Archive for the ‘Pakistan’ Category

Antiboycott Violation Nets $238,000 Fine for Furnishing Prohibited Business Information

Tuesday, November 15th, 2016 by Danielle McClellan

By: Danielle McClellan

Coty Middle East FZCO (UAE) has agreed to pay $238,000 to settle 70 violations of 15 CFR §760.2(d) – Furnishing Information about Business Relationships with Boycotted Countries or Blacklisted Persons.

Coty Middle East FZCO is a foreign affiliate of Coty Inc., a US company located in Delaware thus are they are defined as a US person under 760.1(b) of the Export Administration Regulations (EAR). From 2009-2013 Coty Middle East engaged in transactions involving the sale and/or transfer of goods or services from the US to Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, UAE, and Yemen, activities in the interstate or foreign commerce of the United States. In connection with these activities Coty Middle East furnished the following statement 70 times:  “WE HEREBY CERTIFY…. THAT ABOVE MENTIONED GOODS DO NOT CONTAIN ANY MATERIAL OF ISRAEL ORIGIN…”

View Order: https://efoia.bis.doc.gov/index.php/documents/antiboycott/alleged-antiboycott-violations-2015/1083-a748/file

Pakistani National Extradited and Sentenced to 33 Months in Prison for Conspiracy to Export Gyroscopes to Pakistan

Wednesday, October 12th, 2016 by Danielle McClellan

By: Danielle McClellan

Syed Vaqar Ashraf (71) of Lahore, Pakistan (also known as Vaqar A. Jaffrey) was sentenced to 33 months in prison after being extradited from Belgium on July 31, 2015. According to court documents, in June 2012 Ashraf began asking a Tucson-based company, who shall remain nameless, for price quotes for unmanned aerial vehicles (drones). The company specializes in the design, development, and manufacturing of drones for the US military. The company immediately tipped off Homeland Security Investigations (HIS) agents about Ashraf’s requests.  HSI quickly assigned special agents to work undercover as employees of the Tucson-based company and they began dialoging with Ashraf directly.

From June 2012 to August 2014, Ashraf negotiated with special agents. He represented himself as the head of I&E International, based in Lahore, Pakistan.  Most of the correspondence was done via email where he agreed to purchase 18 gyroscopes that were intended to help medium-sized drones fly longer distances as well as 10 optical receiver modules and laser diodes intended to be installed in the aircraft for approximately $440,000.

In September 2013, HSI agents met with Ashraf in Vienna, Austria to work out details regarding the sale. Ashraf explained during the meeting that Pakistan’s nuclear program had been developed using technology exported from the west without a license. This led the agents to believe that Ashraf was working for Pakistan’s Advanced Engineering Research Organization and the intended use for the electronics was for the Pakistani military UAV program.

From January to March 2014 Ashraf asked agents for suggestions to get around the US export controls after agents requested a license from the Commerce Department and were told that the items would require a special license because the optical receive modules could be used in “activities related to nuclear, chemical, or biological weapons or missile delivery systems.” Ashraf asked if there were any alternative descriptions that would appear to cover the items on documents, but would clear arms control hurdles from State and Commerce departments.  Secret agents offered Ashraf with a few different descriptions and asked him if the customer was aware that transaction was “being done without a license.” Ashraf told the agents that they (customer) were “absolutely aware of everything.” Later in an email, Ashraf wrote, “He (customer) is well aware that he cannot get these gyros in a normal way; he’s well aware of that.” The ultimate plan was to transship all of the items; they would be shipped to Pakistan through Belgium.

HIS agents met with Ashraf three more times in face-to-face meetings, including one in the US where they agreed on a series of wire transfers, including one for $67,000. On August 26, 2014 agents set up a final meeting with Ashraf in Belgium to deliver some of the technology. Before the meeting began Belgian police showed up and arrested Ashraf. A little less than a year later Ashraf was extradited to the US to face trial on charges of conspiracy to export defense controlled items without a license which he later pled guilty to.

Read more: https://www.justice.gov/opa/pr/pakistani-national-extradited-and-sentenced-attempting-export-sensitive-technology-pakistani

Screen Your Parties’ Addresses & Screen Before Shipments: Experienced and Sophisticated Company Fined $90,000 for One Export of EAR99 Item

Tuesday, September 6th, 2016 by Danielle McClellan

By: Danielle McClellan

Spectrolab is an experienced and sophisticated exporter, according to BIS’s Order related to the illegal export of a Large Area Pulsed Solar Simulator (EAR99).  You may be thinking, EAR99 items don’t need a license so how is there an illegal export, but as the title states…screening is important and will find violations that otherwise are not obvious to the naked eye.

In this case, Spectrolab sold and transferred a Large Area Pulsed Solar Simulator to a party on the Entity List in Pakistan. SUPARCO (Pakistan’s Space and Upper Atmosphere Research Commission) was added to the list in 1999 after it was found that they were involved in nuclear or missile activities. SUPARCO used a procurement agent to obtain the simulator from Spectrolab in 2014. Initially the agent said the item was for Pakistan’s Institute of Space Technology (IST) but soon after Spectrolab was made aware that SUPARCO was involved in the transaction. The procurement agent provided Spectrolab with the names and every party involved in the transaction except SUPARCO. Spectrolab screened the names, but not the addresses that they received from the agent which would have alerted them that SUPARCO was on the Entity List as their address was listed as IST.

Spectrolab even hosted an inspection and training session on installation and operation with an engineer from SUPARCO. The engineer even attended the training wearing a SUPARCO badge. As a result, Spectrolab was fully aware that SUPARCO was the end user of the simulator before they ever exported it. Spectrolab failed to run or re-run its screening software to screen either the SUPARCO name or address in connection with the final shipment, a direct contradiction of their own export compliance plan.

There were a few things that went wrong in this case for Spectrolab:

  1. They didn’t screen the companies address; if this was initially done the entire process would have stopped before it even started. BIS noted in the Order that Spectrolab used an export control screening software.
  2. No one raised the question of why the engineer worked for SUPARCO instead of IST or why the end user was SUPARCO instead of IST. This is really where the break down occurred
  3. They didn’t re-run their screening software before shipping the item to Pakistan

The biggest take away from this case is to screen everything about your customers, and that the government expects you to catch on to oddities related to your shipments. In this case, the company name changing, it’s not surprising that no one knew that SUPARCO was on the Entity List, there’s thousands on that list. The issue is that there was a red flag with SUPARCO coming into the transaction but not being listed on the documents. Entities who are on the denial list will be sneaky, and BIS expects you to catch that…that just didn’t happen in this case.

Order:  https://efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents/7-electronic-foia/227-export-violations

Fails! University of Massachusetts at Lowell Pays $100,000 for Shipments to Pakistani Missile Entity

Tuesday, June 18th, 2013 by Brooke Driver

By: Brooke Driver

The University of Massachusetts at Lowell has chosen to settle with BIS for neglecting to obtain the necessary licenses required by Section 744.11 and Supplement No.4 to Part 744 of the Regulations for export to the Pakistan Space and Upper Atmosphere Research Commission (“SUPARCO”), an organization that has been on the Entity List since November 1998, as it was “determined to be involved in nuclear or missile activities.” In September 1, 2007, UML exported antennae and cables valued at $12,480 and designated as EAR99 to SUPARCO without an export license. UML again exported to SUPARCO without permission in October 6, 2007, this time transporting an atmospheric testing device valued at $191,870—also designated as EAR99.

Based on these charges, and had UML chosen to fight them, they could have faced:

  • The maximum civil penalty of up to the greater of $250,000 per violation or twice the value of the transaction that is the basis of the violation
  • Denial of export privileges and/or
  • Exclusion from practice

Luckily for UML, BIS was merciful, due to UML’s timely response to the charges and desire to settle. However, even these considerations could not save UML from:

  • A $100,000 fine
  • A two year probationary period

State/DDTC Updates Pakistan Policy: No New Licenses for MDE Exports to Pakistan Until Pakistan Act Waiver is Issued

Tuesday, November 1st, 2011 by Holly Thorne

Notice to Exporters – Pakistan Policy Update, 5 Oct 2011 (October 1, 2011) Section 203 of the Enhanced Partnership with Pakistan Act of 2009 (Public Law 111-73) prohibits for fiscal years 2012-2014 the issuance of export licenses for major defense equipment (defined in 22 U.S.C. 2794(6)) to be exported to Pakistan absent an appropriate certification or waiver under Section 203 in the fiscal year. Since no certification or waiver has been issued for fiscal year 2012, exporters are advised not to submit such license requests to DDTC. A new notice will be issued in the event of a waiver or certification in fiscal year 2012.

Source: http://pmddtc.state.gov/FR/2011/Pakistan_WebNoticeExporters.pdf

Don’t Do This: PPG’s License Application Denied and It Went Ahead Anyway

Friday, February 18th, 2011 by John Black

Was I dreaming when I read various export control pundits talking about the significance of the PPG enforcement case (reported above) because the US went after a company in China or because there was this indirect issue or that indirect issue?  Sorry, this is not new.  The new importance and “sweeping significance” of this is way over-rated.  It appears some experts are attempting to distort the importance to make it a broader, scary issue.  The issue is they got a license denied and shipped anyway.  That has always been at the top of my personal list of violations not to commit.

