17-0926 Tuesday “Daily Bugle”

17-0926 Tuesday “Daily Bugle”

Tuesday, 26 September 2017

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Posts Guidance Concerning Charitable Donations for Hurricane Maria
  4. State/DDTC Announces DTAS System Outage, 28 Sep
  5. State/DDTC Posts Name Change for DRS Technologies, Inc.
  6. EU Amends Restrictive Measures Concerning Syria
  1. Defense News: “Turkey Accuses U.S., Germany of Arms Embargo”
  2. ST&R Trade Report: “$965 Million Penalty for Foreign Bribery One of Largest Ever”
  1. L.K. Rothberg and K.J. Nunnenkamp: “U.S. President Issues Executive Order Imposing Additional Sanctions on North Korea”
  2. M. Volkov: “Ethics and Compliance Controls – Different Means to the Same Objective”
  3. R. Stohl & C. Goodman: “Five Dangers of Giving the Commerce Department Oversight of Firearms Exports”
  4. R. Rohlfsen, G.D. Rojas & K. Scott: “In the Third-Largest FCPA Enforcement Action Ever, Telia Agrees to Pay Almost $1 Billion to Resolve Bribery Inquiry in Uzbekistan; CEO, Senior Executive, and In-House Counsel Also Charged”
  1. ECTI Presents “United States Export Control (ITAR/EAR/OFAC) Seminar Series” on 4-7 Dec in Miami, FL
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Jul 2017), DOD/NISPOM (18 May 2016), EAR (25 Sep 2017), FACR/OFAC (16 Jun 2017), FTR (20 Sep 2017), HTSUS (25 Jul 2017), ITAR (30 Aug 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


[No items of interest noted today.]

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OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* Defense; Defense Acquisition Regulations System; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Defense Federal Acquisition Regulation Supplement; Acquisition of Information Technology [Publication Date: 27 September 2017.] 

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. DHS/CBP Posts Guidance Concerning Charitable Donations for Hurricane Maria

CSMS #17-000611, 26 Sep 2017.)
This memorandum is being issued to provide guidance on the processing of merchandise imported for relief efforts of Hurricane Maria, both for gifts accepted by FEMA via the international assistance system (IAS) concept of operation (CONOPS), and those being imported by U.S. charities (or other private entities) to assist with disaster relief. Under the IAS CONOPS, the importation has been sanctioned by the State Department as an approved shipment after FEMA exercises its gift acceptance authority, and the goods are eligible to be entered without the payment of duty or taxes pursuant to 19 U.S.C. 1322(b) or 19 U.S.C. 1318(b)(2). The requirement for advanced electronic filing of cargo information may be waived for these shipments. For IAS goods, upon arrival at a port, a paper cargo manifest must be provided by the arriving carrier and screened by the port for high-risk factors in accordance with CBP policy. Also, arriving foreign shipments processed under these guidelines must be logged and tracked locally by the port in accordance with existing policies to document the following:

  – Port of Entry
  – Importer
  – Consignee
  – Description of Goods
  – Quantity
  – Country of Origin of the Goods
  – Destination of the Goods
  – Certification that the Goods were Approved for Importation under the IAS

Shipments of emergency relief supplies, identified by CBP as having been accepted by the United States through the State Department, will be allowed to proceed without FDA review or PN data being submitted. FDA will attempt to obtain the information they require regarding such shipments in advance of arrival either through CBP or other means and will distribute this information to their field personnel as soon as possible.

CBP may not remit the duty on the entry of any goods imported for disaster relief by a private group or individual pursuant to 19 U.S.C. 1322(b), unless the recipient is a recognized tax-exempt charitable organization. These private groups or individuals must provide a letter from the charity, on the charity’s letterhead, with the charity’s Internal Revenue Service (IRS) number(s), and a statement that they are willing to accept the imported goods.  

To determine if a charitable organization is in fact an established and eligible charity, CBP personnel may verify an organization’s tax-exempt status on the IRS list web site at www.irs.gov/charities, under subheading, “Search for Charities.” The organizations that qualify as tax-exempt charities are listed in the Exempt Organizations Select Check electronic search tool. However, not all organizations eligible for tax-free deductions may be listed in the publication. If the charitable organization is not found, CBP personnel may verify an organization’s tax-exempt status and eligibility to receive tax-deductible charitable contributions by directly calling the IRS at 1-877-829-5500.

