Vessel Certificate that Goods Allowed to Enter Oman Leads to Antiboycott Penalty Settlement

A recent Antiboycott penalty settlement serves as a reminder that U.S. parties have a dual obligation under the Antiboycott regulations and must diligently work with outside agents, such as document preparation specialists, to comply.

The Office of Antiboycott Compliance, Bureau of Industry and Security (OAC), alleged that in June, 2007, Polk Audio, Inc., a Maryland company, the company intended to “comply with, further or support an unsanctioned boycott” and failed to report the request that it “engage in a restrictive trade practice or boycott.”  In the May 17, 2012 Proposed Charging Letter, the OAC alleged that Polk Audio’s “document preparation specialists” provided a vessel certificate to “persons in Oman” that certified the “vessel carrying the goods is allowed to enter the ports of Arab States/Oman.”

The second charge – failure to report – explained that the vessel certificate request originated in a letter of credit issued by HSBC Bank in Oman.  By failing to report this request, Polk Audio allegedly violated the Antiboycott regulations a second time.  The proposed charges were settled for a relatively minimal $8,000, not an uncommon amount for an OAC settlement.

This minimal settlement amount, however, should not be shrugged off by U.S. parties.  First, exporting companies should confirm that their export compliance management program addresses the Antiboycott regulations; specifically, the dual duties – reporting a request to engage in a boycott, and not complying with that request.  The OAC has all the details on the BIS website at, http://tinyurl.com/a6u8dd.  As this settlement shows, companies that export on letters of credit need to carefully review the terms for language that requests actions that violate the Antiboycott regulations and when outside agents handle letter of credit review and preparation, exporters must be sure those agents are familiar with the regulations as well.

Also, the minimal settlement in Polk Audio was in connection with a single transaction occurring 5 years ago.  Large volume exporters to and those bidding on tenders and responding to RFPs in Middle East countries should be particularly diligent in their compliance efforts. Just 2 years ago Daewoo Auto settled 59 Antiboycott violation charges for $88,500.  So these penalties can add up quickly.  Many companies may need to conduct an internal review of their transactions in the past 5 years and consider a voluntary self-disclosure regarding any Antiboycott violations that may be found.

At the recent BIS Update 2012 Conference, it was noted that the OAC tends to see over-reporting by some companies.  It is not a violation to over-report questionable Antiboycott requests; rather it is a sign of a robust export compliance program.  It was also noted that the OAC can assist U.S. companies by working with different governments to exclude offending language found in tenders, RFPs, and other documents.

For assistance with issues regarding the Export Administration Regulations, including the Antiboycott regulations, please contact Jon Yormick, jon@yormicklaw.com or call Toll Free (Canada & U.S.), +1.866.967.6425, or +1.216.928.3474.

Advertisements

Tags:

About yormicklaw

Experienced international business & trade attorney

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: