17-1206 Wednesday “Daily Bugle”

17-1206 Wednesday “Daily Bugle”

Wednesday, 6 December 2017

TOPThe 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 here for free subscription. Contact us for advertising inquiries and rates.

[No items of interest noted today.] 

  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC Posts Address Change for SKY Perfect JSAT Corporation
  4. Treasury/OFAC: DENTSPLY SIRONA Inc. Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations
  1. Stars and Stripes: “Four Sentenced for Stealing Army Equipment from Fort Campbell”
  1. M. Volkov: “SBM Offshore Finally Reaches the Finish Line and Settles FCPA Case for $238 Million”
  1. ECTI Presents “United States Export Control (ITAR/EAR/OFAC) Seminar Series” in Huntsville, AL, 19-22 Feb 2018
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Sep 2017), DOD/NISPOM (18 May 2016), EAR (9 Nov 2017), FACR/OFAC (13 Nov 2017), FTR (20 Sep 2017), HTSUS (20 Oct 2017), ITAR (30 Aug 2017)
  3. Weekly Highlights of the Daily Bugle Top Stories 


* * * * * * * * * * * * * * * * * * * *


. Items Scheduled for Publication in Future Federal Register Editions

Federal Register)
[No items of interest noted today.]  

* * * * * * * * * * * * * * * * * * * *

* * * * * * * * * * * * * * * * * * * *

State/DDTC, 5 Dec 2017.) [Excerpts.]
Effective immediately, SKY Perfect JSAT Corporation, 1-14-14 Akasaka, Minato-ku, Tokyo, Japan 107-0052 has changed as follows: SKY Perfect JSAT Corporation, 1-8-1 Akasaka, Minato-ku, Tokyo, Japan 107-0052. 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. …
* * * * * * * * * * * * * * * * * * * *

Treasury/OFAC, 6 Dec 2017.)
DENTSPLY SIRONA INC. (“DSI”), a U.S. company incorporated in Delaware, the successor in interest to DENTSPLY International Inc. (“DII” and, together with DSI, “DENTSPLY”), has agreed to pay $1,220,400 to settle its potential civil liability for 37 apparent violations of § 560.204 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR). Specifically, between on or about November 26, 2009 and July 5, 2012 DII subsidiaries UK International (“UKI”) and DS Healthcare Inc. (d.b.a. Sultan Healthcare) (“Sultan”), exported 37 shipments of dental equipment and supplies from the United States, to distributors in third-countries, with knowledge or reason to know that the goods were ultimately destined for Iran.
OFAC determined that DII did not voluntarily disclose the apparent violations and that the apparent violations constitute a non-egregious case. The statutory maximum penalty amount for the apparent violations is $9,551,082, and the base penalty amount for the apparent violations is$1,695,500.   
OFAC thoroughly considered the arguments DENTSPLY set forth in its submissions to OFAC, and the settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.
OFAC considered the following to be aggravating factors:  
  (1) UKI and Sultan acted willfully by exporting U.S.-origin dental products to third-country distributors with knowledge or reason to know that the exports were ultimately destined for Iran in apparent violation of the ITSR. Personnel from these subsidiaries and/or divisions concealed the fact that the goods were destined for Iran, and in multiple cases continued to conduct business with these distributors after receiving confirmation that the distributors had re-exported DII products to Iran in apparent violation of the ITSR;
  (2) Several supervisory and managerial personnel within UKI and Sultan had actual knowledge of, and actively participated in, the conduct that led to the apparent violations and appear to have deliberately concealed their awareness from DII; and
  (3) DENTSPLY is a large and commercially sophisticated company with knowledge of U.S. sanctions and export control requirements.  
OFAC considered the following to be mitigating factors:
  (1) DENTSPLY has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the first transaction giving rise to the apparent violations, although DENTSPLY was previously the subject of a settlement involving substantially similar apparent violations in 2001;  
  (2) The harm to the ITSR program objectives was limited because the exports were likely eligible for a specific license;
  (3) DENTSPLY took remedial steps, including voluntarily expanding the scope of the review to include a full, company-wide inquiry following a subpoena to one of its subsidiaries that led to the subsequent revelations involving the other subsidiary; and
  (4) DENTSPLY cooperated with OFAC’s investigation, including by providing detailed and well-organized information for its review, and by agreeing to toll the statute of limitations for a total of 1,104 days.
For more information regarding OFAC regulations, please go to: www.treasury.gov/ofac.
* * * * * * * * * * * * * * * * * * * *


