Freight Forwarder Pays Small Fine for Export Involving Prohibited Party

G&W International Forwarders (G&W) agreed to settle a charge of aiding and abetting an export of an EAR99 Stack Sizer Screening Machine to Indian Rare Earths, Ltd., which is on the Proliferation Entity List in Supplement No. 4 to Part 744 of the Export Administration Regulations.  G&W  agreed to pay $20,000 (in 5 installments) for the violation.

Two interesting points:  First, the freight forwarder got nailed for arranging the export to a party on the Entity List.  This shows that forwarders and other parties involved in facilitating exports can be penalized for participating in illegal exports.  I have not heard that the actual exporter got penalized in this case.  I do not know who the exporter is, but I got this website when I googled Stack Sizer Screening Machine:  http://www.derrickcorp.com/webmodules/catCatalog/dtl_Product.aspx?ID=33 and that company is in Buffalo with G&W.  I do not know why the exporter got penalized but if I had to make a wild guess, I would say maybe the actual exporter did a voluntary disclosure and maybe the exporter did not warn G&W it was doing a disclosure so that G&W could do its own disclosure.

The second interesting point is that $20,000 penalty is not much of a deterrent.  I doubt you can use this case to convince your management that you should be doing a better job of screening against the denial lists.  In fact, an unscrupulous person could argue that it is cheaper to pay a $20k fine than to implement comprehensive denial list screening procedures.  Of course, penalties are based on an assessment of aggravating and mitigating factors.

http://efoia.bis.doc.gov/exportcontrolviolations/tocexportviolations.htm

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