On 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of export privileges order in respect of Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) (previous blog).
On 13 May 2018, President Trump tweeted that, following talks with President Xi of China, he had instructed the Department of Commerce to get ZTE “back into business” (previous blog).
Today (7 June 2018), the Department of Commerce has announced that ZTE has agreed to “severe additional penalties and compliance measures” to replace the 7-year denial order. Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before it can be removed from the Denied Persons List (these penalties are in addition to the $892 million in penalties ZTE had already paid to the US government under the March 2017 settlement agreement – see previous blog). Under the new agreement, ZTE will also be required to retain a team of special compliance coordinators for a period of 10 years, whose function will be to monitor on a real-time basis ZTE’s compliance with US export control laws. ZTE will also be required to replace its entire board of directors and senior leadership for both entities. Finally, as before, the new agreement imposes a suspended denial order (this time for 10 years), which the Department of Commerce can activate in the event of additional violations during the 10-year probationary period. Collectively, these are the “most severe penalty” the US Department of Commerce has ever imposed on a company.
On 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of exports privileges order in respect of Chinese telecoms company ZTE (previous blog here).
Yesterday (13 May 2018), President Trump tweeted that, following talks with President Xi of China, he has instructed the US Department of Commerce to get ZTE “back into business”. ZTE previously announced in a filing to the Hong Kong Stock Exchange (9 May 2018) that as a result of the 7-year denial of exports privileges order, the company had ceased its “major operating activities”.
Last week, the EU continued its arms embargo on Burma/Myanmar for 1 year and expanded it to include a prohibition on the export of dual-use goods for use by the military and Border Guard Police, and imposed restrictions on the export of equipment for monitoring communications that may be used for internal repression (previous blog). As a result, the UK Export Control Joint Unit has announced that it has amended and republished the following 5 Open General Export Licences (OGELs) (to remove Burma/Myanmar as a permitted destination from Schedule 2):
1. Export after exhibition: dual-use items
2. Export after repair/replacement under warranty: dual-use items
3. Export for repair/replacement under warranty: dual use items
4. Low value shipments
OFAC has issued General Licence No 2E, which extends for 6 months the sanctions relief for 9 Belarusian entities until 30 October 2018.
Subject to the restrictions set out in the licence, all transactions otherwise prohibited by Executive Order 13405 involving the 9 Belarusian entities, or any entities that are owned, individually or in the aggregate, directly or indirectly, 50% or more by one or more of the named Belarusian entities, are authorised.
US persons relying on the licence to engage in transactions involving (directly or indirectly) any of the named Belarusian entities must file a report to the US Department of State if a transaction (or series of transactions) exceeds $50,000. OFAC Notice here.
The US has indicted 3 US citizens – Sadr Emad-Vaez, Pouran Aazad, and Hassan Ali Moshir-Fatemi – for violating export control laws under the International Emergency Economic Powers Act. Specifically, for allegedly engaging in transactions involving the illegal export of goods and services to Iran and financial transactions designed to evade the Iranian Transactions Sanctions Regulations. US Department of Justice press release here.
Chinese tech company Huawei Technologies is reportedly being investigated by the US Department of Justice for violating sanctions on Iran; namely, for shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.
The US Department of State has reached an agreement with FLIR Systems Inc (Wilsonville, Oregon) to settle allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorised exports of defence articles; the unauthorised provision of defence services; violation of the terms of provisos or other limitations of licence authorisations; and the failure to maintain specific records involving ITAR-controlled transactions.
Under the terms of the four-year Consent Agreement, FLIR will pay a civil penalty of $30 million. The Department of State has agreed to suspend $15 million of that amount on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures. FLIR must also hire an external Designated Official to oversee the Consent Agreement, which would require the company to conduct two external audits to assess and improve its compliance program during the agreement term as well as implement additional compliance measures. Department of State press releases here and here.
Last week, at City of London Magistrates’ Court, Carbosynth Limited pleaded guilty to 6 counts of unlicensed exports of controlled chemicals (‘dual use’ and military list chemicals) and was ordered to pay £4,269.96. The prosecution was brought on behalf of Her Majesty’s Revenue & Customs (HMRC) pursuant to s 68(1) of the Customs and Excise Management Act 1979 in relation to the Export Control Order 2008 and the EU Dual Use Controls (Council Regulation (EC) No 428/2009). Notice here.