Princeton University Settles with BIS over Unauthorized Exports of Animal Pathogens to Overseas Research Institutions
On February 2, 2021, the Bureau of Industry and Security (BIS) issued a press release regarding its administrative settlement with Princeton University in the amount of $54,000, stemming from allegations that the university exported controlled items overseas without any government authorization on 37 separate occasions. From approximately November 2013 to March 2018, Princeton University shipped numerous strains and recombinants of animal pathogens from the United States to multiple foreign research institutions with no required export licenses. These items, which were controlled for Chemical and Biological Weapons reasons, were valued at around $27,000 in total.
The university voluntarily self-disclosed its potential violations to BIS and fully cooperated with the subsequent investigation, as well as agreed to participate in both external and internal audits of its compliance program, resulting in a mitigation of its penalties in the matter.
BIS Reaches $3.2 Million Settlement with Singapore-based Distributor Following Illegal Shipments to China and Iran
On January 29, 2021, BIS announced a settlement with Avnet Asia Pte. Ltd. (Avnet Asia), a Singapore-based distributor of electronics components and related software, for $3.2 million after the company allegedly exported controlled items through Singapore to China and Iran. Between October 2007 and January 2014, Avnet Asia sold and transferred electronic components on 53 occasions to Chinese and Iranian end users, including one party on the BIS Entity List, without prior government authorization. The items in question, most of which were electronics classified under ECCN 3A001, were valued at a total of over $1.2 million.
On the same date, the Department of Justice unsealed the indictment of Cheng Bo, a Chinese national and former employee of Avnet Asia, who was criminally charged with conspiracy for his role in shipping U.S.-origin power amplifiers to China from 2012 to 2015. Avnet Asia agreed to pay a total of $1,508,000 in order to settle its criminal liability in relation to its prior employees, including Cheng.
Berkshire Hathaway Enters into $4.1 Million Agreement with OFAC to Settle Liability Related to Turkish Subsidiary’s Scheme to Facilitate Exports to Iran
On October 20, 2020, Berkshire Hathaway Inc. (“Berkshire Hathaway”) agreed to pay $4,144,651 to settle its potential civil liability for transactions involving and exports to Iran by and through its indirectly wholly owned Turkish subsidiary, Iscar Kesici Takim Ticareti ve Imalati Limited Sirket (“Iscar Turkey”). From 2012 to 2016, Iscar Turkey knowingly sold cutting tools and related disposable inserts to third-party Turkish distributors with plans for shipment to an Iranian distributor and eventual resale to Iranian end-users, including the Government of Iran. Iscar Turkey also purchased goods produced by other subsidiaries of Berkshire Hathaway with intent to fulfill Iranian orders. Iscar Turkey concealed these dealings from Berkshire Hathaway by and through a team of senior managers, despite Berkshire Hathaway and Berkshire Hathaway subsidiaries’ communications and policies sent to the Iscar Turkey regarding OFAC sanctions against Iran. To obfuscate Iscar Turkey’s transactions with Iran, one Iranian distributor made all payments in cash and denominated in Euros, and Turkish distributors would falsify invoices to further the scheme. Iscar Turkey also purposefully listed incorrect end user names for the majority of its orders to conceal the Iranian connection from Berkshire Hathaway and Berkshire Hathaway’s subsidiaries.
Travel Services Company Pays $5.8 Million to OFAC for CACR Violations
On October 1, 2020, Generali Global Assistance, Inc. (GGA), a New York-incorporated travel assistance services company, agreed to pay $5,864,860 to settle claims that it violated the CACR on 2,593 occasions between 2010 and 2015. GGA intentionally referred Cuba-related payments to its Canadian affiliate to avoid processing direct reimbursement payments to Cuban parties and travelers located in Cuba. In furtherance of the scheme, GGA wrote this indirect payment process into its company procedures. Beginning in June 2010, GGA provided travel services on behalf of two Canadian insurers that offered medical expense, travel insurance, and emergency travel insurance policies for non-U.S. Canadian individuals traveling to Cuba. Specifically, GGA provided medical expense claim processing and payment services for claims paid to Canadian travelers insured under a group policy sold by one of the Canadian insurers. In doing so, GGA dealt in blocked property by directly providing post-travel claim reimbursements to Canadian travelers in Cuba and indirectly providing for payment of claims to Cuban service providers through a Canadian affiliate. At the time of the alleged violations, GGA had a sanctions compliance policy in place requiring individuals and providers be screened against OFAC’s SDN List, but those procedures did not require screenings for countries or other regions subject to OFAC sanctions.
BIS Issues $31.4 Million Civil Penalty Against Singapore-Based Company for Use of U.S.-Origin Equipment in Iranian Waters
On August 20, 2020, BIS issued an order imposing a $31,425,760 civil penalty on Singapore-based company Nordic Maritime Pte. Ltd. (“Nordic”) and its Chairman, Morten Innhaug, related to the illegal use of U.S.-origin subsea survey equipment in Iranian territorial waters. In July 2011, a company named Reflect Geophysical (“Reflect”) obtained a BIS license to reexport survey equipment controlled for national security and anti-terrorism reasons. This equipment was loaded onto and kept aboard the M/V Orient Explorer vessel. In March 2012, due to a contract dispute with the owner of the M/V Orient Explorer, Reflect lost access to the equipment and, shortly thereafter, Nordic chartered the vessel and gained control of the equipment in question. Despite Reflect sending a cease and desist letter warning Nordic that use of the controlled equipment in Iranian waters would violate the terms of BIS’ reexport license, Nordic went forward with utilizing the equipment in an offshore seismic survey without obtaining BIS authorization. Additionally, during BIS’ investigation, Nordic submitted a false statement claiming that Reflect had never advised that the survey equipment was subject to a reexport license.