Mar

26

When High Pressure Water Hoses Are Just Not Enough


Posted by at 6:58 pm on March 26, 2012
Category: Arms ExportPiracy on the High Seas

Somali Pirates

A report from the Associated Press suggests that private military and security companies providing protection to commercial shipping in pirate-infested waters have come up with a novel way of arming themselves without running into import and export restrictions of countries where they may dock their vessels in between missions:

Private security firms are storing their guns aboard floating armories in international waters so ships that want armed anti-piracy guards for East Africa’s pirate-infested waters can cut costs and circumvent laws limiting the import and export of weapons, industry officials say.

Companies and legal experts say the operation of the armories is a “legal gray area” because few, if any, governments have laws governing the practice. Some security companies have simply not informed the governments of the flag their ship is flying, industry officials said. …

Storing guns on boats offshore really took off as a business last year. Britain — where many of the operators are from — is investigating the legality of the practice, which has received little publicity outside of shipping industry circles.

Floating armories have become a viable business in the wake of increased security practices by the maritime industry, which has struggled for years to combat attacks by Somali pirates.

The story suggests that there are ten to twelve such armories and that their existence is spurred by complex, ever-changing, and prohibitive laws on the import and export of weapons into ports of the countries in the region around Somalia, such as Saudi Arabia, Egypt and Yemen. The floating armories are governed instead by the laws of the country that flags the vessel, with many of the armories apparently flying the flag of the land-locked nation of Mongolia.

The demand for armed guards is understandable given that without them ships are forced to rely on high pressure water hoses to rebuff attacks by Somali pirate skiffs. Surprisingly, such defensive measures have at times proven successful against some of the less competent Somali pirates.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)



Mar

21

Does An Apple A Day Keeps The Sanctions Away?


Posted by at 11:25 pm on March 21, 2012
Category: OFAC

Bashar al-AssadWell, even the White House now knows, and presumably the folks at the Office of Foreign Assets Control now know, that the Syrian dictator with the silly moustache, Bashar al-Assad, was possibly circumventing U.S. sanctions when he downloaded from iTunes such musical masterpieces as “Dont Talk Just Kiss” by Right Said Fred and God Gave Me You by Blake Shelton. (Click links to these songs at your own risk; Export Law Blog is not liable for any claims of intentional infliction of emotional distress by readers who actually click these links and view the official videos for the songs involved.) Yesterday, White House press secretary Jay Carney called the downloads “sickening” which was less a justifiable commentary on al-Assad’s musical tastes than it was a criticism of al-Assad using popular songs as the personal soundtrack to his slaughter of dissidents in Syria.

How did he get away with this in the face of U.S. sanctions? According to the Guardian story which broke this news:

The fact that the US last year imposed sanctions against Assad and other Syrian government officials, prohibiting “US persons” from engaging in transactions with them, may explain why Assad’s iTunes account is registered to another name and a New York address.

But do U.S. sanctions really prohibit these downloads? Section 542.206 of the Syrian Sanctions Regulations permit export of informational materials to Syria. And even if the executive order designating al-Assad as a blocked person is not subject to the exemption in 542.206, doesn’t the Berman Amendment, 50 U.S.C. 1702(b)(3), which protects informational materials, permit these downloads? Certainly that was the intent of the Berman Amendment but a narrow reading might exclude informational transfers to blocked parties. The Berman Amendment prohibits the president from regulating “exportation to any country” of informational materials, but here the regulation prohibits the exportation to a particular person without respect to the country in which that person is located.

Assuming, for a moment, that the export of informational material to al-Assad is illegal, this case would further illustrate the difficulty of complying with U.S. economic sanctions laws in cyberspace. In theory, a violation of the Executive Order designating al-Assad doesn’t require knowledge by the violator that he or she is dealing with al-Assad. Even if al-Assad is hiding behind a fake name and address, dealings with him are still illegal under the literal language of the order and section 1705 of the International Emergency Economic Powers Act which makes violations of the order illegal. But what could Apple or anyone else done here to prevent the violation? Require every iTunes download account to be verified by presenting a photo ID in person at an Apple store?

On a related sanctions matter, I yesterday expressed my displeasure at the inevitable appearance of the wretched eCFR on the OFAC site. The only real advantage is that the regulations might be more readily updated. But no. Yesterday, OFAC amended the Iran regulations to change the definition of an entity owned or controlled by the Government of Iran. Under the old rule, an entity was owned or controlled by the Government of Iran if the Government of Iran “owns a majority or a controlling interest.” Under the new rule, the entity is deemed to be controlled by the Government of Iran if that government “owns a 50 percent or greater interest or a controlling interest.” Guess which version the OFAC website eCFR version of the rules shows?

screenshot

As the kids on the web these days are wont to say: FAIL.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)



Mar

20

The eCFR Strikes Back


Posted by at 9:06 pm on March 20, 2012
Category: OFAC

WaahSo, this afternoon, I was on the phone with a client who had a question about the Cuba sanctions enforced by the Office of Foreign Assets Control (“OFAC”). As I often do in these situations, I went to the OFAC site to pull up the Cuban sanctions regulations themselves and, poof, they were gone. The hyperlink on this page to the Cuban Assets Control Regulations no longer leads to a PDF version of those regulations — as one might suspect or, at least, hope — but to the eCFR page for Title 31. You are not even taken to Part 500, which is where all of the OFAC regulations can be found. Four clicks later, assuming you know and can find where to click and after waiting for the interminably slow eCFR server to respond, you finally get to part 515 which is where the Cuba regulations are located.

