Iranian National Pleads Guilty to Illegally Exporting Missile Components and Radio Test Sets to Iran
U.S. District Judge Samuel Der-Yeghiayan set sentencing for Aug. 4. Baniameri, who remains in federal custody, faces a maximum penalty of 10 years in prison for violating IEEPA and a maximum of 20 years in prison for violating AECA and a maximum fine of $250,000 on each count. A written plea agreement contemplates a sentencing guideline range of 46 to 57 months imprisonment.
According to the plea agreement and other court records, sometime before Oct. 10, 2008, Mousavi, based in Iran, contacted Baniameri in California and requested that he purchase and export radio test sets from the United States to Iran, through Dubai. Baniameri agreed and over the next few months negotiated the purchase of three Marconi radio test sets from a company in Illinois. Ultimately, Baniameri arranged for the radio test kits to be sent to him in California, where he shipped them to Dubai, for ultimate transshipment to Iran. At no time did Baniameri obtain or attempt to obtain a license from the U.S. government for the export of the radio test sets.
The plea agreement also states that, sometime before Aug. 10, 2009, Mousavi contacted Baniameri and requested that he purchase and export to Iran via Dubai 10 connector adapters for the TOW and TOW2 missile systems. Baniameri agreed to purchase the items on behalf of Mousavi, and over the next few months, he admitted that he and his co-defendants attempted to purchase 10 connector adaptors from a company in Illinois, which unbeknownst to them, was in fact a company controlled by law enforcement. In September 2009, Baniameri admitted that he directed Telemi to take possession of the connector adaptors in California after having paid $9,450 to a representative of the Illinois company. To further facilitate the export of these items to Iran, Baniameri arranged to fly from the United States to Dubai and then from Dubai to Iran. At no time did Baniameri obtain or attempt to obtain a license from the U.S. government for the export of the connector adaptors. He was arrested before leaving the United States.
In the determination, CBP stated that:
CBP was asked to consider two manufacturing scenarios, under which certain operations would be performed in Taiwan or in China. Based upon the facts presented, CBP has concluded that the manufacturing and testing operations performed in Taiwan do not substantially transform the non-TAA country components. The light engine module and the PCBA main board are the essence of the projectors and it is at their production where the last substantial transformation occurs. Therefore, when the light engine module and PCBA main board module are assembled and programmed in China, the country of origin of the projectors is China for purposes of U.S. government procurement. However, if the light engine module and PCBA main board module are assembled and programmed in Taiwan, then the country of origin of the projectors is Taiwan for purposes of U.S. government procurement.
In its guidance, CBP states:
The CBP Form 28 is used by CBP when there is insufficient information in the entry summary package to determine admissibility, appraised value, or classification of imported merchandise. Brochures, descriptive literature, blueprints, samples, proof of payment, affidavits, etc. may be requested.
CBP has advised the field to limit the use of the CBP Form 28 for the purposes stated above and not extend its use as notification that a formal investigation has commenced as a matter of enforcement policy, not a matter of law. The preferred mechanism to inform the importer of the commencement of an investigation is by correspondence on CBP letterhead or the CBP Form 29.
CBP has also advised the field that the CBP Form 28 shall not be used to request proof of a properly executed valid power of attorney. CBP shall request proof of a properly executed valid power of attorney during a broker compliance visit or via an individually drafted letter.
CBP has also advised the field concerning the use of the CBP Form 29. Generally, as stated in 19 CFR 152.2, an entry which is entered at a rate or value of merchandise which is too low, or the import quantity exceeds that of the entered quantity, and the estimated aggregate increase in duties exceeds $15, CBP will notify the importer of the specific nature of the difference. If the rate advance is a proposed action, the importer is afforded 20 days, from the date of CBP mailing the CBP Form 29, to furnish CBP with specific reasons why the rate advance should not be issued.
It is CBP’s goal to act uniformly in providing legal notification to the appropriate party when proposing or taking certain actions. CBP should avoid using language on these forms such as “failure to provide information could lead to penalties under 19 USC 1592…” or “this office is investigating the classification of…” if in fact an investigation is not already in process. Such language defeats the goal of informed compliance and may dissuade importers from filing valid prior disclosures.
Effective May 18, 2011, the Department of Commerce's Bureau of Industry and Security (BIS) suspended certain licenses for the export and reexport to Syria of U.S. origin parts and components needed for the overhaul/refurbishment of certain long-range, high capacity commercial aircraft not currently in service. Due to the commission of human rights abuses related to political repression in Syria, export and reexport of these items is now deemed contrary to the foreign policy interests of the United States. BIS took this action under the authority of Section 750.8 of the Export Administration Regulations and all persons holding relevant licenses have been notified of this action.
Under the Consent Agreement, BAES agrees to pay a total civil penalty of $79 million. Sixty-nine million dollars will be paid through several installments: (1) $18M to be paid within 10 days of the Order; (2) $17M to be paid within 1 year of the Order and then on each of the 2nd and 3rd anniversaries of the order; (3) $3M will be suspended on the condition that BAES has applied this amount to self-initiated, pre-Consent Agreement remedial compliance measures; and (4) $7M will be suspended on the condition that BAES applies this amount to the Consent Agreement authorized remedial compliance measures and for the purpose of defraying a portion of the costs associated with the specified remedial compliance measures.
