On April 14, 2011, in Washington, D.C., David Mills, the new Assistant Secretary for Export Enforcement, Bureau of Industry and Security (BIS), U.S. Department of Commerce, and his Special Advisor, Bob Rarog, explained the enforcement priorities of BIS. These priorities were established by Eric Hirschhorn, who was just sworn in as Under Secretary of the U.S. Commerce Department’s Bureau of Industry and Security (BIS) on April 2, 2010, after being appointed by President Obama. This event was part of the American Bar Association’s Section of International Law’s Export Controls and Economic Sanctions Committee.
David Mills, who has an excellent perspective from recently being a private practicing attorney, and was formerly the Chief of Licensing at the Office of Foreign Assets Control (OFAC), identified the three primary initiatives of export enforcement by the BIS.
1. Efficiency – process administrative cases faster.
2. Education – outreach program to exporting companies.
3. Enforcement – going for the $250,000 maximum penalty or twice the value of the transaction, whichever is greater.
David Mills stated that where both OFAC and BIS have jurisdiction over a violation, it is best to file voluntary self disclosure simultaneously with both agencies. Generally, Special Agents from the BIS’ Office of Export Enforcement will conduct the investigation thereafter. Another interesting point was that the Obama Administration remains focused on Iran, preventing the proliferation of weapons of mass destruction (WMD), and prohibiting any transactions with Specially Designated Nationals (SDNs). This is consistent with the U.S. Department of Justice’s recent National Counter-Proliferation Initiative to increase the detection and prosecution of export control violations. For the past two years since this Initiative started, the number of criminal and civil cases targeting violations of the ITAR, EAR and trade sanctions have greatly increased. Federal agents from the FBI, Justice, BIS, ICE, OFAC, State and Defense have investigated and prosecuted companies and individuals for illegally exporting goods and technology not only to countries such as Iran, China and Cuba, but also to close allies such as Canada, Mexico, Taiwan and Israel.
What surprised many of the legal experts listening to David Mills who practice in the area of export controls was the statement by Mr. Mills that the filing of voluntary self disclosure by the company with BIS will not necessarily protect the employees of that company. Mr. Mills was sending a message:
Willful or knowing, as opposed to inadvertent, violations by individuals will be punished.
Mr. Mills clearly set forth a new policy:
Special Agents of BIS are directed to focus on investigating culpable individuals for criminal prosecution or civil penalties.
He also stated that it is often an appropriate action for the company to terminate the employee who violates the laws of the United States.