Archive for the ‘Iran Sanctions’ Category

May

22

Do Newly Proposed Iran Sanctions Target Iraq?

Posted by at 8:53 pm on May 22, 2013
Category: Economic Sanctions • Iran Sanctions • OFAC
Central Bank of Iraq [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File:Baghdad-bank-hires.jpg
ABOVE: Central Bank of Iraq

Another day on the Hill, another round of sanctions against Iran. As if there were nothing else for these politicians to do. Academic question: how many could actually point out Iran on an unlabeled map? Just a thought.

The newly proposed sanctions are in H.R. 850, imaginatively titled the Nuclear Iran Prevention Act of 2013 which today was voted out of the House Foreign Affairs Committee. The bill, with the euphonic acronym NIPA, is likely to pass both the House and the Senate, there being nothing else, apparently, on the legislative agenda.

One of the major features of the proposed legislation is to extend the secondary sanctions on foreigners who deal with Iran. Currently those secondary sanctions basically cover petrochemical transactions. NIPA would give the President the authority to impose sanctions on foreign individuals who engage in a “significant” transaction with the Central Bank of Iran or other designated Iranian financial institutions for the purchase of goods or services by or from a person in Iran.

But the most interesting provision was one that was slipped into today during the committee markup. In an Amendment in the Form of a Substitution a new section 205 was added That section prohibits a foreign financial institution from opening a correspondent account at a U.S. financial institution if the foreign bank facilitated a “significant” transaction with the Central Bank of Iran or any other designated Iranian bank in a currency other than that of the country in which the foreign bank is operating.

The target of these sanctions is unstated but seems clear. The United States has objected to the Central Bank of Iraq permitting Elaf Islamic Bank to participate in its weekly hard currency dollar auctions even though Elaf had been designated under CISADA for supplying U.S. dollars to Iran. Perhaps implicitly acknowledging the political and diplomatic repercussions of sanctioning the Central Bank of Iraq, the proposed bill permits the President to grant waivers.  This gives Congress a version of plausible deniability and the ability to blame the Executive Branch if these new sanctions go awry.

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Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

29

The Mysterious Case of Professor Atarodi

Posted by at 11:47 pm on April 29, 2013
Category: Criminal Penalties • Iran Sanctions
Mojtaba Atarodi http:/http://atarodi.sharif.ir (Fair Use)
ABOVE: Mojtabi Atarodi

Back in January 2012, this blog first reported on the strange case of Mojtabi Atarodi, a professor at Tehran’s prestigious Sharif University of Technology who was arrested in December 2011 the moment he landed in Los Angeles on the way to a medical appointment with his brother’s cardiologist. Several months later Atarodi was released on bail with a requirement that he wear a tracking device and remain under house arrest at his brother’s home in the United States.

The charges against Atarodi were (and still are) unclear, but Sharif University shortly after the arrest released a statement that Atarodi was accused of trying to buy basic laboratory equipment. The United States government has never released a statement on the case, which has remained sealed and still does not appear on PACER more than a year after Atarodi’s arrest. PressTV, an Iranian media outlet, reported in January 2013 that Atarodi had been sentenced to 56 months in jail, although I was unable to find any other news story confirming this report.

Just as mysteriously as he was arrested and, perhaps, sentenced, Professor Atarodi has now been released and has returned to Iran. The professor traveled to Tehran by way of Oman, which reportedly was engaged in negotiations to release Atarodi. The government of Oman stated that he had been released for “humanitarian reasons.” The United States government has issued no statement on Atarodi’s release.

The PressTV report on Atarodi’s arrival in Tehran quoted Atarodi as saying:

The US authorities knew about my academic background. Even the prosecutor general told me I should have never been arrested, jailed or tried in the first place. He said he was embarrassed to put me on trial, but he had no choice. He said he did it after receiving orders from Washington.

Even though I have reservations about whether the prosecutor said he was “embarrassed” to put Atarodi on trial, the complete silence by the U.S. government on this case, and the fact that the case still remains sealed, certainly invites speculation that the case against Atarodi may have been, shall we say, less than stellar.

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Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

26

No Apps For Ayatollahs

Posted by at 1:10 pm on April 26, 2013
Category: Iran Sanctions • OFAC

Ayatollah Phone (original work from public domain and fair use elements)Samsung has just announced that, as of May 22, it is shutting off access from Iran to its mobile phone app store. The move, announced in an email to customers, was somewhat vague about the reason for the decision, citing only “legal barriers.”

I’m not so sure what those “legal barriers” are that would mandate shutting down the store entirely. To begin with, Samsung, which is  headquartered in South Korea, is not a U.S. person and isn’t subject to U.S. sanctions on Iran. One can be quite sure that no U.S. persons are involved in Samsung’s dealings in Iran, particularly since Samsung appears to want to continue to sell its phones and other electronic devices in Iran.

