On July 8, 2011, the Bureau of Security and Security (BIS) announced that Xun Wang, a former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc., has been charged with conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulations (EAR), and other related offenses.

A former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc., has been charged with conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulations (EAR),

Xun Wang, 51, is accused of conspiring to export and reexport, and exporting and reexporting specially designed, high-performance epoxy coatings to the Chashma 2 Nuclear Power Plant (Chashma II) in Pakistan, a nuclear reactor owned and/or operated by the Pakistan Atomic Energy Commission. This entity is on the list of prohibited end users under the EAR.

Wang was arrested on the indictment on June 16, 2011, at Atlanta Hartsfield-Jackson Airport and transferred to the District of Columbia. She is a Chinese national and lawful permanent resident of the United States. The United States is seeking to have her held without bond pending trial.

The indictment against Wang is related to the December 21, 2010, guilty plea of PPG Paints Trading (Shanghai) Co., Ltd. (PPG Paints Trading), to a four-count information in the U.S. District Court for the District of Columbia. Together, PPG Paints Trading and its parent company, PPG Industries, Inc., paid $3.75 million in criminal and administrative fines and over $32,000 in restitution. The combined amount of criminal and civil fines represented one of the largest monetary penalties for export violations in the BIS history.

According to the indictment against Wang, in January 2006, PPG Industries sought an export license for the shipments of coatings to Chashma II. In June 2006, the Department of Commerce (DOC) denied that license application. Following that denial, Wang and her co-conspirators agreed upon a scheme to export and reexport the high-performance epoxy coatings from the U.S. to Chashma II, via a third-party distributor in People’s Republic of China (PRC), without the required export license from the DOC.

The indictment further alleges that from June 2006 through March 2007, Wang and other co-conspirators intentionally concealed from PPG Industries that the paint would be delivered to Chashma II. Specifically, they falsely stated that the coatings were to be used at a nuclear power plant in China, the export of goods to which would not require a license from the DOC. The indictment alleges that, through these means, Wang and her co-conspirators took part in three shipments of coatings from the United States to Chashma 2 without the required license.

Source: Global Trader Newsletter

Reprinted with permission

Formerly, ITAR required the respondent to provide separate correspondence via a transmittal letter to certify criminal history, eligibility, and foreign ownership. Often, this mandate was overlooked by the respondent, resulting in the return without action of the incomplete application. The revised DS-2032 incorporates these certifications within the form.

Companies registering on or after October 1, 2011 will be required to submit their payments electronically. Beginning August 2011, registration renewal letters will contain instructions for submitting registration fees electronically.

Individuals and companies engaged in the business of manufacturing, exporting, importing and/or brokering defense articles or services should register with the Directorate of Defense Trade Controls (DDTC) annually. With this change registrants will instead be required to submit registration fees electronically via Automated Clearing House (ACH) payable to the Department of State.

For further information contact: Lisa V. Aguirre, Director, Office of Defense Trade Controls Compliance, Directorate of Defense Trade Controls, Department of State, 2401 E Street, NW, SA-1, Room H1200, Washington, DC 20522-0112; telephone 202-632-2798 or fax 202-632-2878; or e-mail through DDTCResponseTeam@state.gov, with the subject line, “Electronic Payment of Registration Fees.”

After reviewing two recent changes to BIS regulations that address burdensome dual-use controls, Wolf turned his attention to getting “into the tall grass of the next step in the reform effort,”- the structure for how militarily less significant defense articles eventually moved from the USML (US Munitions List) will be controlled on the CCL (Commerce Control List).

A newly structured USML and “Commerce Munitions List” within the CCL is being proposed for national security, “It’s that simple,” Wolf said.

Wolf paraphrases former Secretary of Defense Gates, with his belief that our national security will be strengthened if (i) our export control system allows for more interoperability with our NATO and other close allies, (ii) our industrial base is enhanced by, for example, reducing the current incentives for foreign companies to design out or avoid U.S.-origin content, and (iii) our resources are more focused on controlling or prohibiting, as needed, the items that provide at least a significant military or intelligence advantage to the United States.

Wolf calls his goal finding “that sweet spot between facilitating trade to trusted end users and ensuring that sensitive items do not find their ways into the hands of entities and nation states that seek to undermine our national security.”  Wolf calls all interested stakeholders – exporters, export counselors, licensing officers, enforcement agents, and prosecutors – to make our system effective.

The Federal Register notice describing the background, process, and the content of the plan can be found here. The BIS will accept comments through September 12, 2011 on this proposed ruling.

