Late last week, the Office of Foreign Assets Control (“OFAC”) designated the Soho Mall in Panama City, Panama, as a Specially Designated Narcotics Trafficker under the Foreign Narcotics Kingpin Sanctions Regulations. The action was taken based on OFAC allegations that the Mall was engaged in money laundering on behalf of Waked Hatum whom OFAC also designated based on its belief that he and his organization were engaged in drug trafficking and money laundering.

The effect of that designation is set forth in section 598.202 of the Foreign Narcotics Kingpin Sanctions Regulations, which we cite in full because of its curiously fractured English (apparently translated from Middle English into Sanskrit before being rendered into a Modern English of sorts):

Except to the extent provided in regulations, orders, instructions, licenses, or directives issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, there are blocked as of the effective date, and any date thereafter, all such property and interests in property within the United States, or within the possession or control of any United States person, which are owned or controlled by a specially designated narcotics trafficker.

“There are blocked”? Seriously?? Section 598.203 contains the normal provision prohibiting “any transaction or dealing” by a U.S. party in any “property or interest in property” of any specially designated narcotics trafficker.

With that background, General License No. 4, which permits certain transactions pertaining to the Soho Mall, comes as something of a surprise. The General License permits shipments of goods by U.S. persons to “non-designated” stores and other tenants in the mall provided the goods were ordered before May 5 and the delivery is completed prior to July 6. Yes, you read that right. The general license does relate to “non-designated” stores in the mall.

While it’s easy to understand the need for some license to wind-down operations by U.S. persons with the designated mall (a license, by the way, that was not issued), it is hard to understand the need for such a license for the non-designated stores in the mall itself. This license would only be necessary if OFAC thinks that somehow the designated mall has an “interest in” the inventory of the non-designated stores in the mall, a rather surprising idea at best. I can’t imagine what kind of interest this is other than perhaps the mall’s interest that the stores will sell their inventory so that they can pay their rent. By that logic, the mall also has an interest in all the inventory that the stores may have at other locations. So, if there is a MacDonald’s in the food court, no U.S. person can make any deliveries to any other MacDonald’s owned by the same franchisee anywhere else in the world.

It is difficult at this point to see what meaning, if any, is left for the phrase “interest in property.” Of course, OFAC, like Humpty-Dumpty in Alice in Wonderland, has little concerns for the niceties of logic and meaning

When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”

Apparently OFAC thinks that it can.

Photo Credit: Soho Mall, Panama via Soho Facebook Page http://bit.ly/1rPCNCJ [Fair Use]

Processadoro Campofresco, Inc., a Puerto Rican fruit juice processor and packager, has agreed to pay to OFAC $27,000 in connection with its purchase of passion fruit juice and pulp from a Colombian company designated under OFAC’s narcotics trafficking sanctions. This may represent the only time someone has been broken the law by buying fruit juice from a drug dealer.

Of course, when you look into this further, it’s not clear that “Frutas Exoticas Colombiana S.A.” — the Specially Designated Narcotics Trafficker (“SDNT”) involved — is in fact a drug dealer. Leaving aside that the OFAC notice announcing the settlement botched the name of the SDNT involved, which is actually (and more grammatically) Frutas Exoticas Colombianas S.A., the drug dealers in question have been out of the picture since 2005, when the Colombian Government kicked out Lorena Henao Montoya, the widow of narcotics trafficker Ivan Urdinola Grajales, and took over their holdings in Frutas Exoticas.  The Colombian government did this in response to OFAC’s designation order several months before in an effort to keep the company alive and to protect its innocent workers and their families. So, in fact, this case involves getting fined for buying passion fruit juice from the Colombian government.

OFAC knows this, of course, and issued a release stating that it would consider licenses on a case-by-case basis for dealings with Frutas Exoticas. This doesn’t help Campofresco, which, of course, did not apply for a license in the first place. Still it raises a number of questions. To begin with, what would OFAC look at on this case-by-case basis now that the government owns Frutas Exoticas? The type of fruit juice involved? Pineapple versus passion fruit? (Passion fruit, I suppose, being presumptively evil for the name, if nothing else.) The party of the President of Colombia? His birthdate and astrological sign?

The biggest question, of course, is this: what remains to be served by keeping a company once owned by narcos, but now seized and owned by the government, on the list at all? The answer appears to be that nothing is served unless the idea is to punish the Colombian workers who harvest the fruit and mash the pulp for the bad judgment of having been employed by a company once owned by a narcotics trafficker.