ExportLawBlog » 2012

Archive for January, 2012

Jan

31

With Friends Like That . . .

Posted by Clif Burns at 11:18 am on January 31, 2012

ABOVE: Sharif Univ. of Technology

Seyed Mojtaba Atarodi, a professor at Tehran’s prestigious Sharif University of Technology was arrested on December 7, 2011, when he stepped off a plane in Los Angeles where he had arrived for a medical visit to his brother’s cardiologist. The criminal complaint against him is sealed and the arrest was only made known because his name shows up in the Federal Bureau of Prisons inmate locator.

A bail hearing was held last week and Atarodi has been released on bail, partly due to his health problems. He has recently had two heart attacks, two heart surgeries and a stroke. Articles published by Atarodi that can be found on the web appear to deal mainly with semiconductor and microchip technology without any specific defense applications.

The U.S. government has still not released any information on the charges against Atarodi, although it is widely, and legitimately, assumed that they are export related. A spokesman for Sharif University said that Professor Atarodi was charged with buying scientific equipment from the United States, stating:

He was trying to buy some equipment for his lab, and the equipment was very, very simple, ridiculously simple stuff that anybody can buy. …

An official statement released by Sharif University, which appears to be aware somehow of the items mentioned in the indictment, said this about the items in question:

The items mentioned in the indictment, if truly purchased by him are all simple, basic, and elementary components and equipment that are easily sourced and can be found in every electrical engineering department. It is so disappointing to note that most of the items in question are not even the so called â€œdual useâ€ equipment.

Of course, the Iran sanctions cover all items of any sort exported from the U.S., although an arrest and criminal prosecution is rare for items without some further strategic significance.

Even though the U.S. government’s lips are sealed, Atarodi’s defense counsel is not quite so taciturn and said to the Associated Press reporter that his client was more or less guilty:

Kohn said prosecutors “meticulously” built their case against Atarodi, who had come to Los Angeles seeking treatment from his brother’s cardiologist.

Meticulously? A statement like that, if he has been accurately quoted, makes you wonder which side of the case the defense attorney is being paid to argue. I suppose that if the government case is so “meticulous,” the alleged defense attorney can just teach Mr. Atarodi how to say “guilty” in English, collect his CJA reimbursement, and wait for another appointment.

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Jan

24

Bye Bye, TSRA?

Posted by Clif Burns at 6:34 pm on January 24, 2012

Yesterday, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added Iran’s Bank Tejerat to the list of Specially Designated Nationals and Blocked Persons List (the “SDN List”). This means that no U.S. person may engage in financial transactions with Bank Tejerat and all assets of Bank Tejerat that come into the possession or control of U.S. persons must be blocked.

The real impact of this is that this may well signal the end of legal exports of agricultural products, medicine and medical devices to Iran under the authority of the Trade Sanctions Reform and Export Enhancement Act of 2000, or TSRA (tis’-ruh) in Exporteranto, the lingua franca of export professionals. Exports to Iran licensed by OFAC require that the exporter must deal directly with a non-Iranian bank and that the non-Iranian banking intermediary may not use an Iranian bank on the SDN List to complete the financial aspects of the transaction.

Here is a link to a comprehensive list of Iranian financial institutions on the SDN List. As you can see, the U.S. has now designated what I believe to be all Iranian banks that are involved in international financial transactions. Here is a list on Wikipedia purporting to be all the private banks in Iran, but I am unaware of whether any of these other banks are able to engage in international transactions, although the website of EN Bank suggests that it may be able to handle international financial transactions.

That may mean, I’m afraid, that as a practical matter, TSRA exports to Iran will be cut off because there is no way for the U.S. exporter to be paid. If anyone is aware of any other banks that can be used for TSRA exports to Iran and that are not on the SDN List, please share that in the comments section.

Couple this with OFAC’s recent action putting most (and perhaps all) shipping ports in Iran on the SDN List when it designated Tidewater Marine, the executive branch has now effectively nullified the intent of Congress when it passed TSRA. This nullification could easily have been avoided if OFAC issued (or issues) general licenses that permit licensed TSRA transactions to use Iranian banks even if they are on the SDN List and to use ports on the SDN List for licensed TSRA transactions. But there is no indication that this is going to happen.

Of course, in the present environment, it is unlikely that Congress will protest this de facto executive repeal of the act.

