Pay attention to the by-lines on posts here now that my colleague George Murphy has agreed to contribute posts. The post just above this one — the one about the “non-egregious” OFAC violation by San Corporation — comes from George. You can read more about George here.

If you say nice things in the comments to his post, we might be able to convince him to stick around.

This is a slightly off-topic post, but since many export professionals also have security clearance issues in their portfolio, I think they might find this post interesting. I also make a labored attempt to find an export law connection in the last paragraph of this post for any traditionalists out there.

The following item ran as a letter to the editor in today’s Washington Post:

Kudos to John Hamre [“This is no way to weed out spies,” Washington Forum, Feb. 22] for taking on some of the absurdities in how our government investigates candidates for security clearances.

During the most recent investigation into my own clearance renewal, the responsible agency refused to sign off. The reason? I had failed to file a foreign-contact report on an English-born woman I had known for many years and with whom I am still close. At that point in time, I had held a top clearance for more than 20 years and had served in several positions of significant trust. I had even disclosed the relationship on my application, but the government was correct: I had never filed that report.

I asked for a waiver on the grounds that she was naturalized in 1955 and had therefore been an American longer than me, even providing a copy of her naturalization certificate. It was all to no avail, however, so I dutifully filed a report disclosing that I was in regular contact with my mother. My clearance was renewed a few weeks later.

If this kind of thinking from the federal government is encountered in gauging compliance by foreign licensees with the (relatively) new dual national rules, no one will ever rely on the exception in those rules for certain foreign dual nationals. Those rules require foreign licensees to determine whether foreign dual nationals with one nationality in an embargoed country have too much contact with other persons in the embargoed country. If a foreign national still talks to his mother in, say, China, then there could be trouble. Maybe it’s okay if the employee in that situation just sends his mom a card on Mother’s Day and leaves it at that. Phone calls and trips home, however, are out of the question.

Last week, Aviation Week repeated claims by House members Frank Wolf and Lamar Smith that employees of NASA’s Ames Research Center were being investigated for unauthorized release of ITAR-controlled technical data. Specifically, the two members claimed that the NASA employees released information about a space propulsion system at a conference at which Chinese nationals and foreign officials were present. But the kicker, according to Wolf and Smith, was this:

We were very concerned to learn earlier this week that despite the U.S. Attorney’s request for permission from the Justice Department to proceed with indictments, this request was recently denied without explanation, despite the backing of both the FBI and the U.S. Attorney’s office. We are deeply concerned that political pressure may be a factor and are formally requesting an investigation into the circumstances of the Justice Department’s actions with regard to this case.

But, according to a report in yesterday’s Mountain View Voice, the prosecutor allegedly making the request to indict said that the two Congressman were wrong.

On Feb. 12 a statement from Melinda Haag, the U.S. attorney for the Northern District of California, contradicted Wolf. She denied that her office had sought an indictment.

“I am aware of allegations our office sought authority from [the Justice Department in Washington, D.C., to bring charges in a particular matter and that our request was denied,” Ms. Haag said, according to the Washington Times. “Those allegations are untrue. No such request was made, and no such denial was received.”

Of course, I’m shocked, shocked to hear that Congressmen might get export matters wrong.

ABOVE: Pharmacy in Iran

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A report just released by the Woodrow Wilson Center faults U.S. sanctions for critical shortages in medicines in Iran. Although there is, in theory, an exemption in the sanctions which permits the licensed sale of medicines to Iran, other provisions of the sanctions — particularly those targeting Iranian finacial institutions — have, as a practical matter, cut off the exports of medicines from the United States to Iran. As the report notes:

Presently, despite provisions of limited exemptions in American and European sanctions that are meant to facilitate humanitarian trade with Iran, the intertwined structure of the sanctions regime makes it nearly impossible to do so. As an American industry lobby group USA Engage explained in a letter to President Barack Obama in September 2012, “What is ostensibly permitted by license under one rubric is in fact ruled out by express prohibition under another.” Blacklisting Iran’s main banking infrastructure and cutting the Islamic Republic from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) created obstacles for international trade; trade in humanitarian goods, including medicine, is no exception. By removing the larger Iranian banks—especially Bank Tejarat, which is the country’s main trade bank—from the system, the banking circuit was cut between the Iranian importer of legal humanitarian goods and the seller.

In addition the report notes that draconian enforcement actions and gargantuan penalties from OFAC have discouraged many financial institutions from having anything to do with even legitimate and licensed pharmaceutical sales.

The recent experience of a reputable Iranian pharmaceutical group shows the magnitude of the problem. When a senior company representative flew to Paris to present a French bank with documentation showing that the trade was fully legal, he was told: “Even if you bring a letter from the French president himself saying it is OK to do so, we will not risk this.”

Further complicating matters, the U.S. sanctions have caused supplies of hard dollar currencies to dry up, leaving Iranian pharmaceutical distributors with no money to pay for even licensed transactions.

The author of the report proposes the simple and obvious solution: an exception to the financial institution sanctions for licensed sales of medicines needs to be put in place. Additionally, the author notes that even with that change, a good deal of diplomacy will be required with foreign banks to assure them that the United States will not seek to impose crippling sanctions on them if they become involved in financing exports of medicines from the United States to Iran.

First National Bank, one of the oldest banks in South Africa, has announced that it will close all accounts held by any person or entity listed on the Specially Designated Nationals and Blocked Persons list of the U.S. Office of Foreign Assets Control (“OFAC”). No U.S. person may engage in any transaction with a person or entity on that list, commonly referred to as the SDN list, without a license from OFAC, and any property of any person or entity on that list that comes into the possession of a U.S. person must be blocked.

Needless to say, First National Bank is not a U.S. person and is not, strictly speaking, subject to OFAC’s rules with respect to persons and entities on the SDN list. Nevertheless, it said yesterday that it would close all accounts held by anyone on the SDN list. The announcement followed the bank’s decision to close the account of the Al Aqsa Foundation of South Africa, which is, indeed, on OFAC’s SDN list. In explaining its decision, the a spokesperson for the Bank stated:

It has come to the bank’s attention that the foundation is expressly listed by the US Department of Treasury‚ [OFAC] and other international sanctions lists. The listing of the foundation has been verified with reference‚ inter alia‚ to the addresses contained in the listings documents.

The international financial community impose stringent obligations in respect of the maintenance of banking relationships with entities listed by OFAC‚ and the decision by FNB to terminate its relationship with the foundation is a consequence of this fact alone.

What this probably means, in more direct terms, is that the bank feared that there was some risk that transactions it might engage in on behalf of Al Aqsa as a customer might come into the possession of a U.S. bank which would then block the funds. And even though the bank shouldn’t be liable to reimburse Al Aqsa for the lost funds, the whole affair would be a giant headache for the bank. In response, Al Aqsa accused the bank of killing orphans, saying:

This will force a reputable‚ decade-old organisation that supports 1500 orphans every month to shut its doors‚ thus terminating the only lifeline these children have.

OFAC, when it designated Al Aqsa, said that the group used its humanitarian activities as a disguise for its role as “financier of terror.”