Dubai Co. and Owner Charged by BIS For Illicit Exports To Syria, Iran

Non-US companies operating outside of the US may at times believe that US laws donnot apply to them. But once every so often, we are reminded of the long arm of Uncle Sam laws, and the ability of US authorities to exercise jurisdiction over foreign defendants and companies, particularly when it comes to the export of US goods.

Earlier this month, the US Bureau of Industry and Security (BIS), Office of Export
Enforcement (OEE) issued a charging letter to Mohammad Alhamra, and his Dubai company WEBS Electronics Trading Company LLC (WEBS).

Background

WEBS is a UAE-based trading company that specializes in the purchase of US-origin
telecommunications equipment and related commodities. This equipment includes, but is
not limited to, routers, services gateways, serial device servers, networkable door
controllers, server racks, interface cards, and IP phones. WEBS purchases the equipment
directly from U.S. sellers, including from sellers via eBay.

The Misconduct as per BIS

BIS is claiming violations of the Export Administration Regulations (EAR) related to
exports of US manufactured telecommunications equipment to Syria and Iran and misrepresentations and concealment of facts to BIS officials regarding these exports.

“Export controls on Syria and Iran are among the most restrictive that we enforce because their
governments support terrorism, commit human rights abuses, and destabilize regional security,”
said Assistant Secretary of Commerce Matthew S. Axelrod.

In this case, BIS investigated the company after a BIS Export Control Officer (ECO) learned that WEBS and its owner, Mohammad Alhamra, were attempting to reexport a US-origin switch and transceiver from the UAE to Syria. The transceiver was controlled under Export Control Classification Number (“ECCN”) 5A002.a for Anti-Terrorism and National Security reasons and
required a license for export or reexport to Syria. The shipment was detained and returned
to WEBS.

A couple of months later, the ECO conducted a post-shipment verification (“PSV”) with WEBS.
During the PSV, the ECO met with Alhamra, the owner and general manager of WEBS.
Alhamra advised the ECO that WEBS is a trading company that specializes in the online
resale of IT equipment sourced from the US and that he purchases refurbished and surplus
computer equipment from the US and resells it online. Alhamra denied selling products
to Syria. Because WEBS could not provide sufficient documentation during the PSV, it
was deemed an unreliable recipient of US commodities.

Only a month after the PSV, the ECO learned that WEBS was again attempting
to reexport a shipment of US origin items to Syria. The shipment, which was detained,
contained a Blade System SP transceiver. The transceiver was controlled under ECCN
5A991.b for Anti-Terrorism reasons and required a license for reexport to Syria.

After the detention, Alhamra contacted the ECO and requested approval to ship the items to Syria. Alhamra also provided an invoice confirming that the shipment was destined for a trading
company located in Syria. When asked about his prior statement denying
that he exported to Syria, Alhamra admitted that up to 80% of his previous business had
been to Syria but stated that it had declined to approximately 5% in recent years.

In or about February 2019, the ECO again met with Alhamra at WEBS to conduct a PSV
related to two shipments of computer equipment classified as EAR99.
Although Alhamra provided documentation indicating that some of the equipment was sold to a trading company in the UAE, he could not provide documentation related to the sale of the
remaining equipment. As a result, WEBS was again deemed an unreliable recipient of
US commodities.

Further investigation by BIS’s Office of Export Enforcement revealed that Alhamra, who
was at all relevant times the owner of WEBS, had been exporting both US origin and non US origin commodities to the same company in Syria for years, as well as a customer in Iran.

In addition to the two attempted reexports detailed above, the investigation identified a total
of ten reexports to Syria and one reexport to Iran of U.S. origin items without the requisite
US government authorization.

Some Export Control Compliance Thoughts

US exporters are reminded here that transshipment countries such as the UAE, or its free trade zones continue to remain a preferred route to reexport US-origin goods to Syria and Iran.

On the other hand, non-US companies purchasing US manufactured products (even online on sites such as Amazon or eBay) ought to be reminded that BIS follows US-origin products “from cradle to grave”. Therefore prior to making such purchase, one ought to understand the compliance requirements involved for the resale of those products in restricted jurisdictions.

The reexport of any item that is subject to the EAR to Iran or Syria (even if it is as benign as an EAR99 classified item, like a pen for example) without a license is prohibited under US regulations.

For the sake of understanding the implications of such violations, Alhamra and WEBS were charged 14 charges for the violations of the EAR Regulations committed in this instance. That means Alhamra and WEBS could be facing any or all of the following:

• The maximum civil penalty allowed by law of up to the greater of $330,947 per violation,3
or twice the value of the transaction that is the basis of the violation;
• Denial of export privileges;
• Exclusion from practice before BIS; and/or
• Any other liability, sanction, or penalty available under law.

Upcoming Webinar with BIS

If you are operating in the Middle East and North Africa region (MENA), and would like more information on how to navigate the evolving landscape of trade sanctions and export control regulations in the region, feel free to join us and BIS, and for a live webinar on Thursday, 19 January 2023 (12:00 PM Gulf Standard Time).

You will learn about:

  • Particular regulations that businesses should care about in MENA
  • The role of the Bureau of Industry and Security and the growing importance of export controls/sanctions
  • Consequences faced by companies that have been found to have violated export controls
  • Where to look for compliance guidance and tips on how to set up your organization to manage risks

Registration is accessible here

%d bloggers like this: