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Greetings!
We hope you all enjoyed a Happy Thanksgiving! November's import/export news highlights include: a $1M fine for ITAR violations and the use of the False Claims Act by the government; OFAC's publication of recent enforcement actions; Nippon pleads guilty to price fixing on air cargo and will pay a $73M criminal fine; President Obama establishes an Export Enforcement Center; the U.S. partners with India on export controls and non-proliferation efforts; and CBP proposes regulation amendments re: permissible sharing of client records by customs brokers. Thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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Exporter Fined $1 Million for Export Violations
First use of False Claims Act in relation to ITAR violations
 On October 29, 2010, U.S. Politics Today reported that Rocky Mountain Instrument Co. (Rocky Mountain) has agreed to pay a $1 million penalty to settle civil charges related to illegal exports of sensitive military information.
This case represents the first time that the False Claims Act (FCA) has been used in relation to violations of International Traffic in Arms Regulations (ITAR) and the Arms Export Control Act (AECA). Rocky Mountain pleaded guilty to a related criminal charge in June of 2010 and was sentenced to forfeit $1 million and five years probation.The criminal plea agreement detailed that from 2005 to 2007 Rocky Mountain exported prisms and technical data related to various optics used in the military applications in Turkey, China, Russia, and South Korea without a required U.S. Department of State license.
The civil settlement covered a related allegation that Rocky Mountain caused defense contractors to submit false claims for payment to the Pentagon in violation of the FCA by illegally exporting technical data overseas that was later used to manufacture parts used in certain military equipment the contractors sold to the Pentagon.
The FCA prohibits companies from submitting claims for payment to the government that are false or fraudulent and is the government's primary law enforcement tool for combating fraud against the government. |
OFAC Posts Information on Recent Civil Penalties
 On November 16, 2010, Office of Foreign Assets Controls (OFAC) published recent civil penalty information:
Pinnacle Aircraft Parts, Inc. (Pinnacle) of Miami, FL, has paid $225,000 to settle allegations of violating OFAC's Reporting, Procedures and Penalties Regulations (the "RPPR"), occurring in November 2007. OFAC alleged that Pinnacle failed to provide documents in response to an administrative subpoena issued by OFAC as part of its investigation of Pinnacle's 2004 sale and delivery of a jet engine, valued in excess of $1 million, that was destined to Iran.
The subpoena directed Pinnacle to provide a written report regarding the jet engine transaction and "copies of all transactional documents such as invoices, shipping documents, airway bills, correspondence, and all other documents pertaining to the payment or transportation of this shipment."
According to OFAC, in its November 9, 2007, response to the subpoena, Pinnacle, through its outside counsel, submitted more than 260 pages of responsive documents but failed to submit a copy of a post-sale e-mail - which Pinnacle had provided to its counsel - indicating that the aircraft engine was likely destined for Iran as well as other responsive documents concerning the terms of sale.
Pinnacle did not voluntary disclose the violation to OFAC. OFAC determined that Pinnacle's failure to produce responsive documents constituted an egregious case, resulting in a base penalty amount of $250,000. One of the deciding factors in determining the final penalty amount was that Pinnacle apparently relied in good faith on the advice on legal counsel in deciding not to produce the e-mail with Iran reference and other documents in response to the subpoena. However, OFAC noted that even though Pinnacle relied on the advice of its counsel in deciding not to produce the e-mail and other documents, Pinnacle was the party legally responsible for compliance with OFAC's subpoena and the actions of its counsel were attributable to Pinnacle for purposes of calculating a base penalty and settlement amount.
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Nippon Airways Co. Pleads Guilty to Price Fixing on Air Cargo and Air Passenger Services
Company to pay $73M in criminal fines
 On November 1, 2010, the U.S. Department of Justice (DOJ) announced that All Nippon Airways Co. Ltd (Nippon), a Japan-based company, has agreed to pay a $73 million criminal fine for two separate conspiracies to fix prices in the air transportation industry.
According to a two-count felony charge, Nippon engaged in a conspiracy to fix one or more components of cargo rates charged for international air cargo shipments from April 2000 until February 2006. In addition, Nippon is charged with engaging in a conspiracy to fix unpublished passenger fares on tickets purchased in the U.S. from April 2000 until April 2004.
DOJ alleges that Nippon carried out the conspiracies by agreeing during meetings and other communications on certain components of the cargo rates to be charged for shipments on routes between the U.S. and Japan, and on unpublished passenger fares to be charged on tickets purchased in the U.S.
As part of the conspiracies, Nippon levied cargo rates and unpublished passenger fares in accordance with the agreements reached, and monitored and enforced adherence to the agreed-upon cargo rates and unpublished passenger fares.
Nippon is charged with two counts of price fixing in violation of the Sherman Act, which carries a maximum fine for corporations of $100 million for each violation committed after June 22, 2004, and $10 million for violations committed before that date. The maximum fine for each count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
As a result of DOJ's investigation, a total of 19 airlines and 14 executives have been charged in the ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been obtained and four executives have been sentenced to serve prison time.
Charges are pending against the remaining 10 executives. Under the plea agreement, which is still subject to court approval, Nippon has also agreed to cooperate with the DOJ's ongoing antitrust investigation.
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President Signs Executive Order Establishing Export Enforcement Coordination Center
 On November 9, 2010, President Obama signed an Executive Order establishing the Export Enforcement Coordination Center (EECC). EECC is one of the key elements in the Export Control Initiative. The primary function of the EECC will be to coordinate control enforcement matters among the Departments of State, Treasury, Energy, Commerce, Homeland Security, Defense, Justice, Office of Director of National Intelligence, and other departments, agencies, and offices handling the violations of U.S. export control laws.
In addition to serving as the primary forum within the Federal Government executive departments and agencies to cooperate their export control enforcement efforts, EECC's responsibilities will also include:
- Serving as a conduit between Federal law enforcement agencies and the U.S. Intelligence Community for the exchange of information related to potential U.S. export control violations;
- Serving as a primary point of contact between enforcement authorities and agencies engaged in export licensing;
- Coordinating law enforcement public outreach activities related to U.S. export controls; and
- Establishing Government wide statistical tracking capabilities for U.S. criminal and administrative export control enforcement activities, to be conducted by the Department of Homeland Security with information provided by and shared with all relevant departments and agencies participating in the Center.
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U.S. Partners with India Regarding Export Controls and Non-Proliferation
 On November 8, 2010, the White House issued the U.S.-India Partnership factsheet that contains details of the United States' and India's commitment to work together on many issues and programs, including export controls, trade and economic cooperation, counterterrorism and defense cooperation, and the National Export Initiative.
The Factsheets provide that India's Prime Minister (PM) Singh and President Obama are committed to work together to strengthen the global non-proliferation and export control framework and continue to transform bilateral export control cooperation. PM Singh and President Obama agreed to take mutual steps to implement a four-part export control reform program, including: support for India's membership in the multilateral export control regimes, removing India's Defense and Space-Related Entities from the U.S. "Entity List;" export licensing policy realignment, and export control cooperation.
With respect to defense cooperation, factsheet notes that the U.S.-India defense relationship has evolved from solely military-to-military links into a mature partnership that encompasses dialogues, exercises, defense sales, professional military education exchanges, and practical cooperation. The leaders reaffirmed the importance of maritime security, unimpeded commerce, and freedom of navigation, in accordance with relevant universally agreed principles of international law.
As part of the National Export Initiative, the factsheet notes that President Obama recognizes that India, with its high economic growth and its large and growing middle class, is a key market for U.S. exports. During the President's trip to India when the partnership agreement was established, trade transactions were announced or showcased, exceeding $14.9 billion in total value with $9.5 billion in U.S. export content, supporting an estimated 53,670 U.S. jobs.
Regarding the nuclear safety aspect, the factsheet states that U.S. and India signed a memorandum of understanding that provides a general framework for cooperative activities in working with India's Global Centre for Nuclear Energy Partnership, which India announced at the 2010 Nuclear Security Summit. "In working with India's Centre, the U.S. will give priority to discussion of best practices on the security of nuclear material and facilities, development of international nuclear security training curricula and programs, joint outreach on security issues to their respective nuclear industries, and cooperation on other nuclear security activities as mutually determined."
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CBP Proposes Amendments to Customs Regs re: Permissible Sharing of Client Records by Brokers
Comments are due by December 27, 2010
 On October 27, 2010, Customs and Border Protection (CBP) issued a notice of proposed rulemaking in the Federal Register with regard to the permissible sharing of client records by customs brokers. In the notice, CBP states:
The proposed amendment would allow brokers, upon the client's consent in a written authorization, to share client information with affiliated entities related to the broker so that these entities may offer non-customs business services to the broker's clients. The proposed amendment would also allow customs brokers to use a third-party to perform photocopying, scanning, and delivery of client records for the broker. These proposed changes are intended to update the regulation to reflect modern business practices, while protecting the confidentiality of client (importer) information. In addition, the proposed changes would align the regulations with CBP's previously published rulings concerning brokers' confidentiality of client information.
Comments must be received by December 27, 2010. |
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Calendar of Events
Upcoming Trade Events & Seminars
 Our website has a comprehensive listing of import and export conferences held throughout the country, as well as Customs training, EAR training, ITAR training, and other training. Below is a small sampling of what's available in the coming months:
Incoterms® 2010 Seminar - USCIB
December 2, 2010 - Troy, MI - $350/$380
Incoterms® 2010 Seminar - USCIB
December 9, 2010 - Omaha, NE - $350/$380
Incoterms® 2010 Seminar - USCIB
December 14, 2010 - Miami, FL - $350/$380
Incoterms® 2010 Seminar - USCIB
December 16, 2010 - Charlotte, NC - $350/$380
Navigating US Export Controls and Sanctions, including Foreign Military Sales (FMS) - Federal Publications Seminar
December 1 - 2, 2010 - Dubai, UAE - $995
Advanced ITAR Workshop - Federal Publications Seminar
December 9 - 10, 2010 - Washington, DC - $995
Complying with U.S. Export Controls - Bureau of Industry and Security
January 25 - 26, 2011 - Phoenix, AZ - (Details Not Yet Posted)
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Who's Hiring?
A Summary of Current Trade Job Opportunities
 As a service to the international trade community, Global Trade Expertise compiles links to trade job opportunities from many different sources. New trade job listings are posted frequently on our website.
To sort the job opportunities by region, fields, or levels, click on the appropriate category or tag in the right column on our Trade Jobs webpage. |
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Thanks again for your interest in our newsletter!
Sincerely,
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Jennifer Kessinger, Tammie Krauskopf & Ruta Riley
Attorneys & Consultants
jk@globaltradeexpertise.com
Tel. 925.876.1381 (Jennifer Kessinger)
tk@globaltradeexpertise.com
Tel. 708.707.4087 (Tammie Krauskopf)
rr@globaltradexpertise.com
Tel. (630) 862-8123
www.globaltradeexpertise.com
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