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Unrepentant Exporter Gets Tougher Penalty for Violative Shipments

Monday, March 05, 2018
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has issued an order imposing penalties of $100,000 each on a U.S. company and its president and suspending their export privileges for ten years for exporting national security-controlled items to Russia without the required BIS licenses. The items at issue were an explosives detector and a total of 115 analog-to-digital converters classified under export control classification numbers 1A004 and 3A001, respectively.

BIS states that the record amply supports the administrative law judge’s findings of fact and conclusions of law that these two parties committed the violations alleged. According to BIS, the ALJ correctly determined that the company was the U.S. principal party in interest/exporter and thus had the legal obligation to determine licensing requirements and obtain the necessary licenses for the export transactions at issue. Further, the ALJ correctly determined that the company’s president caused, aided, or abetted the unlawful exports, finding that he directed and controlled the company and its operations and that he took one or more specific actions in connection with each of the exports at issue. BIS also upholds the ALJ’s rejection of the respondents’ “persistently proffered, but unsubstantiated, defense that the freight forwarder bore responsibility for the unlawful exports at issue.”

BIS notes that the penalties being imposed are higher than those recommended by the ALJ because the record indicates that the respondents “participated in sustained procurement and export activities … while willfully ignoring, or, at best, blinding themselves to their compliance obligations.” The respondents have also “refused to acknowledge their compliance obligations during this proceeding or accept responsibility for their actions despite their clear violations of the Regulations.” Further, BIS states, the respondents’ “rejection of their export control responsibilities and apparent failure to adopt corrective measures raises additional concerns about their ability and willingness to comply with the Regulations now or in the future.”

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