its export control program. Nevertheless, Mr. Padilla made it clear that “the time is running short” on this issue for the UAE.

Hong Kong was singled out by Mr. Padilla as a country having a good program of export controls to prevent diversion. This seems an odd time to be patting Hong Kong on the back in this regard since it was just last month that BIS issued an order denying export privileges to an exporter who had been transshipping items to the PRC through Hong Kong.

UPDATE: The prepared text of Assistant Secretary Padilla’s remarks to WITA can be found here.