This method of verification is only for U.S. charitable organizations and may not contain information on international relief organizations. For example, the charity Oxfam has tax exempt status under 26 U.S.C. 501(c)(3) and appears on the IRS list, while Medecins Sans Frontieres (Doctors Without Borders) does not appear on the list, but nevertheless appears to have tax exempt status 26 U.S.C. 501(c)(3) status in the United States. In any case, the burden is on the importer to show that the recipient of the goods is an established charitable organization. This information is applicable to all charitable organizations, including religious organizations with 26 U.S.C. 501(c)(3) status.

In all cases where the imported merchandise to be processed under 19 U.S.C. 1322(b), is known to have other government agency requirements, every effort should be made to advise the responsible agency in order to provide them the ability to conduct inspections and make their own admissibility determinations based on their mission needs and requirements.

Any merchandise that does not meet the above criteria for the IAS CONOPS or donations to charities can still be entered under established entry procedures.

For questions about State Department approval for the admissibility of foreign goods for disaster relief, please contact Ms. Carol Chan, USAID, Office of Foreign Disaster Assistance (OFDA) at c.chan@usaid.gov or (202) 712-0841 or ofdainquiries@ofda.gov.

Any questions or concerns regarding this guidance should be addressed to Mr. Randy Mitchell, Director, Commercial Operations Revenue Entry Division, at otentrysummary@cbp.dhs.gov.

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The DTAS information systems will be unavailable from 6:00PM-9:00PM Thursday, September 28th, 2017 for scheduled routine maintenance. The DTAS systems will be available Thursday, September 28th, 2017 after 9:00PM.

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. State/DDTC Posts Name Change for DRS Technologies, Inc.

(Source: State/DDTC) [Excerpts.]
Effective immediately, DRS Technologies, Inc. has changed as follows: Leonardo DRS, Inc. (US). Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. …

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. EU Amends Restrictive Measures Concerning Syria

* Council Implementing Regulation (EU) 2017/1751 of 25 September 2017 implementing Regulation (EU) No 36/2012 concerning restrictive measures in view of the situation in Syria
* Council Implementing Decision (CFSP) 2017/1754 of 25 September 2017 implementing Decision 2013/255/CFSP concerning restrictive measures against Syria

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. Defense News: “Turkey Accuses U.S., Germany of Arms Embargo”

(Source: Defense News, 25 Sep 2017.)
Turkey has officially accused the United States and Germany of imposing an arms embargo against the country.
Turkish Defense Minister Nurettin Canikli has said that “several U.S. and German companies” were implementing a “covered” [indirect] arms embargo on Turkey.
He said those U.S. and German producers were either halting shipments of spare parts of weapons systems to Turkey, or deliberately delaying them.
Turkey has officially accused the United States and Germany of imposing an arms embargo against the country.
Turkish Defense Minister Nurettin Canikli has said that “several U.S. and German companies” were implementing a “covered” [indirect] arms embargo on Turkey.
He said those U.S. and German producers were either halting shipments of spare parts of weapons systems to Turkey, or deliberately delaying them.
Turkey’s ties with Germany too have been badly stained this year after several rounds of allegations against Turkey over human rights violations. Germany advocates that the European Union should stop membership talks with Turkey.

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8. ST&R Trade Report: “$965 Million Penalty for Foreign Bribery One of Largest Ever”