Even more perplexing, of course, is trying to reconcile the company’s stance with the general license issued by OFAC in 2010 authorizing the export to Iran of certain services and software incident to the exchange of personal communications over the Internet. The guidance issued by OFAC on that general license makes crystal clear that “free mobile apps related to personal communications” fall within the license. The guidance also announces “a favorable licensing policy” for license applications to permit export of paid mobile apps relating to personal communications to Iran.

Perhaps the real culprits here are the Angry Birds, the Bad Piggies, and the Fruit Ninjas. It is probably safe to say that these popular mobile device games, whether free, freemium or paid, do not relate to personal communications over the Internet and aren’t covered by either the general license or the favorable licensing policy. Rather than sanitizing the store by eliminating those pesky games, Samsung just decided to chuck the whole thing. And, of course, there may also be practical reasons why it was hard to keep the fingerprints of U.S. persons employed by Samsung off the app store.

Needless to say,  it is highly doubtful that whether the Samsung app store is open or closed will have any impact at all on Iran’s nuclear proliferation activities.

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Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

17

An Egregious “Non-Egregious” Sanctions Violation?

Posted by at 11:36 pm on April 17, 2013
Category: Economic Sanctions • Iran Sanctions • OFAC • Sanctions

Source: San Corporation (Fair Use)OFAC announced on Friday a settlement with California-based SAN Corporation (“SAN”) for an alleged violation of the Iranian Transactions Regulations that occurred in September of 2007.  OFAC alleged that SAN sold nutritional supplements to an entity in Kuwait with knowledge that their end use was to be in Iran.  SAN agreed to pay $22,500 to settle liability for the alleged violation.  OFAC reported that the base penalty amount for the alleged violation was $25,000.

OFAC determined that the alleged violation was non-egregious and it provided several conditions to support that finding: (1) its allegation involved one instance, (2) SAN had no history of prior OFAC violations and (3) the goods at issue, in OFAC’s words, “appear to have been eligible for a license” under TSRA.

What leaves us bewildered is the parade of horribles that OFAC also recites: (1) SAN did not voluntarily disclose the transaction to OFAC, (2) SAN acted with “reckless disregard” for sanctions law by selling to an entity in Kuwait with knowledge that end use was in Iran and having been informed by the Iranian end-user that intended shipment to Iran required an OFAC license and (3) SAN did not fully cooperate with OFAC by providing “incomplete and/or inaccurate statements” to OFAC.

Whatever all the reasons were behind OFAC’s agreeing to this settlement, the result is a good reason to give pause before going to OFAC with a voluntary disclosure. While much goes into a decision of whether to make a voluntary disclosure, it is important to assess enforcement actions like this one to determine carefully if efforts spent to prepare, submit and deal with a voluntary disclosure are worth it.

Clif adds: If shipping an item to Iran without a license even after the Iranian end-user tells you that a license is required isn’t enough to make something an “egregious” violation, I am not sure the word egregious has any meaning left.

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Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Mar

11

Qantas Jet Still Doesn’t Call Australia Home

Posted by at 5:01 pm on March 11, 2013
Category: Iran Sanctions

Koala Climbing Tree by David Iliff http://commons.wikimedia.org/wiki/File:Koala_climbing_tree.jpg (CC BY-SA 3.0)Qantas says it is shocked, shocked that a retired 747 it sold from a desert airplane graveyard in Arizona to a UAE middleman wound up in Iran. The sale came to light back in April 2012 when the Bureau of Industry and Security (“BIS”) issued a temporary denial order against Sayegh Group Aviation, the U.A.E. company that bought three 747s from Qantas and had already, through a series of interconnected straw companies, leased one of the aircraft to Aban Air in Iran.

According to the Sydney Morning Herald story linked above, the Iranian deal was uncovered by CSDS Aircraft Sales and Leasing, a California-based company which blew the whistle on the deal after Qantas rebuffed its own efforts to buy the planes from Qantas. CSDS said it had previously been approached by Sayegh to purchase aircraft, but that these approaches had raised “red flags” for it. When CSDS heard that Qantas sold the planes to Sayegh instead, it contacted U.S. authorities. The President of CSDS told the Sydney Morning Herald that Qantas “could have easily figured it out if they wanted to.”

Qantas, naturally, disagrees.

”It’s drawing a very long bow to suggest that we’re responsible for the conduct of third parties, who owned or leased aircraft several transactions after the original date,” a Qantas spokesman says.

”Whenever we sell an aircraft, we carry out extensive due diligence on the buyer and their intended use of the aircraft and include strict, specific clauses in the sale agreement reinforcing the buyer’s obligation to comply with all relevant international export controls and regulations.”

There is no evidence that Qantas is under investigation in the U.S. in connection with the sale of the 747 to Iran, so, apparently, U.S. authorities agree with Qantas.

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Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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