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Jan

23

Massachusetts Man Pleads Guilty to Illegal Export Charges

Posted by Clif Burns at 8:00 pm on January 23, 2012

Category: Criminal Penalties • DDTC

Rudolf Cheung, who is the head of the Research & Development department of Microwave Engineering Corporation in North Andover, Massachusetts, pleaded guilty on January 20, 2012, to charges that he violated the Arms Export Control Act in connection with unlicensed exports of military antennae to Singapore. A copy of the criminal information detailing the charges can be found here.

The story begins in June 2006 when an unnamed company in Singapore sought to order certain military antennae from Microwave Engineering. In preparation for requesting an export license, Microwave Engineering asked the Singapore company to execute a Form DSP-83 (Nontransfer and Use Certificate). When the company, citing its own internal policies, refused to sign the DSP-83, the sale and export were cancelled by Microwave Engineering’s export compliance officer.

When Cheung learned of the cancellation of the sale, he contacted another Massachusetts company, and agreed with that local company that it would purchase the military antennae and ship them to the company in Singapore. Thereafter, the local company purchased antennae from Microwave Engineering and exported them without license to the company in Singapore. The local company also purchased antennae from Microwave Engineering for export to another company in Singapore, Corezing International. Corezing is subject to another indictment, and the U.S. is seeking extradition, in connection with its role in the exports of radio modules from the United States to Iran which were later found in improvised explosive devices in Iraq.

The criminal information alleges that Cheung was aware that the purchases by the unnamed local company were destined for the customer in Singapore and that he took no action to stop these exports or to obtain the required licenses from the Directorate of Defense Trade Controls (“DDTC”).

Moral of the story: if your export compliance officers stops a sale, it is probably not a good idea to try to find another way to make the sale.

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Jan

19

Would You Like a Side of Sanctions with Your Pad Thai?

Posted by Clif Burns at 7:37 pm on January 19, 2012

Category: OFAC

ABOVE: Nalinee Taveesin

Any U.S. companies doing business with the Thai government are going to have to exercise some additional caution after Thailand’s Prime Minister Yingluck Shinawatra appointed Nalinee Taveesin as PM’s Office Minister. Ms. Taveesin is on the SDN List maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”). U.S. persons are forbidden by law to engage in any transactions with individuals on the SDN List.

Ms. Taveesin was placed on the list because of her alleged involvement in various transactions with Grace Mugabe, the wife of Zimbabwe’s President Robert Mugabe. Taveesin claims it’s all a huge misunderstanding, that she never was involved in any business deals with Grace Mugabe, and that she merely had become friends with Grace Mugabe when she came to Thailand for a New Year’s holiday vacation.

The issue now is whether Ms. Taveesin’s presence on the SDN list has any impact on business deals with the Thai government in which she may be involved. The SDN list would seemingly bar transactions with her both in her private and in her official capacity. OFAC has, at least in the case of the Palestinian Authority, held that the presence of sanctioned individuals in a government agency or body could prevent transactions with the government agency itself, effectively eliminating any notion that someone can be sanctioned vis-Ã -vis their private activities but not their official governmental activities.

I’ll have to be honest and say that I have no idea what the PM’s Office Minister in Thailand does, but U.S. businesses doing business with the government of Thailand should be wary and make sure that Ms. Taveesin has no connection with, or involvement in, the transaction.

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Jan

18

Mystery Solved (Maybe)

Posted by Clif Burns at 6:29 pm on January 18, 2012

Category: BIS • DDTC

MMIC In a post back in December titled “Imaginary Numbers,” I noted that the list of commodity jurisdiction determinations by the Directorate of Defense Trade Controls had some puzzling entries:

Three entries on the list, two for a high mobility electron transistor (â€œHMETâ€) and one for a microwave monolithic integrated circuit (â€œMMICâ€), indicate that the correct classification for these items is ECCN 3A982. The problem is that there is no ECCN 3A982, and there has never been, at least that I could find.

Well today I came across a notice of a final rule by the Bureau of Industry and Security, dated January 9, 2012, and effective on the same date, which creates a new ECCN 3A982 for HMETs and MMICs. Of course, the mystery remains as to how the DDTC could classify something as ECCN 3A982 before the ECCN actually existed, but I suppose that only bothers people concerned about the rule of law and other minor details.

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