An international telecommunications company [Editor’s Note: Telia Company AB] and its Uzbek subsidiary [Editor’s Note: Coscom.] have agreed to pay a combined criminal and civil penalty of more than $965 million to resolve charges arising from a scheme to pay bribes in Uzbekistan. The Department of Justice states that this global settlement is one of the largest criminal corporate bribery and corruption resolutions ever.
According to a DOJ press release, the two companies paid approximately $331 million in bribes to an Uzbek government official who had influence over the governmental body that regulated the telecom industry. The companies structured and concealed the bribes through various payments, including to a shell company that certain company management knew was beneficially owned by the foreign official. The bribes were paid so the parent company could enter the Uzbek market and its subsidiary could gain valuable telecom assets and continue operating in Uzbekistan.
DOJ states that under a deferred prosecution agreement in connection with charges of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act the parent company agreed to pay a total criminal penalty of $274.6 million to the U.S., including a $500,000 criminal fine and $40 million in criminal forfeiture on behalf of its subsidiary. The parent company also agreed to implement rigorous internal controls and cooperate fully with the DOJ’s ongoing investigation, including its investigation of individuals.
The parent company also agreed to pay $457.2 million in disgorgement of profits and prejudgment interest to the Securities and Exchange Commission and a criminal penalty of $274 million to the Public Prosecution Service of the Netherlands. Portions of these amounts could be offset by payments made in overseas settlements or proceedings.
DOJ notes that its criminal penalty reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range for the companies’ extensive remedial measures and cooperation with the DOJ’s investigation. However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because they did not voluntarily self-disclose their misconduct.

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L.K. Rothberg and K.J. Nunnenkamp: “U.S. President Issues Executive Order Imposing Additional Sanctions on North Korea”

* Authors: Louis K. Rothberg, Esq.,
; and Kenneth J. Nunnenkamp, Esq.,
. Both of Morgan, Lewis & Bockius LLP, Wash DC.
The executive order expands the extraterritorial reach of existing North Korea sanctions by extending it to US persons’ dealings with non-US actors that do business with North Korea.
On September 21, President Trump issued a new executive order (EO) with respect to North Korea. While US persons already were prohibited from all commercial dealings with North Korea under existing sanctions, the EO broadens to a new level the extraterritorial reach of these US sanctions’ proscriptive jurisdiction in connection with non-US (or foreign) persons.
This impact occurs through certain key provisions of the EO:
  – Section 1(a)(iii) authorizes the United States to block the property and interests in property within the United States or that may come into the possession or control of a US person, of any foreign person located anywhere in the world who the Secretaries of the Departments of Treasury and State have determined “to have engaged in at least one significant importation from, or exportation to, North Korea of any goods, services or technology.” (Emphasis added)
  – Section 1(a)(v) authorizes the United States to block the property and interests in property within the United States or that may come into the possession or control of a US person, of any foreign person located anywhere in the world who the Secretaries of Treasury and State have determined “to have materially assisted, sponsored or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property or interests in property are blocked” pursuant to the EO. (Emphasis added)
  – Section 4 authorizes the United States to block the property and interests in property within the United States or that may come into the possession or control of a US person, of any foreign financial institution located anywhere in the world or to deny such foreign financial institution from maintaining correspondent accounts or payable-through accounts in the United States, if the Secretaries of Treasury and State determine that such foreign financial institution “knowingly conducted or facilitated any significant transaction in connection with trade with North Korea.” (Emphasis added)
  – Section 8(e) broadly defines “foreign financial institution” as “any foreign entity that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent; and holding companies, affiliates, or subsidiaries of any of the foregoing.”
While the EO broadly defines foreign financial institution, the EO does not define two of the most important and seemingly critical terms – “significantly” and “materially.” This lack of definition could create great uncertainty as to the exact scope of the EO. Without definitions for such key terms, the goods, services, or technology that need to be involved in a targeted transaction do not need to have an identifiable percentage of US-origin content or other objectively identifiable nexus to the United States to be captured within the meaning of “significant” or “material.”
While we await the inevitable issuance of Frequently Asked Questions (FAQ) (the Office of Foreign Assets Control’s (OFAC’s) preferred vehicle for issuing explanatory statements), OFAC previously provided some insight into the meaning of “significant” in the context of the Iran extraterritorial (“secondary”) sanctions in FAQs 154 and 174. In determining whether a transaction or financial service is “significant” for purposes of those regulations, the Treasury Department said it would consider:
  – the size, number, frequency, and nature of the transaction(s);
  – the level of awareness of management of the transaction(s) and whether or not the transaction(s) are a part of a pattern of conduct;
  – the nexus between the foreign financial institution involved in the transaction(s) and a blocked Islamic Revolutionary Guard Corps individual or entity or blocked Iran-linked financial institution;
  – the impact of the transaction(s) on the goals of certain Iran-related legislation;
  – whether the transaction(s) involved any deceptive practices; and
  – other factors the Treasury Department deems relevant on a case-by-case basis.
However, it is not clear that these considerations will be applied (or even be appropriate) in the context of the Trump administration’s effort to stop foreign persons’ dealings with North Korea.
A conservative approach for non-US businesses, and in particular financial institutions, is to cease dealings with North Korea pending clarification (and potentially thereafter) and halt transactions with other foreign companies that deal with North Korea. A company that deals with North Korea, once blocked under this EO, would place any company that does business with that entity in an untenable situation because it, too, could find itself being designated as a Specially Designated National (SDN) and have its assets blocked. Few companies would welcome this potential absolute exclusion from the benefits of participating in the US economy.
This EO potentially extends the extraterritorial breadth and reach of US proscriptive jurisdiction for secondary sanctions enforcement to a level not seen in prior US sanctions programs, unless the terms “material” and “significant” are defined, and applied, in accordance with their historical applications under OFAC sanctions programs. Unlike the secondary sanctions against Iran, which covered certain sectors of Iran’s economy (e.g., energy) or had specific dollar value thresholds that needed to be triggered, the new sanctions cover all foreign persons’ “significant” or “material” dealings or financing in or support for any sector of North Korea’s economy. As such, they have the potential to be applied more broadly than the previous secondary sanctions regimes.
Of course, while the sanctions themselves may be broader, their impact likely would not approach that of the Iran sanctions, as few companies currently do business with North Korea. The most significant impact will be on Chinese, Iranian, and Russian entities, from where virtually all trade with North Korea originates.
Thus, while we await issuance of explanatory definitions, regulations, and FAQs, companies should tread cautiously when engaging with entities known to currently do business with North Korea. Moreover, due diligence and “know your customer” efforts should be enhanced immediately to capture information regarding dealings with North Korea-whether related to a particular transaction or not. Not capturing this information now could lead to unfortunate consequences when the exact extraterritorial scope of these North Korea sanctions becomes known.