The Consent Agreement also outlines that as a result of the conviction, BAES was statutorily debarred but there was an immediate lifting of the debarment. The Consent Agreement also outlines a policy of denial concerning certain non-U.S. subsidiaries of BAES involved in activities related to the conviction (BAE Systems CS&S International, Red Diamond Trading Ltd., and Poseidon Trading Investments Ltd., and their subsidiaries, divisions and business units, and successor entities), which means that there will be a presumption of denial of license and other applications involving these entities. DDTC posted guidance on its website to exporters regarding a policy of denial for BAE Systems plc.
Prior to making transfers to certain dual national and third-country national employees under this policy, approved end-users must screen employees, make an affirmative decision to allow access, and maintain records of screening procedures to prevent diversion of ITAR-controlled technology for purposes other than those authorized by the applicable export license or other authorization.
The Department of State is amending parts 124 and 126 of the ITAR to reflect new policy regarding end-user employment of dual nationals and third-country nationals. As a part of the President’s Task Force on Export Control Reform, the previous policy regarding the treatment of dual nationals and third-country nationals employed by approved end users was re-evaluated. A proposed rule to eliminate the separate licensing requirement for dual nationals and third-country nationals employed by licensed end-users was presented for public comment. The proposed rule had a comment period ending September 10, 2010. Thirty-two parties filed comments recommending changes, which the DDTC analyzes and addresses in the publication.
The rule is effective August 15, 2011.
The Under Secretary testified that the task force created to develop the new export controls regime is currently implementing Phase II. This includes working to revise the U.S. Munitions List (USML) and the Commerce Control List (CCL) so that they use common technologies and structures.
The Under Secretary said that, “State, Commerce, and Treasury are also in the process of adopting the Department of Defense’s export licensing computer system, which will be part of a unified, cross-government computer system for export control purposes. As part of this effort, exporters eventually will use a single form for applications to State, Commerce and Treasury. Exporters also will be able to submit those applications through a single electronic portal. This isn’t rocket science; we are simply adopting modern business practices.”
To address commodity jurisdiction determination issues, the State Department is working with the Departments of Defense and Commerce to create a “bright line” between munitions and dual-use items, which will finally provide clear guidance to exporters on commodity jurisdiction issues. Ellen Tauscher stated that, “this is necessary to update our system that is still designed with the assumption that technologies are developed for the military and only later find their way into the commercial sector, whereas, today, that is often the exception rather than the rule.”
As part of the USML review, agencies are developing a process for transferring items from the USML to the CCL which includes deciding on the appropriate licensing requirements on items that are moved to the CCL.
The Under Secretary also noted the Obama Administration also wants to improve the process for notifying Congress about arms sales and the transfer of items from the United USML as over the years the “process has become lengthy and unpredictable.”
The Under Secretary concluded that Phase III will complete the reform process by creating the “four singularities” – a single control list, a single information technology system, a single enforcement coordination agency, and a single licensing agency.
This final rule revises the CCL to implement changes made to the Wassenaar Arrangement’s List of Dual-Use Goods and Technologies (Wassenaar List) maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement, or WA) at the December 2010 WA Plenary Meeting (the Plenary). The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. To harmonize the CCL with the changes made to the Wassenaar List at the Plenary, this rule amends entries on the CCL that are controlled for national security reasons in Categories 1, 2, 3, 4, 5 Parts I & II, 6, 7, 8, and 9, revises reporting requirements, and adds and amends definitions in the EAR.
BIS Publishes Testimony of Under Secretary Hirschhorn on the President's Export Control Reform Initiative
Hirschhorn testified regarding:
- The Current Export Control Role of the Department of Commerce
- Changes at the Department of Commerce
- List Review & Licensing Policy
- Compliance and Enforcement
- The Export Enforcement Coordination Center
- The Role of Congress in Export Controls
Gina’s testimony highlighted CBP’s enforcement stance, provided examples of actions and initiatives performed in support of U.S. antidumping and countervailing duty laws, and presented some of the challenges CBP faces while enforcing those laws.
Currently, there are 73 ITA signatories, representing appx. 97 percent of world trade in ITA products. The ITA requires participants to eliminate import duties on covered products. The elimination of duties under the agreement has helped to generate substantial growth in ICT trade. Industry sources estimate that global trade in products currently covered under the ITA grew from $1.2 trillion in 1996 to $4.0 trillion in 2008.
The ITA currently covers computers and computer equipment, semiconductors and integrated circuits, computer software products, telecommunications equipment, semiconductor manufacturing equipment, and computer-based analytical instruments. The list of covered products has not been expanded since the ITA was concluded in 1996.
ATA Carnets are international customs documents that allow for the duty and tax-free temporary import and export of goods for up to one year.
ICC emphasized in its press release that Mexico’s large economy and geographic position make it both an important international trading partner and transit point for goods. Mexico is the U.S.’ second-largest export market and its third-largest trading partner. Mexican exports to the US in 2009 were worth US$185 billion, representing approximately 80% of the country’s total exports, according to U.S. State Department figures.
Mexico became 71st country to accept ATA Carnets. According to ICC, more than 160,000 Carnets are issued every year worldwide, for goods with a total value of over US $20 billion. ATA Carnets in Mexico will be administered by the Mexico City National Chamber of Commerce (CANACO).