The larger point here is that an agency in the business of imposing significant fines on people for not following its regulations should not impose on the at-risk public needless obstacles to finding and consulting those regulations and avoiding these fines.

Some readers might remember that there was a bit of a ruckus when the Bureau of Industry and Security migrated the Export Administration Regulations over to the eCFR. As a result, BIS returned to a more user-friendly version of the EAR on its website. Let OFAC know what you think, and maybe OFAC will do the same

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Copyright © 2012 Clif Burns. All Rights Reserved.
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Mar

14

Export Reform on a Slow Boat to China


Posted by at 6:52 pm on March 14, 2012
Category: Arms ExportChinaDDTCExport Reform

Gregory Schulte
ABOVE: Gregory Schulte

The House Armed Services Committee last week held a hearing on whether the Thales sale of an ITAR-free satellite to the Chinese had, in fact, leaked U.S. space technology to the Chinese. During that hearing, Gregory L. Schulte, deputy assistant defense secretary for space policy, tried to allay concerns by the Committee that export reform would be a boon to the Chinese.

And we are not proposing removing the Tiananmen Square sanctions that would remain in place even with export-control reform, meaning that items still on the Munitions List could not be exported to China. And, also meaning, that we would not allow the launch of satellites from Chinese launch vehicles.

He went on to say that although some space items would, as part of export reform, be moved to the less restrictive Commerce Control List, those would only be “space items that are already widely available.” Even then, according to Schulte, such space items that were moved to the CCL would still be subject to strict controls with respect to licensing exports to China.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)



Mar

13

Does Anything Exported to the UAE Ever Stay There?


Posted by at 10:24 pm on March 13, 2012
Category: BISCriminal PenaltiesSyria

Afton, WyomingAn Afton, Wyoming man, Matt Kallgren, was sentenced, on January 23, 2012, to three years probation with the first four months in home confinement on charges that he exported EAR99 diesel truck parts to Syria. Of course, since criminal penalties weren’t enough in this case, the Bureau of Industry and Security (“BIS”) piled civil charges on top of the criminal prosecution. Now BIS has announced a settlement of the civil charges pursuant to which Kallgren agreed to a $75,000 penalty and a three-year denial order, both of which were suspended for three years provided that he commits no further export violations and complies with the terms of his criminal sentence.

According to the charging papers, Kallgren was contacted by a Syrian company in 2006 which was seeking to purchase civilian diesel engine parts. When Kallgren attempted to ship the parts, his “normal freight forwarder” (which according to this local newspaper account was UPS) told him that items couldn’t be shipped to Syria. He then used a freight forwarder recommended by the Syrian buyer to ship the parts to Syria by transshipping them through the UAE.

Miraculously Kallgren was subsequently the, er, beneficiary of an “Outreach” visit from Immigration and Customs Enforcement Agents who, allegedly, advised him on the U.S. laws prohibiting exports to embargoed destinations. (Another case which shows that the appropriate response to an “Outreach” visit is to call your lawyer.) Kallgren shipped a second order of parts via the UAE to Syria which, in a similarly miraculous fashion, were seized by Customs on their way out of the country. Allegedly, Kallgren doubled down and told Customs that the parts really were destined for the UAE. Really. I promise. Pay no attention to those commercial invoices.

Kallgren’s company Powerline Components, which shares Kallgren’s home address, also agreed to settle separate charges relating to these shipments. Under that settlement, Powerline agreed to a $60,000 fine and a three-year denial order. The denial order, but not the fine, was suspended.

Finally, in what appears to be a related case, R.I.M. Logistics agreed to a $50,000 fine to settle charges that it aided and abetted an export of EAR99 diesel parts to Syria via the UAE. Although that settlement does not mention Kallgren or Powerline, the timing and subject matter strongly suggests that these were the same exports that got Kallgren and Powerline in trouble. Interestingly, there is not a single allegation in the charging letter that it had any knowledge that the export to the UAE was ultimately destined to a customer in Syria. One might suspect that R.I.M. was the freight forwarder recommended by the Syrian customer, in which case R.I.M. might have had knowledge of the ultimate destination of the export. But without making that assumption, and based on the face of the charging documents, R.I.M. was held to be absolutely liable for its customer’s misdeeds whether or not it had any knowledge of them.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)


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