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M. Volkov: “Ethics and Compliance Controls – Different Means to the Same Objective”

(Source: Volkov Law Group Blog. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
People are getting confused. A company’s ethical culture is not a touchy-feely concept that makes everyone warm and cozy all over. At the same time, compliance controls are not hard and fast rules that are mechanically enforced with no regard to purpose or results.
I always get frustrated when people like to classify concepts as either black and white. People are uncomfortable with grey concepts, ideas that work together but are not easily classified. This observation finds support in Jungian psychology – people have trouble holding or acknowledging conflicting feelings – I like some aspects of a person but dislike other aspects of the same person.
The same goes for holding together a company’s ethical culture and its compliance controls – rather than operating in conflict, they mutually reinforce each other. Far from being at odds with each other, a company’s ethical culture and its compliance controls are not as different as they first appear or are perceived by some people.
Some compliance professionals favor a comprehensive set of rules and requirements governing corporate conduct rather than a more amorphous concept of ethical culture. Unfortunately, the question is not an either/or type of question. To the contrary, a company’s ethical culture reinforces its compliance controls and vice versa – a company’s compliance controls reinforce the company’s ethical culture.
Notwithstanding this clear fact of interdependence, compliance professionals who prefer specific compliance controls and enforcement of those controls can find solace in the area of ethical culture.
For those who want more objective tasks and measurements of performance, these compliance professionals should embrace measurement of ethics messages, meetings and commitment. Additionally, these tangible-oriented compliance professionals should dedicate time and attention to conducting employee surveys, focus groups and other structured meetings to develop criteria to monitor and measure the company’s “ethical culture” performance.
In this area, a chief compliance officer can develop criteria to measure a company’s culture on an ongoing basis. Employee survey responses are a good area to measure and monitor. These surveys provide quantitative measurements on responses to important questions such as perception of leadership’s integrity, willingness to report misconduct committed by other employees, and believe in the overall corporate mission of ethics and integrity.
A company’s ethical culture is, in fact, the most important control a company can implement. Employee misconduct can violate a company’s ethical standards, as articulated in its code of business ethics, and a specific compliance control. These two separate aspects of a compliance program should be acknowledged, promoted and preserved through enforcement.
Like many issues in life, the choice to focus on ethics or compliance controls is not an either/or choice; rather, it is one of mutual interdependence that requires a coordinated strategy.

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R. Stohl & C. Goodman: “Five Dangers of Giving the Commerce Department Oversight of Firearms Exports”

Defense News, 25 Sep 2017.)
* Authors: Rachel Stohl, Director of the Conventional Defense Program at the Stimson Center; and Colby Goodman, Director of the Security Assistance Monitor at the Center for International Policy.
U.S. President Donald Trump’s “Buy American” agenda is taking a potentially deadly turn, with the administration expected to issue new regulations that would make it easier for U.S. firearms and related ammunition to reach terrorists, criminal organizations and corrupt and abusive foreign security forces.
The Trump administration’s proposed regulations would likely transfer responsibility for reviewing licenses to export certain types of weapons – including assault-style rifles and pistols and armor-piercing sniper rifles – from the State Department to the Commerce Department.
Although not as eye catching as an F-35, these small arms are often called “the real weapons of mass destruction.” Responsible for up to 1,000 deaths a day, these weapons also threaten U.S. service members around the world. The proposal has raised significant concerns, including from U.S. law enforcement agencies that have fiercely opposed the transfer of these items because of the increased risk that they may land in the hands of unintended end users.
There are five key dangers of shifting oversight of firearms exports to the Commerce Department.
First, there is an increased risk of exports to unauthorized end users and conflict zones. Under the Commerce Department system, companies can generally use several broad license exemptions to export military equipment without U.S. government approval. When the U.S. government shifts oversight of firearms exports to companies, it loses the ability to identify key warning signs, including risky middlemen, unusual routes and mismatched weapons systems, of a possible diversion of U.S. guns to terrorists, criminals or conflict zones. Without U.S. oversight, the government also couldn’t stop the sale of firearms to foreign security force units accused of serious human rights violations or corruption.
Second, a shift to the Commerce Department could compromise the United States’ ability to investigate and prosecute arms smugglers. The Trump administration’s proposal would likely eliminate the current requirement that individuals receive government approval before attempting to broker a deal to non-NATO countries for firearms controlled by the Commerce Department. The proposal might also remove the requirement that companies first register with the U.S. government before engaging in arms exports, which U.S. law enforcement has used to build investigations against illegal arms traffickers. Furthermore, the proposal could create greater legal ambiguity about restrictions on firearms exports and, thus, impede U.S. law enforcement’s efforts to prosecute cases of illegal arms trafficking. Indeed, if an arms exporter can show that a reasonable person would be confused by U.S. regulations, the illegal exporter could escape prosecution.
Third, the proposal risks losing key legal restrictions on dangerous arms transfers. Commerce Department regulations, unlike the State Department’s, are not tied to all federal laws that regulate security assistance, including the commercial export of defense articles to foreign governments that support terrorism, violate internationally recognized human rights norms or interfere with humanitarian operations as well as country-specific controls imposed on nations of concern, such as China. A shift to the Commerce Department would likely complicate, if not end, State Department reviews of a recipient’s human rights violations, as Commerce is not required to get the approval of the State Department when making arms transfer decisions. Such a shift would thereby dilute the State Department’s ability to prevent high-risk transfers.
Fourth, the Trump proposal risks eroding global norms on firearms exports. Over the past two decades, through bilateral and multilateral agreements, the United States has successfully encouraged governments around the world to adopt better laws and policies to stop irresponsible and illegal arms transfers. Many of these agreements note the need to review export licenses on a case-by-case basis, highlight the importance of brokering registration and licensing and contain other key controls. If the United States decides to reduce or remove some of these controls, many other countries may choose to do so as well, particularly if it allows them to better compete with the United States.
Finally, a shift would likely result in less transparency in arms sales. The proposal could eliminate both Congress’s and the public’s view of U.S. firearms sales authorizations and deliveries around the world because the Commerce Department’s annual reports cover only about 20 countries. Furthermore, there are no public end-use reports on arms exports authorized by the Commerce Department such as those for exports authorized by the State Department. The reports are useful to identify key trafficking patterns that can help avoid risky arms transfers.
Although the Commerce Department maintains a regulatory process for exports, its oversight is notoriously less robust than the State Department’s. Indeed, Congress has limited the executive branch’s authority to transfer military equipment to the Commerce Department to only those articles that do not have “substantial military utility.”
While firearms might not appear to hold the destructive power of many other conventional weapons systems, their potential impact can be devastating. As such, they deserve greater, not less, scrutiny when making export decisions.

