Penalty, External Audit Requirements for False Statement in Export Matter
A California company and its CEO have been assessed a $221,000 civil penalty by the Bureau of Industry and Security to settle a claim that they violated the Export Administration Regulations. BIS is also requiring these two entities to ensure that an unaffiliated third-party consultant with expertise in U.S. export control laws completes two audits of the company’s export controls compliance program.
According to BIS, the bureau’s Office of Export Enforcement had notified the company that a prior shipment of aircraft parts to one customer had been detained for further investigation while the company was in ongoing discussions with OEE about its export business with that customer. To replace some of those detained parts, which are subject to the Export Administration Regulations and designated EAR99, the company arranged to export the parts to another customer and then deliver them to the original customer in China.
In connection with this scheme the company submitted (through a freight forwarder) electronic export information that falsely identified the ultimate consignee of the exported goods and deliberately did not inform OEE of this shipment during a subsequent meeting. Further, BIS states, the company declared the value of the parts to be significantly below their true value.
BIS is suspending $181,000 of the civil penalty for four years, and will waive it thereafter, provided that the company and its CEO (a) timely pay the remaining $40,000, complete the required audits, and submit the audit results and (b) commit no further export violations during that time. BIS is also suspending a denial of export privileges subject to the same conditions.