Kuwait

The first prosecution under the new UK export laws has been recognized. The new laws were designed to prevent the uncontrolled movement of arms by British nationals between countries outside the UK. The laws carry a maximum of 10 years in prison and cover the movement of military and security goods.

John Knight was sentenced to four years in prison after he pled guilty to the illegal sale of 130 MPT 9 machine guns in the Middle East. He was to supply the guns to Kuwait via a procurement company. Knight applied for a license from the Export Control Organization to move the 130 guns, but posted them as MP5 A3 machine guns. None the less his license was denied and later his appeal was denied.

Knight continued with the shipment moving the guns from Iran to Kuwait and even laid a paper trail to make it seem as though he had left the deal. He received $120,000 on account from the Kuwaiti Ministry of the Interior for the machine guns.

When the shipment arrived to Kuwait it was intercepted by the Kuwait Customs Service. Later a search of Mr. Knights home revealed evidence that supported he was involved in the unlicensed export of the guns. Officials were able to uncover documents from Knight’s shredder that led to his conviction.

More information:

Article from BERR (Department for Business Enterprise & Regulatory Reform)

Cooper Tools Industrial Ltda. has been issued a civil monetary penalty amounting to $27,000 for engaging in transactions with a boycotted country, committing 15 violations of Section 760.2(d) of the EAR. The violations were related to transactions with Kuwait and United Arab Emirates.

Details from Department of Commerce (PDF)

— Hannah Bandalan

In late March, 2007, the Department of Treasury released the most current list of countries which require, or may require, cooperation with an international boycott within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986.

The list includes:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Yemen

Republic of Iraq is not on this list but its status is currently under review by the Department of Treasury and it may be added in the future.

Source:

• Federal Register - April 3, 2007 (Volume 72, Number 63, Page 15934)

In an effort to send a signal to Iran, the State Department is seeking Congressional approval to sell arms to US allies in the Persian Gulf. Countries such as Saudi Arabia, Qatar, Kuwait, Bahrain, Oman and the United Arab Emirates could have their defenses bolstered through the purchase of sophisticated air and missile defense systems, advanced early warning radar aircraft and light coastal combat ships. It is also believed that Northrop Grumman’s E-2D Hawkeye 2000 early warning aircraft is under consideration for sale. The United Arab Emirates had tried to acquire this aircraft in 2003 but the deal fell through due to the US Navy’s hesitation to sell the necessary communication software.

US officials have been rather quiet about the proposed arms sales. This could be due to the concern that building up Iran’s neighbors could bring the US closer to an Iranian confrontation. Officials state the need for Congressional support and the need for a low level of publicity from the countries involved as the reason for being so tight-lipped. Several countries have been reticent about agreeing to sales because of the fear of sending a message of aggression to Iran.

Source:

• The Boston Globe - boston.com March 21, 2007, Author: Farah Stockman

So, you got limited export compliance resources and your probably use only a small part of that pool for compliance with the antiboycott regulations. We can’t get you more resources such as time and money, but we can tell you to focus your antiboycott compliance resources on your business activities that involve these countries:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Republic of Yemen

( Iraq is not on the list at this time but remains under review by the Department of the Treasury.)

On September 26, 2006 , the U.S. Department of the Treasury published a notice in the Federal Register announcing that the above countries may require cooperation with an international boycott according to the Internal Revenue Code of 1986, the Arab League boycott of Israel , the same unsanctioned boycott covered by the Export Administration Regulations antiboycott rules. The Commerce Department has not recently put in writing an acknowledgement that its antiboycott regulations focus only on the Arab boycott of Israel , but informally Commerce Antiboycott officials may be willing to admit that is the case. (Quite a few years ago Commerce published an article in its newsletter “The OEL Insider” that stated that it interprets the EAR antiboycott rules to apply only to the Arab boycott of Israel.)

In the October 15, 2003 Federal Register the Treasury Department published a notice identifying 10 countries that may require cooperation with an international trade boycott not sanctioned by the United States. The ten countries are:

Bahrain, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, Republic of Yemen.

Companies in these countries may require that you comply with the Arab League boycott of Israel. If you are a US company, a US citizen/resident, or a subsidiary of a US company, compliance with the secondary and tertiary levels of the Arab boycott of Israel may be a violation of US antiboycott rules found in the Export Administration Regulations and section 999(b)(3) of the Internal Revenue Code of 1986.

Generally speaking, the key provisions of the US antiboycott rules prohibit US persons from complying with the Arab boycott of Israel. Prohibited cooperation could include 1) refusing to do business with a company or country; and 2) supplying information about your business relationship with other companies or countries.

This list is useful in that it highlights the countries from which you are most likely to receive prohibited boycott requests or inquiries. You should focus your antiboycott compliance procedures on these countries. Please note, however, that EAR antiboycott issues may also arise when dealing with any country, but you also pay close attention to Indonesia, Bangladesh, Pakistan, Iran, India, Ethiopia, and Eritrea.