Shipping after a license is denied is willful and knowing and intentional and criminal, and, by the way, stupid.  Not only did they know a license was required, they knew the USG would deny the license.  People could have gone to jail and companies could have been added to the denial list.   Not a mistake or accident here but intentionally violating the regulations.  Add that to nuclear facility, entity list, China and Pakistan, and you have a big ole stew of aggravating factors

Perhaps I should apologize for saying the violation was stupid.  My mother always says it is rude to say “stupid.”  OK, the violation demonstrates a lack of sound judgment and thought and illustrated behavior based greed.  I just assumed that everybody knows that if BIS denies your license application, there is a good chance BIS will watch your company closely because BIS suspects your company will ship anyway.  You know why BIS does that?  Because idiotic (my mother doesn’t read this stuff) companies ship anyway when their license is denied. (more…)

PPG China Pays $3.75 Million Penalty

Friday, February 18th, 2011 by Danielle McClellan

One of the largest monetary penalties imposed on a non-US company for violating US export controls was imposed on PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of US-based PPG Industries, Inc.  PPG was hit with over $3.75 million in fines for four counts of violating IEEPA and the EAR.  The government’s aggressive enforcement of the export control laws should be a sign to companies that violations are costly and will not be taken lightly, no matter where the company is located. (more…)

$91,000 Oscilloscopes to Pakistan Nets $125,000 Fine

Friday, October 30th, 2009 by Danielle McClellan

Utech Product’s Inc. was recently charged with 3 violations of the EAR. The charging letter explains that the New Jersey company failed to get a license for 3 exports of oscilloscopes to Pakistan. The oscilloscopes are classified under ECCN 3A292 and are controlled for nuclear nonproliferation reasons. The charging letter stated that the exports were valued at $91,000; BIS fined the company $125,000 for the violations. Looks like they won’t be making a profit on that export. 

Charging letter: http://efoia.bis.doc.gov/ExportControlViolations/TOCExportViolations.htm

Another Valve Maker Gets Nailed

Sunday, September 30th, 2007 by John Black

Well, it seems to me that export compliance might be a good topic for the next annual meeting of US valve company executives and lawyers. Commerce Department law enforcement agents have found the valve industry to be a reliable source for a steady stream of violations. Just when I think maybe the stream will dry up, the valve industry offers up another victim.

Hmmm, “Valve Industry Export Control Update” has a nice ring to it…

The Commerce Department’s Bureau of Industry and Security (BIS) charged Cole-Parmer Instrument Co. for committing 10 violations of the Export Administration Regulations (EAR) for illegally exporting valves to China and Pakistan. Cole-Parmer Instrument Co. was forced to pay a civil penalty of $55,000 for violating the Regulations.

More information:

E2004.pdf (PDF)

Update on New Country Requirements and Policies

Saturday, August 30th, 2003 by Maarten Sengers

Here is a rundown of changes to US Government trade control policy for certain countries:

India and Pakistan ITAR Licensing Policy

In a Federal Register Notice dated June 20, DDTC declared that defense export licenses to India and Pakistan would now be reviewed on a case-by-case basis. According to information posted on the www.pmddtc.state.gov website, the previous licensing policy had been one of denial.

Rwanda Licensing Policy Changes

Both DDTC and EAR changed their regulations to loosen restrictions surrounding the lifting of the UN Arms Embargo on Rwanda. The ITAR changes essentially enunciate a new case-by-case license policy for the Government of Rwanda only. For all non-Government exports, all other 126.1 ITAR proscribed country restrictions remain, including a policy of denial for licenses. Likewise, exemptions may not be used for non-Government end users.

Burma

On July 29, 2003, President Bush issued an Executive Order that place further trade restrictions on Burma (a.k.a. Myanmar). Previous to this order, the Foreign Assets Control regulations restricted investment by US firms in Burma. The Executive Order expands Burma trade restrictions. First the order freezes all assets of the Government of Burma that enter the US or are in the possession of US Persons (which includes US branch offices overseas). Second, all imports from Burma into the United States (but not exports or reexports to Burma) are prohibited effective August 28, 2003. The order also prohibits the export or import of financial services. The order contains restrictions of any facilitation of any activity by a third person that a US person could not engage in.

So you may continue to export commercial products to Burma, but dealing with the Government and Government entities will be tricky as Government assets are frozen and related financial services, such as confirming or negotiating a Letter of Credit, are restricted. No barter deals: imports into the US from Burma will soon be prohibited. Burma continues to remain an ITAR proscribed country, so defense article exports are prohibited.

Iraq

On June 27, OFAC formally amended its regulations on Iraq that now basically allow most EAR99 and “xx991” export and reexports to Iraq under a General License. We described these changes last month, and this regulation adds nothing new.