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R. Rohlfsen, G.D. Rojas & K. Scott: “In the Third-Largest FCPA Enforcement Action Ever, Telia Agrees to Pay Almost $1 Billion to Resolve Bribery Inquiry in Uzbekistan; CEO, Senior Executive, and In-House Counsel Also Charged”

Ropes & Gray LLP)
* Authors: Ryan Rohlfsen, Esq.,
Ryan.Rohlfsen@ropesgray.com; G. David Rojas, Esq.,
David.Rojas@ropesgray.com; and Kendall Scott, Esq.,
Kendall.Scott@ropesgray.com. All of Ropes & Gray LLP, Chicago.
In the first blockbuster FCPA action of the Trump administration, on September 21, 2017, Swedish telecommunications company Telia agreed to pay $965 million in total penalties to the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) to resolve allegations that the company and its subsidiary made illegal payments to an Uzbek government official to expand the companies’ telecommunications business in Uzbekistan. The combined penalty marks the third-largest global FCPA resolution in history, following the Siemens and Odebrecht enforcement actions.
Resolution Details
According to the government, from 2007 until at least 2010, senior managers at Telia authorized corrupt payments to a government official-the President of Uzbekistan’s eldest daughter-in exchange for access to the country’s telecommunications market. Telia carried out this scheme by acquiring an existing Uzbek telephone operator, Coscom LLC, in 2007 and providing the government official with a 26 percent ownership stake. The government official, who held the equity interest in Coscom through a Gibraltar-based shell company called Takilant Limited, was given a put option to sell the interest back to Telia at a later date for a guaranteed profit. In exchange for this lucrative arrangement, the government official caused Uzbek regulators to issue critical telecommunications licenses, frequencies, and number blocks on Telia’s behalf.
Telia continued its scheme for several years, making payments to the government official through Coscom and Takilant as it sought to expand its network and market share in Uzbekistan. For instance, the government alleges that Telia paid $55 million in sham consulting fees to the Uzbek official through Takilant in November of 2010 in exchange for necessary 4G licenses and frequencies. In total, Telia allegedly made $331 million in illegal payments to the government official in exchange for approximately $457 million in profits.
In the criminal case brought by the DOJ, Coscom pleaded guilty and was sentenced on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Telia separately entered into a deferred prosecution agreement in connection with a criminal information with the same count. Telia agreed to pay a total criminal penalty of approximately $548.6 million, with potential payments to Dutch and Swedish authorities credited from this amount.
In related proceedings, Telia also settled with the Public Prosecution Service of the Netherlands (“Openbaar Ministrie” or “OM”) and the SEC. Telia agreed to pay a $274 million criminal penalty to OM and $457.2 million in disgorged profits to the SEC, less $40 million in forfeiture paid to the DOJ. The Swedish Prosecution Authority announced confiscation proceedings against Telia. In total, Telia agreed to pay over $965 million to the U.S., Dutch, and Swedish authorities.
The DOJ noted that Telia received full credit for its cooperation with the criminal investigation and that it engaged in extensive remedial measures, including terminating those individuals responsible for the wrongdoing. As a result of Telia’s remediation efforts and existing compliance program, the DOJ determined that an independent compliance monitor was unnecessary at this time. Telia did not self-report to the government and thus received no voluntary disclosure credit.
The Swedish Prosecution Authority also charged Telia’s former CEO, the former head of Telia’s Eurasian business, and the general counsel for the Eurasian business each with five bribery offenses. The charges appear to stem from the individuals’ approval of various corrupt payments. For instance, U.S. court papers indicate that Telia’s former CEO approved the ownership agreement between the Uzbek official and Coscom. The former head of Telia’s Eurasian business likewise knew of the corrupt arrangement and authorized multiple illegal payments to the foreign government official on Telia’s behalf. Press reports indicate that he was charged because he participated in the corrupt deals by helping draft the agreements.
The Telia resolution appears to conclude the multilateral investigation into bribes made by telecommunications companies to the President of Uzbekistan’s eldest daughter, aside from the potential prospective resolution with Swedish authorities. In February 2016,
VimpelCom Ltd. and its wholly owned subsidiary paid $795 million to U.S. and Dutch authorities to resolve allegations that the companies had made corrupt payments to the same Uzbek government official using the same shell companies and a virtually identical scheme as Telia. If considered together, the combined settlement with
VimpelCom and Telia (totaling over $1.76 billion) exceeds the DOJ’s highest-profile multi-company FCPA resolution, the KBR-Halliburton resolution in 2009.
This resolution illustrates continued coordination among international law enforcement agencies, including Dutch and Swedish authorities. In several resolutions over the last year, including Rolls-Royce,
VimpelCom, and Odebrecht/Braskem, the DOJ credited foreign authorities with providing valuable assistance. Moreover, the enforcement action reinforces the U.S. government’s broad understanding of its jurisdiction under the FCPA. This action involves the Uzbek subsidiary of a Swedish company-which was not listed on a U.S. stock exchange when most of the alleged misconduct took place-making improper payments to an Uzbek government official. The U.S. jurisdictional hook in this case is premised primarily on Telia’s status as a U.S. issuer through September 2007-shortly after the misconduct allegedly began-as well as the denomination of improper payments in U.S. dollars and the use of U.S.-based email accounts. It is clear that the U.S. government, along with other countries, is continuing to pursue companies vigorously under the FCPA.

