Yesterday the Office of Foreign Assets Control (“OFAC”) announced that it had extracted $304,706 from Halliburton Atlantic Limited and Halliburton Oversea Limited in connection with unlicensed exports of $1,189,752 in goods and services by those companies to the joint venture granted the concession to the Cabinda Onshore South Block in Angola.

Wait, you ask, did the U.S. reimpose sanctions on Angola while I was not looking? Nope. The problem here was that Unión Cuba-Petróleo (CUPET) owns a whopping 5% interest in the joint venture at issue.

Wait, you ask again, did OFAC suddenly get rid of the 50% rule? I thought you didn’t have to worry about interests held by blocked parties less than 50 percent, individually or in the aggregate. You don’t normally, but the Cuba rules are different. Section 515.201 of the Cuban Assets Control Regulations prohibit any dealings in property in which any Cuban “has at any time on or since the effective date of this section had [sic] any interest of any nature whatsoever, direct or indirect.”

So, since CUPET had a five percent interest in the joint venture, exports of goods and services to it were illegal. Further, those exports would have been illegal if CUPET had only a 0.0001% interest in the joint venture because the regulation covers “any” interest. And they would have been illegal if Cuba had a 0.0001% interest in an Angolan company that had a 0.0001% interest because the regulation covers “any interest … direct or indirect.” Worse, the exports would have been illegal if CUPET had divested its 0.0001% interest in the Angolan company with a 0.0001% interest in the joint venture ten years before the exports. That would be because the regulation covers property in which a Cuban “has” or “had” any interest. One might be able to seek refuge in the ungrammatical peculiarities of  “has at any time on or since the effective date of this section had [sic] any interest of any nature whatsoever, direct or indirect” — read it carefully — but I wouldn’t count on it.

In theory, the breadth of this regulation imposes a nearly impossible task on any exporter, requiring the exporter to ferret out any remote Cuban abuela or abuelo hiding behind a potted palm somewhere before exporting anything, particularly given that violations of OFAC rules do not require knowledge. In this case, OFAC noted that Halliburton had been supplied documents showing the Cuban interest, but this was not the basis for liability here but instead an “aggravating factor,” suggesting that OFAC would have fined Halliburton even if had not known of CUPET’s paltry, non-controlling interest in the joint venture.

You have to wonder whether the federal employees who run OFAC have ever worked outside the government and have even the slightest conception of the real impact of requiring businesses to confirm that there is no Cuban interest, past or present, of any size whatsoever, in any foreign customer before exporting goods or services to that customer.

Two days ago, the Office of Foreign Assets Control (“OFAC”) announced that CGGVeritas S.A, a French company, and its U.S. and Venezuelan affiliates had agreed to hand over $614,250 to settle allegations that the companies had violated the U.S. embargo on Cuba. Most of the violations involve CGG’s export of U.S.-origin parts and equipment to two vessels engaged in oil exploration activities in Cuban waters.

Under most sanctions regulations, re-export by foreign persons of U.S. origin goods that are EAR99 is not a violation, but the situation for Cuba is different and re-exports by foreign persons of such goods will be a violation. Section 515.201 prohibits “any person” (that includes the French) from “all dealings in” any “property” that is “subject to the jurisdiction of the United States” and in which Cuba or any Cuban national has or had “any interest of any nature whatsoever.” On its face, that prohibits all exports of U.S. origin items by anyone to Cuba.

Because licensing jurisdiction for exports to Cuba has been ceded by OFAC to the Bureau of Industry and Security (“BIS”), section 515.533 provides that exports are authorized under OFAC rules if the export is “licensed or otherwise authorized” by BIS. Section 746.2 of the EAR indicates that a license is required to “export or reexport … all items subject to the EAR,” which of course includes all EAR99 items in the United States or manufactured outside the U.S. with more than 10% controlled U.S. content. There is nothing in either BIS’s rules or OFAC’s rules for Cuba comparable to section 560.205 of the Iranian Transactions and Sanctions Regulations to permit re-exports by foreign persons of EAR99 goods.

CGG, of course, is in an interesting position because under Council Regulation (EC) No 2271/96, CGG would have broken the law in its home country by refusing to send the U.S. parts and equipment based on the U.S. embargo on Cuba. OFAC, naturally, takes the position that the U.S. has jurisdiction over the entire planet (if not the entire universe) and that U.S. law naturally trumps any laws passed by other (and necessarily inferior) countries or governments such as France or the European Union. BIS takes the same position so CGG is no doubt busy bickering with BIS over how much it owes BIS for complying with the law in CGG’s home country.

The other violation cited by OFAC involved CGG’s Venezuelan affiliate, which was a subsidiary of CGG’s U.S. affiliate, engaging in the  “processing of data from seismic surveys conducted in Cuba’s Exclusive Economic Zone benefiting a Cuban company.” This was alleged also to be a violation of section 515.201, but that can only be the case if the language of the regulation, which prohibits U.S. persons from dealing in “property” in which Cuba or a Cuban national “has any interest,” is interpreted such that the meaning of “property” is stretched beyond all reasonable bounds. Even given the broad definition of data contained in section 515.311 it doesn’t include within its bounds mere data about Cuba. If it did, is satellite imagery of Cuba property in which Cuba has an interest? Has Google violated the embargo by processing that information for online presentation? Even if that benefits companies in Cuba? There might be an argument that a violation occurred if the seismic data survey was conducted pursuant to a contract with a Cuban entity giving it proprietary rights in those results — but that is not what OFAC says happened.