BIS Revokes the Suspension of a $2M Penalty and Accelerates Payment of Outstanding $5.2 Penalty for Balli Group

On June 13, 2011, the Bureau of Industry and Security (BIS) announced that in response to a May 20, 2011 order revoking the suspension of a $2M civil penalty and invoking the acceleration clause for the two remaining $2.6M installment payments, Balli Group PLC and Balli Aviation paid a total of $7.2M in civil penalties.

BIS and the Treasury Department's Office of Foreign Assets Control (OFAC) had entered into an agreement with Balli Group PLC and Balli Aviation Ltd. (collectively "Balli") in February 2010, with civil penalties totaling $15M, originally suspending $2M, regarding allegations that Balli conspired to export or reexport commercial aircraft from the United States to Iran in violation of the Export Administration Regulations (EAR) and the Iranian Transactions Regulations (ITR). This case represented the largest civil penalty ever imposed by BIS.

In his revocation order, BIS Assistant Secretary Mills stated: "[Balli] failed in my judgment to arrange its business and financial affairs in such a manner as to ensure compliance with its civil penalty payment obligations - obligations that were imposed, moreover, as a result of Balli's egregious conduct that violated U.S. export control laws and provided support to Iran and its proliferation efforts."

BIS previously had charged that between 2005 and 2008 Balli conspired with an Iranian airline to export or reexport U.S.-origin Boeing 747 aircraft to Iran without the required U.S. Government authorization. Specifically, three of the aircraft were flying on routes in and out of Iran using Iranian flight numbers while under the operational control of the Iranian airline. Balli allowed the aircraft to continue to be operated contrary to U.S. export control laws, despite warnings from BIS and the manufacturer. Additionally, Balli misled and concealed information from BIS regarding the role the Iranian airline played in the acquisition and financing of the aircraft via funds from the Iranian Foreign Exchange Reserve Fund.

BIS also had charged that from July 2008, through September 2008, Balli took actions prohibited by a BIS order temporarily denying its export privileges. Balli conducted negotiations with persons, including another person subject to the Temporary Denial Order, concerning financing, receiving and/or using three additional U.S.-origin aircraft that had been exported from the United States and are subject to the EAR.