ExportLawBlog » Cuba Sanctions

Archive for the ‘Cuba Sanctions’ Category

Nov

4

Cuba Study Provider Settles OFAC Charges

Posted by Clif Burns at 7:48 pm on November 4, 2008

Havana Poster According to the latest civil penalty information released by the Office of Foreign Assets Control (“OFAC”), the Center for Cross-Cultural Studies (“CC-CS”), a Massachusetts-based company specializing in arranging university study programs abroad, agreed to pay $15,000 to settle allegations that it violated the U.S. embargo on Cuba. Interestingly, the fine appears to relate to activities conducted by CC-CS in connection with otherwise licensed activity.

As usual, the abbreviated squib provided by OFAC provides few details of what actually happened, but Jerry Guidera, a director of CC-CS, sent details of the situation to the website Havana Journal. According to Guidera, the dispute between CC-CS and OFAC centered on a program conducted by CC-CS and Willamette University in Salem, Oregon from 1997 to 2004 (In 2004 tightened OFAC regulations on educational activities in Cuba resulted in the elimination of most U.S. educational programs in Cuba.) CC-CS designed the program and handled the logistics using its staff in the U.S. and in Cuba.

An article from the journal Higher Education, also reprinted at the Havana Journal website, provides even more detail:

It was when the government blocked an attempted wire transfer, intended to cover program costs, in January 2004 … that Guidera said CC-CS came under governmental scrutiny.

â€œWeâ€™ve been dealing with this for almost five years now,â€ said Guidera, who added … that, in reaching the settlement, there was no finding of fault. He believes the regulations then in place allowed for subcontractors to act on licenseesâ€™ behalf. â€œWeâ€™re convinced that we would have won in court.â€

â€œIf we had infinite resources we would have kept fighting this one forever.â€

Actually, I don’t think CC-CS is on very strong ground here. The Cuban Assets Control Regulations are generally quite specific in detailing what sorts of transactions incident to licensed transactions are permitted, and there isn’t a broad exception for activities of subcontractors or agents of licensees. Moreover, section 515.565(a)(2)(vii) of those regulations, which was not changed by the 2004 amendments, seems to be quite clear that “the organization of and preparation for” licensed educational activities is permitted only “by a fullâ€“time employee of a [licensed] U.S. academic institution.” That would seem to suggest pretty clearly that CC-CS’s provision of logistics to Willamette with respect to its Cuba study program required a separate license.

Permalink

Comments Off

Sep

3

Wednesday Export Law Grab Bag

Posted by Clif Burns at 8:52 pm on September 3, 2008

We’re back from vacation and we’re back with a grab bag of things:

University of Tennessee Professor J. Reece Roth was convicted on eighteen counts, including violations of the Arms Export Control Act for permitting foreign graduate students to have access to information relating to an Air Force project on the use of plasma technologies for unmanned aerial vehicles. According to the report on the Knoxville News Sentinel‘s website, a key piece of evidence proving that Roth had knowledge that his conduct was illegal was a set of notes that divided the work between an American graduate student and the Chinese graduate student in order to keep export-controlled technical data away from the graduate student. When this arrangement impeded progress on the project, the students were allowed to share data. Roth claimed that he didn’t believe the information was export-controlled until the project netted an actual military product, a claim that would appear inconsistent with his initial division of work on the project between the American and the Chinese graduate student.
The Denver Business Journal supplies more information on the Platte River Associates prosecution for allegedly violating the Cuba embargo. The attorney for Platte River told the Denver Business Journal that the prosecution arises from training that the company gave to an employee of a Spanish company, Repsol, that had previously purchased geological modeling software used for oil exploration. The employee arrived with seismic data that appeared to relate to the western Caribbean and possibly to Cuba. There is apparently no allegation that Platte River dealt with any Cubans or the Cuban Government, nor any allegation that Repsol actually used the software in connection with a Cuban project. Instead, it now appears that the government’s case is based not on the sale of the software but the training of the Repsol employee. It’s still a tenuous connection without proof that Repsol used the software in connection with dealings with the Cuban government.
Someone has made a broad-ranging Freedom of Information Act request at the Office of Foreign Assets Control (“OFAC”), apparently seeking copies of all applications for licenses to export agricultural and medical products to Iran. This has prompted OFAC to send letters to licensees requiring the licensees to assert in writing any claims that information in these licenses is proprietary or confidential to the licensee. Does anyone have any information on who may be seeking this information and why? Please let me know in the comments section.

Permalink

Comments (8)

Aug

14

Campo de SueÃ±os

Posted by Clif Burns at 6:08 pm on August 14, 2008

Category: Cuba Sanctions • OFAC

Twin State Peregrine Winds Up The Twin State Peregrines, a little league baseball team from Vermont and New Hampshire, is currently playing ball in Cuba with Cuban teams their own age, the first little league tour of Cuba by an American team since 2000 and the first since more stringent travel regulations went into place in 2002. Obtaining approval from OFAC for the privately-funded trip took the team twenty months and three rejections until the travel license was obtained in March of this year. Ironically it’s easier to export cows from Vermont to Cuba than a bunch of pint-sized little leaguers.

