International Trade Law News

Published by Jacobson Burton Kelley PLLC

By Alison Battiste*

The Commerce Department’s Bureau of Industry and Security (BIS) recently imposed nearly $1.1 million in civil penalties on oil and gas equipment manufacturer Dresser, Inc., and its subsidiaries and affiliates in Canada, Dubai, Italy, Germany Mexico and the United Kingdom, as a result of numerous violations of the Export Administration Regulations (EAR). The violations, which occurred between 2000 and 2004 and involved exports to Libya, Cuba and Iran, were voluntarily disclosed by Dresser, Inc. to BIS. The following is a summary of the facts and circumstances that led to the settlement agreements reached with BIS:

• BIS imposed an $820,000 penalty on Dresser Italia S.r.l. (Dresser Italy) for unauthorized exports of oilfield-related items to Iran and Libya. Specifically, BIS alleged that Dresser’s facility in Voghera, Italy (which the company no longer operates) specially ordered from a U.S. company various oil industry-related items, including valves and valves parts (all classified as EAR99), which were exported by the U.S. company through Italy to Libya without the required U.S. Government authorization. BIS claimed that Dresser Italy ordered, bought, stored, sold and/or transferred items exported from the U.S. with knowledge that a violation was occurring in connection with the items. In addition, BIS claimed that Dresser Italy knew or had reason to know that the items would be exported to Libya/Iran without the required U.S. Government authorization and that Dresser Italy personnel had knowledge that U.S. products could not be sold to sanctioned countries, including Libya/Iran. BIS's charging letter noted that Dresser Italy’s management was so focused on making sales to the point that they disregarded U.S. export controls and certain Dresser Italy personnel stated that they did not agree with the strictness of U.S. export regulations.

• A $122,100 penalty was imposed by BIS on DI U.K. Ltd. (Dresser U.K) for reexporting oilfield items from the U.K. to Libya and Iran without the required U.S. Government authorization. BIS claimed that DI U.K. specially ordered the items from the U.S. that were exported by the U.S. company through the U.K. to Libya without the required U.S. Government authorization. BIS alleged that Dresser U.K. and its U.S. supplier knew or had reason to know that the items were destined for illegal destinations.

• A $110,000 penalty was imposed on U.S.-based Dresser Inc. for engaging in illegal exports to Iran and Libya. Specifically, BIS alleged that Dresser, through its Massachusetts facility, exported various items through Canada to Libya without the required U.S. Government authorization. BIS alleged that Dresser was in possession of documentation stating that the items were destined for Libya, and no OFAC authorization was obtained. Dresser also exported, through its Louisiana facilities, various oil industry-related items through the U.K. to Libya and Iran without the required U.S. Government authorization. BIS claimed that Dresser knew or had reason to know that the items were intended for Libya and Iran. BIS also claimed that Dresser Inc., through its Texas and Louisiana facilities, exported various items through Italy to Libya without the required U.S. government authorization. BIS alleged that Dresser knew or had reason to know that the items were intended for Libya.

• BIS assessed a $19,800 penalty on Dresser Europe GmbH (Dresser Europe) for causing an export to Libya without the required U.S. Government authorization. Specifically, BIS alleged that Dresser Europe’s facility in Germany specially ordered from a U.S. company various oilfield items that were exported by the U.S. company through Germany to Libya without the required U.S. Government authorization. BIS also claimed that Dresser Europe acted with knowledge, since it ordered, bought, stored, sold and/or transferred items exported from the U.S. with knowledge that a violation was occurring in connection with the items. BIS noted that Dresser Europe knew or had reason to know that the items were intended would be exported to Libya without the required U.S. Government authorization and company personnel had knowledge that U.S. products could not be sold to sanctioned countries, including Libya.
  

• A $12,000 penalty was imposed on Dresser Instruments S.A. de C.V. (Dresser Mexico) for aiding and abetting an unlicensed reexport of Items to Cuba. BIS alleged that Dresser Mexico procured pressure gauges, thermowells and thermometers from a U.S. company for sale to a company in Mexico with knowledge or reason to know that the items would be reexported to Cuba without U.S. Government authorization.

• BIS imposed a $6,600 penalty on DI Canada, Inc. (Dresser Canada) for reexporting from Canada to Libya various oil industry-related items. BIS alleged that Dresser Canada specially ordered from a U.S. company various items that were subsequently exported by the U.S. company though Canada to Libya without the required U.S. Government authorization.

• A $6,600 penalty was imposed by BIS on Dubai-based Dresser International, Inc. for causing a reexport from Dubai to Iraq without the required U.S. Government authorization. BIS alleged that Dresser’s Dubai branch transferred to a customer various oilfield items that were reexported by the customer to Iraq. BIS also alleged that Dresser’s Dubai branch knew that the items were intended for use in Iraq, and Dresser knew or had reason to know that a license was required for these exports because its personnel had knowledge of the U.S. embargo against Iraq and the EAR.

• BIS imposed a $3,300 penalty on International Valves Ltd., a Dresser affiliate in the U.K., for reexporting from the U.K. to Libya U.S.-origin spare parts classified as EAR99 without the required U.S. Government authorization.

Labels: BIS