Click here for complete conference remarks.

Late last week, the Bureau of Industry and Security (“BIS”) released documents relating to an agreement by Toll Global Forwarding (USA), Inc. to pay $200,000 to settle charges that it had aided and abetted nine unlicensed exports of EAR99 items to companies on BIS’s Entity List. The company also agreed to conduct an external audit of its export controls compliance program.

The violations at issue were committed by Baltrans Logistics prior to its acquisition by Toll Global Forwarding in 2008. The exports in question were to Bharat Dynamics Ltd. and Solid State Physics Laboratory, both government-owned entities in India which have since been removed from the Entity List.

It is hard to work up much sympathy for companies engaged in this kind of violation by failing to consult an easily accessible list on the BIS website. And in this instance, it wasn’t an isolated failure but instead nine separate failures. Worse yet, this wasn’t Baltrans’s first time at the rodeo. In 2007 Baltrans agreed to pay a $6,000 fine to settle charges of an unlicensed export to another Indian company on the Entity List. Moreover, one of the unlicensed exports in the current case occurred after Baltrans agreed to pay the earlier fine. That might explain the high fine in this case as well as the external audit requirement.

Source: Bryan Cave LLP, Wash DC, 202-624-3949
Export Law Blog

Reprinted by permission.

The Census Bureau has recently updated the AES system to add a new License Exception code for STA shipments. The Census Bureau has also indicated that new reporting requirements should be followed when using C59 to prevent the return of fatal errors from AES:

- In addition to reporting C59 in the AES License Type field, also report STA in the license number field.

- The Export Control Classification Number (ECCN) field is required. Refer to §740.20 of the Export Administration Regulations for those items that are ineligible for BIS license exception STA.

- Report Export Information Codes OS, OI, CH or CI.

A complete list of all of the AES License Type codes and reporting instructions found at<http://www.cbp.gov/linkhandler/cgov/trade/automated/aes/tech_docs/aestir/june04_intro/appendices/apndx_f.ctt/apndx_f.doc>, which has been updated to include the code for License Exception STA.

License Exception STA authorizes exports of items in specific Export Control Classification Numbers (ECCNs) on the Commerce Control List without a license to the following 36 countries:

Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.

For certain ECCNs involving less sensitive items, software and technology, the following eight additional countries are eligible for license exception STA shipments:

Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, and Taiwan.

http://www.tradelawnews.com/; dnj@djacobsonlaw.com)

A DSP-73 license application must clearly identify the need for the temporary export and describe the role of each party to the transaction. This information can be provided in Block 23 or in a separate letter of explanation. Technical data and/or product brochures must be provided on the requested defense articles.

A DSP-73 application can combine demonstration to identified end-users and public trade shows. However the application must be limited to one geographic region and the parties listed on the license can only be located in that geographic region (e.g. Europe, Middle East or South America). License applications must be tailored to the requested transaction. Any deviation must be explained in the transmittal letter. If demonstration/marketing to identified end-users will exceed public domain information and release technical data a separate DSP-5 authorization must be obtained as technical data cannot be exported under a DSP-73.

DSP-61 – Temporary Import License Applications: Return to Country of Origin (22 CFR 123.3(a)(1))

For overhaul/repair and modification/upgrade transactions, the application must be supported by a request from the foreign owner of the defense articles for the requested transaction, and as necessary, explaining fully the modification/upgrade to be performed.  For transactions relating to the temporary import of foreign-manufactured defense
articles for trade shows and demonstration, the license application must be Guidance as of 6/23/2011 supported by documentation identifying the U.S. or foreign entity responsible for the defense articles while in the U.S. and/or trade show registration documentation from the foreign party.

For transactions relating to military exercises at U.S. bases/ranges, the license application must be supported by documentation from the foreign government identifying the participation of the foreign country in the exercise. The license application must specifically identify the name of the military exercise. These application types should be submitted by a foreign embassy on behalf of their military. Any exception must be explained in a letter of explanation describing the circumstances.

Transit to a Third Country/Transshipment Requests (22 CFR 123.3(a)(2))
For transshipment licenses involving non-U.S. origin defense articles, the documentation must represent the transaction between the two foreign entities to the transaction (e.g. purchase documentation should not be directed to the U.S. applicant) and must include the same information that a DSP-5 requires. The license applicant and the U.S. entity identified in Block 21 should only be acting as a freight forwarder. If not, the role of the U.S. parties must be explained in a transmittal letter. The applicant must be identified in Block 21 and their role described. Identification in Block 8 does not explain the applicant’s role in the transaction.

