News last week that two major U.S. companies had violated export control statutes should be warning enough to any business that the U.S. government is serious about enforcing cross-border trade laws and regulations.
In the first case, Weatherford International, a major energy industry company, and four of its subsidiaries were fined $100 million for export control and sanctions violations. The government found that executives, managers, or employees on multiple occasions participated in, directed, approved, and facilitated prohibited transactions and the conduct of its various subsidiaries. Specifically, the businesses had exported or re-exported oil and gas drilling equipment to, and conducted business operations in, sanctioned countries without the required U.S. Government authorizations between 1998 and 2007.
This news arrived almost simultaneously to that of another major company's export control problems. The former export compliance officer at Honeywell International, Inc. was administratively debarred from participating in any activities that are subject to the International Traffic in Arms Regulations (ITAR) for violations of the Arms Export Controls Act (AECA) and the ITAR. The company itself avoided sanctions by voluntarily disclosing the violations to the U.S. State Department’s Office of Defense Trade Controls Compliance. According to the government, the employee falsified export license authorizations which resulted in the company exporting defense articles, including technical data, and provided defense services to various foreign persons without Department approval in violation of the AECA and ITAR.
As these two cases demonstrate, the "we've got someone on top of that" and "it's not broke, so no need to fix" arguments do little to advance understanding and transparency in what is becoming an increasingly significant source of revenue for many U.S. companies: international operations.
Understanding the obligations with which your company must comply under international trade and customs laws and regulations can be a burdensome task. If your company is involved in interactional sourcing, manufacturing and/or distribution activities, we’d be pleased to help. A few of our value-added services include export control compliance program development, reviews or assessments, and staff & management training.
For more information, please contact Mark Ludwig of Variant Advisors* at email@example.com or tel. 305-213-8775, or John Archer of CBIZ MHM LLC at firstname.lastname@example.org or tel. 305.503.4229.
*Outside of the Big Four, and through its relationship with Variant Advisors, CBIZ is unique among other major national professional services firm by offering these value-added solutions.