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Archive for May, 2012

May

21

Guess Who Is Doing Business in Iran?

Posted by Clif Burns at 6:18 pm on May 21, 2012

Peugeot Last Thursday, May 17, Ileana Ross-Lehtinen, who never saw a sanction she didn’t like, had her committee, the House Foreign Relations Committee, hold a hearing on sanctions in Iran. The Committee heard testimony from, among other witnesses, former Bush administration official, Mark Wallace, who now runs a lobbying group called United Against Nuclear Iran which, although it would prefer simply bombing Iran, will settle for sanctions as the next best thing.

UANI’s latest campaign is to pressure automobile companies to stop doing business in Iran. (If nuclear scientists can’t drive to work, that will apparently cripple Iran’s nuclear ambitions.) Wallace’s testimony before the Committee, however, contained this interesting nugget:

Despite its extensive business in Iran, Peugeot has partnered with American automaker General Motors, a company partly owned by the U.S. Treasury.

In fact, in March, General Motors bought 7 percent of Peugeot. The Treasury Department, which administers U.S. sanctions against Iran, owns about 25 percent of GM. And now it indirectly owns a piece of Peugeot which ships complete knock-down (CKD) kits to Khodro in Iran. Khodro then assembles and sells the Peugeots in Iran. Apparently, the export of CKD kits by Peugeot to Khodro in Iran has been stopped for the moment. Peugeot cites the risky financial situation in Iran and not the GM investment as the reason it temporarily stopped shipping CKD kits to Iran.

As part of its campaign against automakers, UANI is pushing an acronym-errific piece of legislation it calls the DRIVE act. That stands for the Debarment and Restrictions for Iranian-related Vehicle Enterprises Act and would require automakers to certify that they are not doing any business in Iran to be eligible for government contracts or financial assistance. (I suppose calling it the Car Restrictions Against Persians Act was out of the question.)

Before you accuse me of being soft on Iran, I do support smart sanctions which target goods that are useful for nuclear proliferation and groups in Iran involved in nuclear proliferation. However, keeping Peugeots out of Iran won’t accomplish much other than, perhaps, to bankrupt Iranian car repair garages that all do gangbuster business fixing broken-down Peugeots.

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May

18

Do You Know the Way to Mandalay?

Posted by Clif Burns at 3:18 pm on May 18, 2012

Category: Burma Sanctions

Burma Yesterday, in remarks made by Secretary of State Clinton With Foreign Minister of Burma U Wunna Maung Lwin after the two met, Secretary Clinton announced that the United States was suspending its sanctions against Burma.

Sort of.

Here’s what she said, which is the only official announcement so far of the new policy

Today, I am also announcing new steps to permit American investment in the country and export of U.S. financial services. These are the most significant adjustments to our previous policy that have been taken to date. The United States will issue a general license that will enable American businesses to invest across the economy, allow citizens access to international credit markets and dollar-based transactions.

Late in her remarks the Secretary indicated that the United States would maintain the arms embargo against Burma, which would prohibit sales of any item on the United States Munitions List to Burma.

But then came this curious exchange which suggested that the “general license” might not be so “general.”

QUESTION: Secretary Clinton, regarding the easing of economic restrictions, will the â€“ will U.S. companies be able to invest and trade with Myanmar state-owned companies, including in the oil and gas sector? And also, you talk about the corporate responsibilities of U.S. companies. Will these expectations be binding under U.S. law?

â€¦

SECRETARY CLINTON: Well, thank you. First, let me say our presumption is that our companies will be able to deal in every sector of the economy with any business. That is a rebuttable presumption in the event that there is a company whose reputation, whose practices, are not in keeping with our stated policies of corporate responsibility or other matters that rise to our attention. But the presumption is that our oil and gas companies, our mining companies, our financial services companies are all now free to look for investments that can be mutually beneficial to Burma and to them.

Huh? Presumption? What part of “general license” do we not understand here? Perhaps Secretary Clinton means that if the U.S. doesn’t like a particular investment made pursuant to the general license it can revoke this “presumption” and revoke the general license as to that transaction. That, of course, would mean that making a new investment in Burma would be more risky than most companies could tolerate. We will have to wait and see exactly what the general license says when it is issued.

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May

17

Traveling to the United States Can Be Dangerous

Posted by Clif Burns at 6:15 pm on May 17, 2012

ABOVE: Ulrich Davis Mugshot

On May 15, Ulrich Davis, a citizen and resident of the Netherlands, was sentenced to six months in prison and a $2,000 fine. He was charged with violating a Temporary Denial Order issued by the Bureau of Industry and Security (“BIS”).

The TDO in question was issued on October 1, 2007, against Aviation Services International, B.V., in the Netherlands, as well as affiliated and related individuals and entities in the Netherlands. Cyprus, and the UAE, and arose out of allegations that the parties subject to the TDO had shipped U.S. origin items to Iran. According to the Criminal Information, which served as the basis for Davis’s plea, Davis provided freight forwarding services involved in the export of acrylic adhesives and spray-paint coatings” from a company in the United States to an unspecified company listed on the TDO. All actions charged in the Criminal Information were undertaken by Davis entirely within the Netherlands and outside the United States.

The reason that Davis wound up being hauled in front of a U.S. federal district court and charged with violating U.S. criminal laws is that he traveled to the United States and was arrested at Newark Liberty Airport on his way back to the Netherlands from the United States. The U.S. takes the position that it has criminal jurisdiction over all persons, regardless of location and citizenship, for crimes arising out of their dealings with U.S. origin goods. This is not a position recognized by many other foreign countries, meaning that it would be unlikely that Davis could have been extradited from the Netherlands based on the actions alleged in this case, which all took place in the Netherlands and which did not violate Dutch law. But once he was in the United States — and voluntarily at that — whether he was extraditable under Dutch law was, at best, a moot point.