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* What: United States Export Control (ITAR/EAR/OFAC) Seminar Series in Miami, FL
* When: ITAR Seminar: December 4-5, 2017; EAR/OFAC Seminar: December 6-7, 2017
* Where: North Miami Beach, FL: Doubletree Ocean Point Resort & Spa
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker Panel: John Black and Gregory Creeser
* Register: Here, or Jessica Lemon, 540-433-3977, jessica@learnexportcompliance.com
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* Pope Paul VI (born Giovanni Battista Enrico Antonio Maria Montini; 26 Sep 1897 – 6 Aug 1978; served as Pope from 21 June 1963 to his death in 1978.)
  – “Nothing makes one feel so strong as a call for help.”
  – “In youth, the days are short and the years are long. In old age, the years are short and days long.”
* T.S. Eliot (Thomas Stearns Eliot, OM; 26 Sep 1888 – 4 Jan 1965; was a British essayist, publisher, playwright, literary and social critic, and one of the twentieth century’s major poets. He moved from his native United States to England in 1914 at the age of 25, settling, working, and marrying there. He eventually became a British subject in 1927 at the age of 39, renouncing his American citizenship.)
  – “Only those who will risk going too far can possibly find out how far one can go.”

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. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 28 Jul 2017: 82 FR 35064-35065: Technical Corrections to U.S. Customs and Border Protection Regulations

  – Last Amendment: 18 May 2016: Change 2
: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary 

: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 25 Sep 2017:
82 FR 44514-44517
: Removal of Certain Entities from the Entity List; and Revisions of Entries on the Entity List

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 
: 15 CFR Part 30
  – Last Amendment: 20 Sep 2017: 82 FR 43842-43844: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction  
  – HTS codes that are not valid for AES are available
  – The latest edition (18 July 2017) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, Census/AES guidance, and to many errors contained in the official text. Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 25 Jul 2017: Harmonized System Update 1706, containing 834 ABI records and 157 harmonized tariff records.
  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available
  – Last Amendment: 30 Aug 2017: 82 FR 41172-41173: Temporary Modification of Category XI of the United States Munitions List
  – The only available fully updated copy (latest edition: 12 Sep 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated 

, by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.
 The BITAR is available by annual subscription from the Full Circle Compliance
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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