Four men were sentenced Tuesday for stealing Army weapons accessories and equipment from Fort Campbell in Kentucky and selling it to various customers around the world, according to the U.S. Attorney’s Office for the Middle District of Tennessee.
John Roberts of Clarksville, Tenn., was sentenced to 15 years in prison for conspiracy in stealing Army property, 10 counts of wire fraud and two counts of violating the Arms Export Control Act. He also was ordered by a federal judge to pay $4.2 million in restitution for the equipment stolen, according the U.S. Attorney’s Office.
The items were stolen by soldiers from Fort Campbell and sold to Roberts for cash. The soldiers are believed to have been suffering from financial problems and drug addiction issues, according to the U.S. Attorney’s Office.
Alexander Hollibaugh, formerly of Fort Campbell, Army Spc. Dustin Nelson from Northville, N.Y., and Aaron Warner of Fort Campbell, all pleaded guilty to conspiracy to the theft and sale of Army property and were sentenced to time served and probation.
No complete weapons were sold, but equipment deemed sensitive such as grenade-launcher sights, night-vision mounts, telescopic and close-quarters sights for sniper and assault rifles, machine gun parts, communications gear, helmets and medical supplies were put online for sale to international customers. Some of the equipment was advertised as “U.S. Special Forces” and “New in Package.”
The equipment was marketed on eBay and sold to customers around the world, including recipients in Russia, Japan, Mexico and other countries, according to the U.S. Attorney’s Office.
Four others involved in the plot – Michael Barlow and Jonathan Wolford, both of Clarksville, Tenn.; Kyle Heade of Fort Campbell, and Cory Wilson of Gonzales, Louisiana – are waiting to be sentenced in January 2018 and face charges ranging from wire fraud to theft after pleading guilty, according to the U.S. Attorney’s Office. Each faces up to five years in prison for theft and a fine of up to $250,000.
In addition, Wilson faces up to 20 years for each count of wire fraud and violating the Arms Export Control Act. Barlow faces up to 10 years in prison on conspiracy charges. Any money made from the sale of the equipment will have to be repaid in restitution.
* * * * * * * * * * * * * * * * * * * *


Volkov Law Group Blog, 4 Dec 2017. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
In a follow-on prosecution and end to a twisted investigation and enforcement path, SBM Offshore agreed to settle an FCPA enforcement matter for $238 million (including a $500,000 criminal fine and $13.2 million forfeiture). Under the agreement, SBM offshore entered into a three-year deferred prosecution agreement (DPA, copy
), and a US subsidiary entered a guilty plea to one count of FCPA conspiracy. The Justice Department declined to require a corporate monitor.
SBM Offshore’s settlement was expected given the recent unsealing of two criminal guilty pleas by Anthony Mace, a former CEO, and Robert Zubiate, a sales and marketing director. Shortly after the Justice Department’s announcement, the UK’s Serious Fraud Office charged two former SBM Offshore executives, Paul Bond, a Senior Sales Manager, and Stephen Whiteley, a former Vice President, for paying bribes to foreign officials in Iraq, using the infamous intermediary Unaoil. Two weeks ago, the SFO charged two other individuals with conspiracy to pay bribes to Iraqi officials. A third individual, Unaoil’s commercial director is the subject of an extradition request from Monaco.
SBM Offshore was the subject of an enforcement action in 2014 when US prosecutors declined to bring an enforcement matter based on lack of jurisdiction. Netherlands prosecutors reached a $240 million settlement with SBM Offshore for the foreign bribery violations.
In early 2016, the Justice Department re-opened the case based on information it learned as part of the Unaoil investigation. The new information implicated Robert Zubiate, a US citizen, who committed various acts in furtherance of the conspiracy in the United States. This new information established the Justice Department’s jurisdiction to prosecute the case in the United States. SBM Offshore did not earn credit for a voluntary disclosure but fully cooperated with the Justice Department’s investigation.
SBM Offshore’s corrupt conduct spread to numerous countries, including Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. The factual statement outlining SBM Offshore’s conduct reads like a laundry list of every conceivable corrupt scheme.
From 1996 to 2012, SBM Offshore paid more than $180 million in commissions to intermediaries knowing that those commissions would be used to finance bribes to foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq. SBM acknowledged that it gained at least $2.8 billion from projects in the five countries.
SBM Offshore executives oversaw the global bribery scheme. The CEOs maintained a detailed spreadsheet tracking bribery payments and projects earned. The spreadsheet was maintained in a safe and access to the safe was restricted to the CEOs and an administrative assistant. The CEOs used personal email accounts and faxes to avoid leaving a trail of communications related to bribery schemes.
Bribes were paid regularly through intermediaries through inflated commissions. The intermediaries maintained business accounts and related shell company accounts in Switzerland through which bribery payments were made to
foreign officials at various state-owned oil and mining officials. The bribes were given in exchange for awards of contracts and inside information used to challenge bids or respond to government inquiries. In some cases, SBM offshore made payments through intermediaries to foreign officials in Sonangol, Angola’s state-owned oil and gas company, for services that were never provided.
SBM Offshore’s bribery strategy included payments of cash, gifts, hospitality, vehicles, travel for vacations and sporting events, tuition and financial support, employment of non-qualified relatives and other benefits to foreign officials and relatives. SBM Offshore employees used specific codes for bribery payments and benefits to disguise the payments and avoid detection.
* * * * * * * * * * * * * * * * * * * *


. ECTI Presents “United States Export Control (ITAR/EAR/OFAC) Seminar Series” in Huntsville, AL, 19-22 Feb 2018

(Source: Jill Kincaid; jill@learnexportcompliance.com)
* What: United States Export Control (ITAR/EAR/OFAC) Seminar Series in Huntsville, AL
* When: ITAR Seminar: February 19-20, 2018; EAR/OFAC Seminar: February 21-22, 2018
* Where: Huntsville: Embassy Suites Huntsville Hotel & Spa
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker Panel: John Black, Scott Gearity, Greg Creeser, Marc Binder and Melissa Proctor
* Register: Here, or Jessica Lemon, 540-433-3977, jessica@learnexportcompliance.com

* * * * * * * * * * * * * * * * * * * *


. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Joyce Kilmer (born as Alfred Joyce Kilmer; 6 Dec 1886 – 30 Jul 1918; was an American writer and poet mainly remembered for his short poem, “Trees”. Though a prolific poet, Kilmer was also a journalist, literary critic, lecturer, and editor.)
       – “I think that I shall never see a poem lovely as a tree.”
Many writers have parodied Kilmer’s poem Trees, such as this version by Parum Nuntius (Christopher Ross, a writer for Mad Magazine):
“I think that I shall never hear
A poem lovelier than beer.
The stuff that Joe’s Bar has on tap,
With golden base and snowy cap.
The stuff that I can drink all day
Until my mem’ry melts away.
Poems are made by fools, I fear
But only Schlitz can make a beer.”

* * * * * * * * * * * * * * * * * * * *

EN_a29. 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.

ATF ARMS IMPORT REGULATIONS: 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. 

CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199
Last Amendment: 28 Sep 2017: 82 FR 45366-45408: Changes to the In-Bond Process [Effective Date: 27 Nov 2017.] 

  – 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 


  – Last Amendment:
9 Nov 2017: 82 FR 51983-51986: Amendments to Implement United States Policy Toward Cuba


FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment:
13 Nov 2017: 82 FR 52209-52210: Removal of Côte d’Ivoire Sanctions Regulations


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 (20 Sep 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, and Census/AES guidance.  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.

HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 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: 20 Oct 2017: 
Harmonized System Update 1707, c
27,291 ABI records and 5,164 harmonized tariff records.
  – HTS codes for AES are available 
  – HTS codes that are not valid for AES are available 
  – Last Amendment: 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: 19 Nov 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), 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 website. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.

* * * * * * * * * * * * * * * * * * * *

. Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor)

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

* * * * * * * * * * * * * * * * * * * *

* 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 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.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top