Dealing with Embargoed Countries

Many companies across industries that are not generally regulated for export control believe that they can export without concern. This is not always the case, and due diligence must be done to ensure the export is valid and legal. For example, regardless of what you’re selling, you may not sell it to embargoed countries or to sanctioned individuals. In fact, any company desiring to export goods or services must know their end user, end use, and country of ultimate destination. They are responsible for looking for “red flags” to ensure diversion of their commodities is not likely to occur. C2I can help perform these pre-transaction screens and checks to ensure the export is authorized. If a license is needed (or if an exemption is available), C2I can help ensure it is properly obtained and implemented. All exports, regardless of method (license, agreement, exemption, or no license required) require certain documentation and recordkeeping. C2I can help ensure all documents and records are complete and sufficient to stand up in the event of an audit or investigation. The article below from the National Security Division of the Department of Justice describes a Texas oil company that sold drilling equipment to Syria, an embargoed country. The U.S. company will end up paying fines, penalties, and forfeitures more than 50 times greater than the proceeds of its illegal exports.

The guilty plea stemmed from actions by Robbins & Myers Belgium that, in 2006, caused four illegal exports, reexports and/or transshipments of stators—important components of oil extraction equipment—that had made from steel that had been milled in the United States to a customer operating oil fields in Syria.

As part of its plea agreement Robbins & Myers Belgium agreed to pay a total of $1 million in criminal fines ($250,000 for each violation) and to serve a term of corporate probation. The gross proceeds received by Robbins & Myers Belgium for these four illegal exports was $31,716. As part of its plea agreement, Robbins & Myers Belgium has forfeited the entire $31,716 to the government. Robbins & Myers Belgium has also entered into a civil settlement with the Department of Commerce requiring the company to pay $600,000 in civil penalties.

Robbins & Myers Belgium entered the guilty plea this afternoon and was sentenced this afternoon in accordance with the terms of the plea agreement by the Honorable Judge Beryl A. Howell in U.S. District Court for the District of Columbia.

“This case shows that the United States will vigorously enforce its export laws against companies doing business with Syria, a state-sponsor of terrorism and home to one of the most brutal regimes on earth,” said U.S. Attorney Machen. “The Department of Justice will hit companies that do business with Syria where it hurts most: the bottom line. This company will pay fines, penalties, and forfeitures more than 50 times greater than the proceeds of its sales.”

“The significant civil and criminal penalties in this case show our resolve to pursue and prosecute those who flout our export control laws,” said Under Secretary of Commerce Hirschhorn. “We will continue to work in concert with our partner agencies to ensure that U.S. technology stays out of the wrong hands.”

According to court documents, in or about May 2006 an internal auditor with Robbins & Myers Inc. (the U.S. parent company of Robbins & Myers Belgium which was acquired by National Oilwell Varco in 2013) discovered that the company’s Belgian subsidiary had shipped stators made from U.S.-origin steel to a customer in Syria. The internal auditor informed senior management at Robbins & Myers Inc. of the shipments; management then confirmed that those shipments had occurred and that they were likely in violation of U.S. law which prohibited trade in U.S.-origin goods with Syria. Although the U.S.-based parent directed Robbins & Myers Belgium to stop such shipments, the subsidiary continued to make shipments of stators to Syria between August 2006 and October 2006. Following those illegal shipments, employees of the Belgian subsidiary attempted to hide documents related to those shipments from the government’s investigators.

In announcing the guilty plea and sentencing, U.S. Attorney Machen and Under Secretary Hirschhorn commended Special Agents Richard Jereski and Joseph Bankins, who worked under the direction of Special Agent in Charge Nasir Khan, as well as Attorney Advisor R. Elizabeth Abraham of the Department of Commerce’s Bureau of Industry and Security. They also thanked Special Assistant U.S. Attorney John W. Borchert and the Counterespionage Section of the Justice Department’s National Security Division for their roles in prosecuting this matter.