The over-burdened Office of Antiboycott Compliance (“OAC”) at the Bureau of Industry and Security, which engaged in all of three enforcement actions in 2009, is gunning for a record this year having just released its tenth settlement agreement for 2010. The lucky victim is Dallas-based Multicam, Inc., which agreed to pay $28,800 to settle allegations of eight violations of BIS’s anti-boycott regulations.

As usual, the settlement documents are crafted so as to provide as little guidance as possible to other exporters as to the exact nature of the violations. This is probably because OAC is so overwhelmed with enforcement actions that it really doesn’t have the time to fuss with such administrative diversions as exporter education. Of course, this blog is only to happy to take up the slack from the OAC and to try to explain the nature of the violations that cost Multicam almost $30,000.

Four of the violations were for engaging in prohibited boycott activities by furnishing information about business relationships with boycotted countries in violation of 15 C.F.R. § 760.2(d). Based on a table in the settlement documents, it appears that Multicam provided to its purchasers in the U.A.E. four “agent vessel certificates” that the vessel carrying the goods was eligible to enter U.A.E ports or, in one instance, “Arab ports.”

The OAC has always considered language as to eligibility to enter ports of individual countries engaged in the Arab League boycott or alternatively to enter “Arab ports” as a coded affirmation of compliance with the boycott. An interpretation in Supplement 1 to part 760 makes clear the owner, master or charterer of the ship can supply that certificate pursuant to an exception in section 760.3(c) permitting compliance with the documentation requirements of the boycotting country. But no one else can make that certification. And here it looks like an agent for the vessel, and possibly Multicam itself, made the certification. Moreover, certification of eligibility to enter “Arab ports” rather than U.A.E. ports would fall outside the 760.3(c) exception.

The four remaining counts were for failing to report receipt of boycott requests in violation of section 760.5. According to the table attached to the charging letter, one of the documentary requirements of three letters of credit was a certificate from the “shipping company or its agents” that the vessel could enter U.A.E. ports. Section 760.5(a)(5)(viii) exempts from the reporting requirements a request for a certificate from the “owner, master or charterer” of the vessel. The “shipping company” may not be any of these three things and an agent is certainly not any of those three things. Accordingly these were reportable requests. The fourth letter of credit at issue required as documentation a certificate by the “carrier/master” or its agent that the ship could enter “Arabian ports.” Here the carrier may not be the owner of the ship. Additionally, the 760.5(a)(5)(viii) exception doesn’t apply to certifications relating to “Arabian ports” as opposed to specific countries or groups of countries. For reasons known only to OAC, “Arabian” is not a reference to a group of countries. Go figure.

For those wondering what the logic is behind the relatively low fines imposed by OAC in these cases, notwithstanding that the office has the power to impose fines of p to $250,000 per violation, it’s simple. OAC wants to keep the fines sufficiently low that the fine is less than what it would cost to litigate the fine. There is considerable question whether the antiboycott regulations are still in force after the failure of Congress to renew the Export Administration Act. The regulations could only be in force if they can be extended by the President pursuant to the provisions of the International Emergency Economic Powers Act. And it’s hard to see how the Arab League boycott is an “unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States.” OAC clearly doesn’t want to have to argue this in court.

A multi-step attack targeting defense exporters was recently reported on Symantec’s security blog. This ploy first invaded one defense contractor’s network where it set up a directory on the system for fake press releases. The invaded network was then used to send emails from that network to employees of a second defense contractor. Those emails reported (falsely) that the CEO of the second defense contractor had been arrested for violations of the Export Administration Act and contained a link back to the fake press release directory on the first contractor’s website. Clicking that link would deliver the payload to the user’s computer.

Often these malware attacks originate outside the United States from people whose proficiency in English grammar and spelling is on the severely limited side, thereby providing the first clue that something is amiss. (If cybervillains could speak decent English, after all, they could probably get real jobs.)

The email with the payload link read as follows:

According to an official spokesperson of FBI, [name deleted], the CEO of [name deleted] had been detained for further investigation. The US government is accusing [name deleted] of vialating [sic] Export Administration Act. It is said that during 2001 and 2008 [name deleted] had been involved in several illegal technique exportation to Iran and North Korea. Click here for further information. [Link deleted.]

The missing “the” in front of “FBI” and “Export Administration Act” makes it sound like it was written by Natasha from Rocky and Bullwinkle and suggests a Slavic country as the origin. Read the email aloud in your best Natasha accent imitation and see if you don’t agree. My vote is for someone in Ukrussia as the culprit. (A friend of mine in the anti-malware business says that people in Ukraine and Russia are responsible for an alarmingly high number of malware attacks and has coined “Ukrussia” as a shorthand name for the two countries).

The lesson to be learned here is to think before you click. Look at an email, even from what appears to be a trusted source, with care for telltale signs that it was cooked up in Ukrussia and not in Rosslyn, Virginia. If you think that your competitor’s CEO may be headed for the hoosegow, try a Google News search rather than clicking an email link. And don’t forget that the recent large-scale invasion of defense networks by Chinese hackers relied on getting defense company employees to click on links in emails from people that they had met on Facebook and other social networks.

[Thanks to a reader for emailing a link to the Symantec article.]

ABOVE: Majid Kakavand

---

Color me surprised (not really) but this afternoon a French court rejected the U.S. request to extradite Majid Kakavand, an Iranian alleged to have been involved in the export of U.S.-origin items to Iran through a company he created in Malaysia. This blog has posted on the Kakavand case here, here, and here. Today’s decision was foreshadowed by earlier findings by French government agencies that the U.S.-origin items were not dual use items, as the U.S. claimed, and that therefore their export to Iran didn’t violate French law, a precondition to granting an extradition request in this case.

A spokesman for the Department of Justice indicated that the Department wouldn’t give up and would continue to pursue Kakavand. Since Kakavand says he’s hopping on the first plane back to Tehran, one has to wonder what the DOJ has in mind here. Are they going to request that Iran extradite him? I suppose that they are hoping that Kakavand will visit, say, Georgia or some other country that might be more favorable to an extradition request or an extraordinary rendition. I’m not taking that bet.

A French-language press report in L’Express added some interesting details. Kakavand’s case had been diplomatically linked to the case of Clotilde Reiss, a French citizen being held in Tehran for having violated Iranian law when she took photographs of the Iranian election protests and emailed them to a friend. Nevertheless, Kakavand threw Ms. Reiss under his departing Airbus by saying he hoped she would be released “if she were innocent.” But, if she did take those pictures, well, too bad for her.

Mr. Kakavand, who is unlikely to be travelling anywhere outside of Iran other than France, indicated his desire to return to the land of Voltaire and Montesquieu, noting, as L’Express put it, that “il connaît déjà un peu la langue et qu’il a appris, malgré tout, à aimer.” (“He already knew a little bit of French, which he had, notwithstanding everything else, learned to love.”) He may, however, have a hard time finding copies of Proust and Stendahl to read in Tehran.

Last week Emenike Charles Nwankwoala, a 49-year-old resident of Laurel, Maryland, pleaded guilty to charges that he exported shotguns, pistols and ammunition to Nigeria without a license. According to the press release from Immigrations and Customs Enforcement (“ICE”), Nwankwoala had been exporting these items for ten years to Nigeria concealed in shipping containers with automobiles, hospital beds, home furnishings and the like. For at least part of this period, he was employed as a probation officer.

The investigation appeared to have started after Nwankwoala got a little chatty with an undercover ICE agent in May 2009. ICE had likely been tipped off to Nwankwoala’s side business by one of the firearms dealers that sold him the weapons, although the press release doesn’t indicate that. Thereafter, ICE detained one of Nwankwoala’s shipping containers and found the contraband goodies concealed inside.

Interestingly, Nwankwoala had previously applied for licenses from the Department of Commerce’s Bureau of Industry and Security (“BIS”) for Mossberg 500 and Maverick 88 shotguns of the type found in the container. (BIS licenses shotguns with barrel lengths of 18 inches or greater.) A license application by Nwankwoala for a Mossberg 12-gauge shotgun for export to Nigeria for personal use was granted. A subsequent application in February 2009 for 45 Mossberg 500 and Maverick 88 shotguns to be used at a shooting range in Nigeria was denied when Nwankwoala could not provide documentation of the existence of these firing ranges. Why Nwankwoala had a sudden crise de conscience and began applying for licenses rather than just stuffing them into the trunks of cars in shipping containers is not clear.