For licenses involving the transshipment of U.S. origin defense articles, the application must be supported by an approved General Correspondence (GC) letter for retransfer of the defense articles to the new end-user pursuant to 22 CFR 123.9.

A copy of the GC approval letter and the DSP-83, if applicable, must be submitted with the license application.

DSP-73/DSP-61 Replacement/Renewal License Applications

The license application must specifically identify the need for the continued activity and the current disposition of the subject defense articles. This information can be provided in Block 23 or in a separate letter of explanation. The application submission must be accompanied by a complete copy of the precedent license. The renewal license application must be received 60 days prior to expiration to ensure sufficient time for review by DDTC.

More Information: http://pmddtc.state.gov/licensing/documents/gl_supportingdoc.pdf

The Defendants
·    The Parts Guys LLC, a company in Port Orange, Fla., that maintains a warehouse at the Middle Georgia Municipal Airport in Macon, as well as the president of The Parts Guys, Michael Edward Todd, who is a U.S. national.
o    Todd pleaded guilty to violating the Arms Export Control Act and faces a possible 40 years in prison.
·    Galaxy Aviation Services, a company in St. Charles, Ill., and its president, Hamid Seifi, also known as Hank Seifi, an Iranian-born U.S. national.
o    Seifi pleaded guilty to conspiracy to violate the AECA and violations of International Emergency Economic Powers Act, receiving 56 months in prison followed by three years of supervised release, a fine of $12,500 and forfeiture of $153,950, while Galaxy Aviation, which is now defunct, received a $400 special assessment.
·    Aerotechnic, a company in Pinsaguel, France, and its president, Philippe Sanchez, a French national, as well as Luc Teuly, a French national and the sales manager of Aerotechnic.  Each of these defendants remains a fugitive.
·    Aletra General Trading, a company in Dubai doing business as “Erman & Sultan Trading Co,” and Syed Amir Ahmed Najfi, an Iranian national and purchaser for Aletra. Najfi remains a fugitive.
·    They are Sabanican Company, a company in Tehran, and its president, Hassan Seifi, an Iranian national, as well as Reza Seifi, an Iranian national and the managing director of Sabanican Company.  Each of these defendants remains at large.

The Charges
·    Conspiring to export components for attack helicopters and fighter jets to Iran without obtaining the required U.S. export licenses.  These components included military parts for the Bell AH-1 attack helicopter, the UH-1 Huey attack helicopter, as well as the F-5 and F-4 fighter jets (All defendents).
·    Placing orders and purchased military aircraft parts, including those for the Bell AH-1 attack helicopter, from Todd and his company, The Parts Guys, in the United States.  Todd and other conspirators then attempted to and did cause the export of the aircraft parts to the U.A.E.  (Defendant Najfi & his firm).
·    Placing orders and purchasing U.S. aircraft parts from Todd and his company in Georgia — on behalf of Hassan Seifi, Reza Seifi and their company in Iran.  According to the charges, Todd and other conspirators then caused these aircraft parts to be exported to Iran via the defendants in France: Sanchez, Teuly and their company, Aerotechnic.

Maximum penalties (years in prison)
·    Conspiracy- 5
·    Violating the AECA- 20
·    Violating IEEPA- 20
·    Money laundering- 20
·    Making false statements- 5

More information: http://www.wltz.com/Global/story.asp?S=14963374

Here is one for your in-house training of your sales staff.

The Bureau of Industry and Security (“BIS”) just released settlement documents announcing that Curtis Hickcox, a regional sales manager at PPG, agreed to a $500,000 penalty for exporting EAR99 epoxy paint without a license.  Hickcox also received a 15-year membership on the Denied Parties List and is required to take an export compliance training class.

The paint, valued at $25,0000, was allegedly for use by a Chinese company constructing a nuclear power facility for the Pakistan Atomic Energy Commission. This export required a license because PACE is on the BIS Entity List.  It may also have required a license under the end-use policy in the Export Administration Regulations, depending on the nature of the facility and whether it was subject to IAEA inspections or not. The settlement documents suspended all but $15,000 of the penalty, which are required to be paid with an initial payment of $5,000 and then four quarterly payments of $2,500.  If he doesn’t make the payment on time, he has to pay the full $500,000—can you say “hand delivered payment”?

Hickcox’s company previously had a license denied for the export.  Hickcox came up with a way to export the paint anyway.  Not sure his sales commission for this transaction compares favorably to the $15,000 he has to pay, not to mention the legal expenses he burned through to keep himself out of deeper trouble.  And, the legal fees and penalty probably aren’t the most painful thing.