News of the baseball tour to the island, not surprisingly, generated an alarmed reaction from some of the predictable corners of support for the Cuba embargo on the Hill. Congressman Lincoln Diaz-Balart called the OFAC action granting the license to the kids “very troubling.”

”Sporting events may be interpreted as diplomatic gestures even when they are not meant to be,” Diaz-Balart said. “And a sporting event is not an appropriate way to respond to the ongoing torture of political prisoners Yuselin Ferrera, Nelson Aguiar and many others.”

Vermont’s Senator Patrick Leahy took Diaz-Balart’s pitch and knocked it out of the park:

”He should pick on someone his own size,” [Leahy] said.

The latest report on the series has the Peregrines 1-1 in the series, losing 16-5 to the Santos and beating the Mangos 19-8.

Permalink

Comments Off

Aug

6

Chinese Company Fined $1.2 Million Over Cuba Trade

Posted by Clif Burns at 8:21 pm on August 6, 2008

Category: Cuba Sanctions • General

ABOVE: Nickel Production in Cuba

The latest release by the Office of Foreign Assets Control (“OFAC”) of recent civil penalty cases reports that Minxia Non-Ferrous Metals, Inc., remitted $1,198,000 to settle allegations that between 2003 and 2006 it purchased or otherwise dealt in Cuban metals. The matter was not voluntarily disclosed to OFAC.

Even though this is the highest fine imposed this year and is substantially higher than the typical fine for a violation of the Cuba embargo, OFAC is, as usual, parsimonious about the details of what happened. The information provided above is all OFAC had to say about the matter. So what led to such a large fine? We can only speculate, but there are some things on which to base such speculations.

Minxia Non-Ferrous Metals is a subsidiary of China Antimony Chemicals Co., Ltd., which, in turn, is a subsidiary of China Minmetals Non-Ferrous Metals Co., Ltd., which is, in turn, a subsidiary of the giant Chinese metal conglomerate China Minmetals Corporation. This climb up the corporate ladder may reveal what had OFAC in a snit about Minxia’s trades — namely, the $600 million joint venture between China Minmetals Corporation and Cuba to exploit Cuba’s large nickel supplies. China is one of the largest consumers of nickel which is a key component of stainless steel, and nickel is Cuba’s largest export — plenty there to get OFAC in a tizzy. In fact, the Bush administration announced a crackdown on nickel exports in July 2006, claiming that they constitute more than half of Cuba’s foreign income.

Sadly for the Chinese, if this was the cause of the fine, the Chinese interest in the nickel joint venture was recently bought out by Venezuela in what may not have been an arms-length, consensual transaction.

Permalink

Comments (1)

Jul

21

Platte River Associates Mystery Deepens

Posted by Clif Burns at 3:54 pm on July 21, 2008

Category: Criminal Penalties • Cuba Sanctions

ABOVE: Cuban oil well

Last week we reported on criminal charges filed against a Colorado software company for violating the Cuba embargo. We had hoped to see the criminal information when it became public because the charges seemed, well, a little bit fishy. Now it appears, according to this article in Boulder’s Daily Camera, that the criminal information won’t be made public until a “change of plea” hearing takes place in October. The company had previously pleaded not guilty to the charges.

That article also gives a fair amount of detail about the facts leading to the indictment including claims by the defense attorneys that the company had no direct dealings with the Cuban government:

Foreman, an attorney with Denver-based Haddon Morgan Mueller Jordan Mackey & Foreman, said Thursday that the allegations stem from Platte Riverâ€™s work in 2000 with Repsol, a Spanish oil and gas company.

He said the Boulder company sold its software program, which analyzes seismic and other ground data to assist in determining potential places to drill for oil, to Repsol in 2000.

A couple of months later, a Repsol employee came to Boulder for further training on using the software, Foreman said. At that time, a Platte River representative recognized that the seismic data looked as if it related to the Caribbean and Cuba, he said.

â€œI have no idea whether or not Repsol ultimately did anything with Cuba utilizing that software,â€ Foreman said.

This is all pretty attenuated as a basis for a criminal indictment. Platte River sold software to a Spanish company that then fed data into the program relating to areas around Cuba. Is Microsoft going to go to jail for selling Excel to a Canadian company that then uses the program to analyze its sales figures, including sales to Cuba? It strikes me that you don’t have criminal activity unless it can be demonstrated that Platte River knew that the software was going to be used to aid drilling in Cuba and was in fact later used to aid drilling in Cuba. Short of that, “no cigar,” as they say.

That being said, the mystery about this case only deepens. The change of plea hearing suggests that the defendants are now going to plead guilty and that some sort of plea agreement has been reached. But why would anyone plead guilty on the facts as they appear so far?

Permalink

Comments (1)