Antiboycott Violations Result in Export Denial Order
February 2008
The US Department of Commerce’s Bureau of Industry and Security (BIS) has issued denial orders for two New York medical device distributor companies. AR-AM Medical Services LLC and DMA Med-Chem Corporation, both located at 49 Watermill Lane, Great Neck, New York. The charging papers explain that the companies supplied commercial invoices to the New York branch of the Bank of Egypt containing the following language that violations the antiboycott rules in the Export Administration Regulations:
The goods are neither of Israeli materials nor [sic] they contain any Israeli materials nor are they exported from Israel.
We declare that no raw material of Israeli origin has been used for production or preparation of the goods mentioned in this invoice.
Because the language was found on invoices that both companies generated, this is not a case where either company missed the boycott language in terms and conditions and/or other documents supplied by the purchaser. AR-AM included the language in three invoices, whereas DMA has allegedly only included it in one of their invoices.
Both companies are prohibited from participating in transactions in Bahrain, Iraq, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates, and the Republic of Yemen. Beginning January 14, 2008 the companies will be prohibited from any transactions for two years and AR-AM was fined $7,200 while DMA agreed to a fine of $2,400.
While it is unusual for a violation of the antiboycott rules to result in a company getting its export privileges denied, it is not unprecedented. In the landmark Baxter Healthcare antiboycott case, Baxter was partially denied its export privileges for Saudi Arabia and Syria, in addition to getting hit with a $6 million dollar fine and having its general counsel also personally fined.
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