DHL Settles Charges of Causing, Aiding and Abetting Illegal Exports to Syria and Iran
Trade intermediaries and logistics providers are a hot target for the Department of Commerce’s Bureau of Industry and Security (BIS), which regulates exports of dual-use items from the United States, as well as the Treasury’s Office of Foreign Assets Controls, which administers U.S. embargoes and sanctions with regard to select countries. On August 6, 2009 a settlement agreement between DPWN Holdings (USA) Inc., formerly DHL Holdings (USA) Inc. and DHL Express (USA) Inc. recited BIS's allegations that the companies had committed 98 Export Administration Regulations (EAR) violations in connection with unlicensed exports to Syria in violation of Part 736 of the EAR, General Note 2, and for failing to retain air waybills and other required export control documents in accordance with Part 772. Specifically, DHL was charged with “[c]ausing, aiding or abetting” the unlicensed exports to Syria. Similarly, OFAC alleged that DHL had made more than 300 shipments to Iran and the Sudan in violation of the OFAC Regulations and failed to maintain records required in connection with those shipments. In all, DHL settled the matter for $9,444,744, along with its promise to hire a third-party consultant with expertise in U.S. export controls laws to conduct an external audit of its export control compliance program and report any additional violations that might be found.
In the BIS press release, both BIS and OFAC emphasized the importance that all exporters, especially forwarders and other intermediaries, maintain records in conformity with agency regulations. OFAC Director Szubin stated that “joint enforcement actions signal the U.S. Governments’ commitment to ensuring that sanctions law – including recordkeeping requirements – are followed carefully,” and BIS stated that “[l]arge-scale compliance breakdowns lead to significant sanctions aimed at ensuring that freight forwarders put into place and maintain necessary measures to meet their compliance responsibilities.”
Attempting to regulate individual U.S. exporters, given their number, is difficult. It is more efficient in many respects for the government to monitor the trade intermediaries that facilitate prohibited exports to prod them to into compliance, thereby preventing attempted illegal exports from ever reaching their prohibited destination. Forwarders’ records also allow investigators to obtain an understanding of which exporter shipped which item to where, so that they can work backwards to locate shippers in violation. More and more, trade intermediaries are being viewed as a last line of defense in the government’s ongoing fight against illegal exports, and as the DHL case demonstrates, failure to intercept illegal exports and maintain records can be costly.
Lastly, although many intermediaries may focus on the nature of the goods exported, such as munitions or other military goods, it should be noted that, in the DHL case, the goods exported to Iran were rather innocuous, such as clothes, perfumes and lapel pins. Export controls go far beyond whether you knowingly ship grenades to Al-Qaeda; violations for shipping outerwear to Tehran are costly as well.