No, I am not suggesting export compliance training is more painful than that.  I find export compliance training to be quite pleasant and enjoyable, as a matter of fact.

Hickcox’s membership on the EAR Denied Parties List means that he probably will not be able to get a job with any company that exports.  His denial status means that he may not be directly or indirectly involved in anything export related.  As a practical matter, not only can he not be in international sales, he may be unemployable because it may be impossible for a company that exports to be able to completely seal him off from any direct or indirect contact with export activity.

Some of you may remember the recent article about the nearly $4 million penalty that PPG paid apparently in some related matters.  Well, just today I heard that Xun Wang, a former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of United States-based PPG Industries, Inc., has been indicted on a charge of conspiring to violate the regulations.  She was arrested at Atlanta Hartsfield airport on June 16, 2011.

More information available at: http://efoia.bis.doc.gov/exportcontrolviolations/e2210.PDF

http://www.bis.doc.gov/news/2011/doj0782011.htm

Responsible for the administration of customer service issues, customer communications and customer requests and orders on a daily basis. Maintain and ensure integrity of all customer data in the business systems, including customer property, orders and associated dollars.  Assure that all customer requests for quotes are properly managed in the PTS system. Responsible for maintaining and ensuring accurate backlog, orders, and market segmentation data. Position Specification Education/Experience

• An Associates or Bachelors degree with a minimum of 5 years related industry work experience.
• Solid understanding of military and commercial export compliance regulations.
• Demonstrated ability to effectively and professionally communicate with all levels in the organization, vendors and customers.
• Understanding of pricing models.
• Proven negotiation skills.
• Strong verbal and written communication skills.
• Strong computer skills with working knowledge of MS Office and Access.
• Proven team-work capabilities and experience.

• Understanding of the Fourth Shift or Syteline ERP system.
• Able to handle and resolve customer complaints and problems and escalate when required.
• Willing and able to develop long-term relationships internally and externally.
• Attention to detail.

The Customer Service Representative provides support to both the internal and external customers of the company.  This position plays an active role in the maintenance and management of the various business systems. Success in this role will require a proactive approach and the ability to create and implement process improvements to ensure that the systems and processes are as robust as possible to provide superior service to the customers.

Duties and Responsibilities

• Responsible for the accurate and timely management of all sales order activity.
• Ensure all sales data is accurate and complete in order to maintain order, market and backlog reporting integrity including schedule and associated dollars.
• Responsible for raising export compliance concerns to the DECA or DECA backup when required.
• Serves as a central point of contact for customer inquiries. Provides customers with updated order and delivery status.
• Responsible for inputting data (RFQs, pricing, status, etc) into the PTS (Proposal Tracking System) and ensuring that all data is accurate and complete and up to date.
• Provides engineering with request for quote information required to initiate estimating process.
• Performs contract review and order acceptance process. Controls and maintains master contracts/ purchase order files.
• Assists with the configuration control process.
• Performs the EDI transaction conversion to the business system. Tracks changes in delivery dates, prices and handles terminations.
• Maintains customer information in the various business systems.
• Responsible for disseminating Terms and Conditions, special shipping instructions, configuration changes and quality requirements throughout the organization.
• Assists accounting with invoicing and collection issues.
• Review Customer Scorecards.
• Perform other duties as required by the business and as instructed by supervisor.

Essential Functions of Position

Interpersonal Skills

• Must be able to communicate clearly and effectively with all levels of personnel within the organization and the customer.
• Must be able to communicate orally and/or in writing as to work requirements, work in progress, and/or work completion
• Must be able to follow complex instructions and/or directions. May require ability to decide on a course/sequence of action

Schedule and Planning

• Must be able to schedule and organize time effectively to satisfactorily complete assigned tasks and functions.

Physical Effort

• Minimal physical effort
• May be required to travel occasionally to customer premises or corporate office.
• Operate personal computer.

Working Conditions

• Primarily work in office areas with exposure to shop floor.
• Generally responsible for the safety and clean up of own work area.

Disclaimer

• The above information on this job description has been designed to indicate the general nature and level of work performed by employees within this classification. It is not designed to contain or be interpreted as a comprehensive inventory of all duties, responsibility and qualification required of employees assigned to this job.

Contact Pamela R. Daly regarding this position at:

Barnes Aerospace

169 Kennedy Rd

Windsor, CT 06095

P: 860-687-5270

F: 401-228-0823

pdaly@barnesaero.com

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