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January 25, 2009 

BIS Issues Temporary Denial Order in Effort to Prevent Powerboat From Being Reexported From South Africa to Iran

In an interesting and unusual development, last Thursday the U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued a Temporary Denial Order (TDO) in an effort to prevent a powerboat containing U.S. engines and other components from being reexported from South Africa to Iran for possible use by the Iranian Revolutionary Guard Corps navy.

The parties named in the TDO included the Islamic Republic of Iran Shipping Lines (IRISL) and Tadbir Sanaat Sharif Technology Development Center (TSS), both based in Tehran, Iran, and Icarus Marine (Pty) Ltd. of Cape Town, South Africa.

According to the TDO, BIS obtained evidence that the denied parties were about to commit an imminent violation of the Export Administration Regulations (EAR) by re-exporting a Bladerunner 51 powerboat, containing U.S. origin engines and other components (classified as ECCN 8A992.f), to TSS for use by the Iranian Revolutionary Guard Corps navy. BIS also stated that an IRISL vessel, the M/V “Diplomat” (a/k/a the “Iran Diplomat”), is going to be used to transport the powerboat to Iran.

Because the powerboat can reportedly reach speeds of up to 65 knots BIS has concerns that the boat will be used by the IRGC navy as a fast-attack craft to mount surprise attacks. BIS noted that similar vessels have been armed with torpedoes, rocket launchers and anti-ship missiles.

As a result of BIS's actions, the denied parties are prohibited from engaging in this re-export transaction and from directly or indirectly participating or benefiting in any way in or from any other transaction subject to the EAR. In addition, no other person may participate in a transaction subject to the EAR with any of the denied parties. The TDO is effective for 180 days from issuance and is subject to possible renewal.

As we have reported, in September 2008the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added IRISL’s entire fleet, including the Diplomat, to the List of Specially Designated Nationals (SDN List).

Interestingly, TSS's website, was was referred to in the TDO and was hosted by a Canadian hosting company, has been recently suspended. Google's cache of the site can be found here and here.

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