Moral of the story: if you live outside the United States and sell U.S. goods to Iran, postpone indefinitely any plans to visit Disneyland. (There is no indication of why Davis was in the United States. The reference to Disneyland is for illustrative purposes only.)

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May

14

eBay Busts Soldier in Iraq for Illegal Exports

Posted by Clif Burns at 5:24 pm on May 14, 2012

Category: Criminal Penalties

A recently filed criminal complaint accuses a former U.S. soldier of using eBay to export military items he obtained while serving in Iraq. Specifically, the defendant is accused of the unlicensed export of an Atilla-200 laser aiming device to Japan. The complaint details communications between eBay and the defendant which suggests that eBay tipped off federal investigators as to the export of the Atilla-200. As is often the case with criminal export prosecutions, the central issue in the case is whether the defendant had criminal intent since there seems to be little doubt that the export occurred and that no license was obtained.

The criminal complaint details three interviews between law enforcement and the defendant. In the first interview, conducted when the defendant was entering the United States through the Miami airport, the defendant allegedly admitted that he had stolen the item in question while serving in Iraq, but denied any knowledge of the International Traffic in Arms Regulations (“ITAR”) or its restrictions on the export of defense articles. In a second interview, conducted ten days later at the defendant’s home, he again admitted taking the item while on duty in Iraq. When asked why he had described the item in shipping documents as “used camera lens (optic),” he said that he did that as a result of instructions from the buyer and not because he was aware of ITAR restrictions on exporting the item.

Subsequently, the agents were given emails from the defendant’s Gmail account. One of these read as follows:

Sir,

Sorry late, I alrady [sic] payment.
Please check your paypal account
This
is ITAR itme[sic],If you ship,Please do not write AN PVS-14/7B or ATILLA-200
If you write invoice ex.car engine parts or car electronic parts ($100-$120)

In a third interview, conducted by telephone, the agent pointed out that the email quoted above mentioned that the ATILLA-200 was an ITAR item and instructed him to falsify the shipping documents. The defendant, according to the criminal complaint, continued to deny “that he knew what ITAR meant” and said that he had been truthful in prior interviews.

One semi-literate email from the Japanese purchaser seems a narrow thread on which to hang the required element of scienter, namely, that the defendant knew that the export was illegal. Certainly the defendant would have had a motivation to alter the shipping documents since he clearly knew that he had come into possession of the item illegally. But whether the email’s single reference to “ITAR itme” should have sent the defendant off to Wikipedia prior to shipping the item seems doubtful at best. It is equally reasonable to suppose that the defendant believed that ITAR was a garbled misspelling for some other word or was a Japanese term or any of a number of other possibilities. Indeed, if the defendant was dumb enough to list the item on eBay, it is not hard to imagine that he had no clue what the ITAR was or that the items required an export license.

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May

8

Dead Chickens By Sea: A Hard Warming Story

Posted by Clif Burns at 5:30 pm on May 8, 2012

Category: Agricultural Exports

Gulf Coast Cold Storage Usually criminal export defendants are in the dock for exports of night vision, stun guns, or high-tech chemical processing equipment. Today we have criminal defendants who were indicted for exporting insufficiently chilled chickens from Pascagoula, Mississippi to Russia, proving, I suppose, that even exporting chickens can be a dangerous business these days.

The indictment describes an alleged conspiracy by the three defendants, all employees at Gulf Coast Cold Storage, to remove dressed chicken carcasses from blast freezers before they had reached certain temperatures required by the trade agreement between the U.S. and Russia. In other instances, the defendants were alleged to have put chicken that reached higher than permissible temperatures back into the blast freezers.

Why, you must be asking, is the U.S. concerned about exports of warm chickens to Russia? Can they be weaponized into chicken wings of mass destruction? Will the warm chickens be served, pathogens and all, to Russian political prisoners? No, the warm chickens became criminal export violations through the wondrous intervention of the federal prosecutor’s jack-of-all-trades and catch-all statute, 18 U.S.C. Â§ 1001, a/k/a the Martha Stewart law, which can transform almost any activity otherwise legal under U.S. law into a federal crime. Just as Martha Stewart went to jail for lying about perfectly legal activities, so the Pascagoula Three risk jail time for an allegedly untrue statement on an export certificate with respect to processing techniques that would not themselves have violated U.S. law.

When required by importing countries, as is the case with Russia for poultry exports, the Food Safety and Inspection Service of the U.S. Department of Agriculture will issue an export certificate attesting that the product complies with the importing country’s requirements. The exporter fills out an application for that certificate on FSIS Form 9060-6 which has a certification at the end that “the product covered by this application for export meets the inspection requirements for the country of destination.” This was the alleged false statement that served as the basis of the 18 U.S.C. Â§ 1001 charge.

In order to sustain a conviction under 18 U.S.C. Â§ 1001, the prosecution must demonstrate that the defendants knew that their statements were false. United States v. Yermian, 708 F.2d 365 (9th Cir. 1983). Here that means that the prosecution must show that three guys working in a blast freezer in Mississippi were familiar with Russian law on chicken processing. That seems to be a heavy burden, although the indictment suggests that one or more of the defendants told others to report false chicken temperatures, which I suppose will be argued as proof that they knew the temperature requirements of Russian law.

And the moral of the story? It’s this: there is no product so benign or inconsequential that someone can’t figure out how to send you to jail for exporting it.

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Archive for May, 2012

Guess Who Is Doing Business in Iran?

Do You Know the Way to Mandalay?

Traveling to the United States Can Be Dangerous

eBay Busts Soldier in Iraq for Illegal Exports

Dead Chickens By Sea: A Hard Warming Story

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