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This is an old blog we lost during our transfer of site hosting. \u00a0<\/p>\n\n\n\n
\u00a0\u00a0 A record-setting payment of $1,190,000,000.00 by ZTE Corporation of Richardson, Texas (\u201cZTE\u201d) shows the enormous risks today of underestimating U.S. export enforcement. The International Emergency Economic Powers Act gives the President of the United States broad authority to regulate international transactions and exports.. Pursuant to two Executive Orders issued by President Clinton in the mid 1990\u2019s, the Iranian Transactions and Sanctions Regulations (\u201cITSR\u201d)\u00a0 was created that prohibit, among other things, exportation or re-exportation of U.S. products to Iran without a license from the Office of Foreign Asset Control (\u201cOFAC\u201d).<\/p>\n\n\n\n
Almost a year ago, the Obama administration accused ZTE of violating ITSR and the Export Administration Regulations (\u201cEAR\u201d), restricting the export of products that could make a significant military contribution to Iran or other countries. Fast forward to today, and, ZTE has pleaded guilty to charges of unlawful conspiracy to export U.S. goods (to both North Korea and Iran), obstruction of justice and knowingly and willfully making a materially false statement during the investigation. ZTE settled the lawsuit for the largest sanctions penalty in history: $1.19 billion divided between the U.S. Department of Justice, OFAC and the Bureau of Industry and Service (\u201cBIS\u201d). Below are some ideas of how to avoid becoming the record holder for the largest trade sanctions penalty:<\/p>\n\n\n\n
What\nZTE did: Senior\nmanagement was aware of, and even condoned, illegal activities and\nnon-compliance with trade laws.<\/p>\n\n\n\n
Best Practices: Create a company culture of honesty and compliance,\nstarting with top level management. It is up to senior management to establish\nclear company policies regarding compliance with all export policies because\nthey, better than anybody else, understand the high risks associated with\nnon-compliance. Senior management behavior is an example for the rest of the\ncompany so it should clearly show what are acceptable export practices. <\/p>\n\n\n\n
What\nZTE did: ZTE sought\nout and used “isolation companies” to re-export U.S. products to\nembargoed countries in order to hide ZTE’s involvement.<\/p>\n\n\n\n
Best Practices: Take a look at the process third parties which you may\nemploy use to complete their business. \nRequest written verification that they comply with trade laws and\nmemorialize this via a contract in which the third party commits to complying\nwith U.S. trade laws. The main point is to create and maintain transparency –\nwith teeth – regarding interactions\nbetween your company and any third party involved in your business\ntransactions.<\/p>\n\n\n\n
What\nZTE did: Incredibly, once the investigation had begun,\nZTE asked its employees to sign nondisclosure agreements to conceal the illegal\ntrade with Iran.<\/p>\n\n\n\n
Best Practices: Concealment is\nalmost always worse than the initial crime! Create a company plan that empowers\nemployees to report compliance issues. Even if it turns out there is no\ncompliance issue at the moment, you are given the chance to address a minor\nproblem before it turns into a major (record setting) compliance issue. See our January 20, 2016 post regarding\nVoluntary Disclosures, which can greatly lessen or even eliminate\npenalties (\u201cNew BIS Export Enforcement\nGuidelines\u201d.)<\/p>\n\n\n\n
What\nZTE did: After\nlearning of the impending charges, ZTE instituted a “contract data induction\nteam” whose purpose was to identify and remove data related to the Iran\ntransactions.<\/p>\n\n\n\n
Best Practices: Again, the\nconcealment activity failed and brought on a Billion Dollar<\/em> (!) penalty. When establishing an effective\ncompliance plan for your company, it should include a method of safe and\nreliable record keeping. The plan should include the types of records to keep\nand when they can be destroyed as well as steps to be taken should the company\nface an accusation of violating laws.<\/p>\n\n\n\n Ultimately, your goal should be to\nestablish company policies that respect and enforce compliance best\npractices. If an issue should arise, the\ncompany is then prepared to assist with and minimize the effect of any\nviolation and\/or investigation, rather than hinder and thereby compound it.<\/p>","protected":false},"excerpt":{"rendered":" \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This is an old blog we lost during our transfer of site hosting. \u00a0 \u00a0\u00a0 A record-setting payment of $1,190,000,000.00 by ZTE Corporation of Richardson, Texas (\u201cZTE\u201d) shows the enormous risks today of underestimating U.S. export enforcement. The International Emergency Economic Powers Act gives the President of the United States broad authority to regulate international transactions and exports.. Pursuant […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[262,260,83,257,263,176,259,261,256],"class_list":["post-1675","post","type-post","status-publish","format-standard","hentry","category-blog","tag-ear","tag-embargo","tag-export","tag-export-control","tag-ofac","tag-penalties","tag-penalty","tag-sanction","tag-zte"],"_links":{"self":[{"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/posts\/1675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/comments?post=1675"}],"version-history":[{"count":2,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/posts\/1675\/revisions"}],"predecessor-version":[{"id":1677,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/posts\/1675\/revisions\/1677"}],"wp:attachment":[{"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/media?parent=1675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/categories?post=1675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.customscourt.com\/es\/wp-json\/wp\/v2\/tags?post=1675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}