Export enforcement & disclosures, February 2013

379 views
319 views

Published on

export controls, economic sanctions, EU, disclosures, enforcement

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
379
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Export enforcement & disclosures, February 2013

  1. 1. Enforcement trends and disclosures inexport controls and sanctionsTrade Compliance Seminar – Export Controls12 February 2013Jasper HelderPartner, International Tradejasper.helder@bakermckenzie.com+ 31 (0) 6 46 17 94 82Baker & McKenzie Amsterdam N.V. is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with thecommon terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly,reference to an "office" means an office of any such law firm.© 2013 Baker & McKenzie Amsterdam N.V.
  2. 2. Agenda– What are the enforcement trends in export controls and sanctions?– What can you do if you discover a violation?– How do you make sure disclosures are successful?© 2013 Baker & McKenzie Amsterdam N.V. 2
  3. 3. EU Export Controlsand SanctionsEnforcement © 2012 Baker & McKenzieAntidumping and Countervailing Duties© 2013 Baker & McKenzie Amsterdam N.V. 3 3
  4. 4. EU Background– Enforcement is regulated by national laws, on national level (but may be prompted by EU exchange of information)  No EU rules on penalties (national criminal laws)  No EU rules in respect of enforcement (national codes of criminal procedure)– Common denominators between EU Member States, but also substantial differences– Different cultures: from ‘Informed Compliance’ to ‘Enforced Compliance’© 2013 Baker & McKenzie Amsterdam N.V. 4
  5. 5. EU Enforcement– Administrative enforcement  Audits  Withdrawal of licenses– Criminal enforcement  Investigations (commonly by Customs, who mostly are authorized to conduct criminal investigations)  Prosecution (often by general Prosecution Authorities)  Settlement (in some EU Member States) with Prosecutor / Customs© 2013 Baker & McKenzie Amsterdam N.V. 5
  6. 6. EU Enforcement– National administrations may have duty to report violations to prosecuting authorities → may impede voluntary self disclosures– Prosecuting authorities may have discretion to refrain from prosecution → transparency varies between EU MS– Just because cases aren’t publicized as much does not mean that there is no enforcement; companies try to settle investigation out of Court to avoid negative publicity© 2013 Baker & McKenzie Amsterdam N.V. 6
  7. 7. NL Enforcement– Not many Court cases (yet)– More and more settlements with Public Prosecutor  Many remain confidential, but  Need to be made public if:  More than EUR 50,000, or  In a ‘sensitive’ case– In particular ‘Iran’ is high on the enforcement agenda© 2013 Baker & McKenzie Amsterdam N.V. 7
  8. 8. Enforcement trends: ‘globalization’– Increased international co-operation– New export control laws in countries outside the EU and US: In the last several years, Mongolia, Malaysia, Thailand, Philippines, United Arab Emirates, etc. are all either considering or have passed Strategic Trade Acts– Extraditions: Granting extraditions for US export violations (Singapore, Hong Kong, Germany, Czech Republic, United Kingdom)© 2013 Baker & McKenzie Amsterdam N.V. 8
  9. 9. Recent US Enforcement in the Netherlands– United States v. ABN AMRO (May 2010)- $500 million criminal forfeiture for violations of US export control laws and the Bank Secrecy Act– United States v. Urlich Davis (May 2012)- 6 months imprisonment and $2,000 fine for conspiring to defraud the United States and violate a temporary denial order– United States v. ING Bank (June 2012)- $619 million criminal forfeiture for violations of US export control laws– United States v. Aviation Services International (June 2012)- owners sentenced to time-served and probation for violations of US export control laws© 2013 Baker & McKenzie Amsterdam N.V. 9
  10. 10. EU Examples Germany UK Oberlandesgericht Stuttgart (16 October 2008) October 2010: Ms, Caroline Egley-Turner, a Gotthard L. sentenced to 5 and a half years for businesswoman originally from New Zealand, procurement support of ultracentrifuges for Libya and arranged for electric stun guns to be supplied from AQ Kahn network (forfeited proceeds of Euro 3.5 the US to the New Zealand police force, sentenced to million) six months imprisonment, suspended for twelve months. A confiscation order for £24,802.51 was made against the defendant, who was ordered to pay £36,197.49 costs. Netherlands See: Court of Appeal Amsterdam (30 January 2009) http://www.bis.gov.uk/policies/export-control-organisation/eco-pre X BV; unlicensed exports of graphite, pressure gauges, triethanolamine and O-rings; penalty of € 85,000. Court of Appeal Amsterdam (30 January 2009) Person Z (managing director and shareholder of X BV); unlicensed exports of graphite, pressure gauges, triethanolamine and O-rings; penalty of € 85,000; imprisonment for 18 months, 6 months of which suspended; probation period of 2 years.© 2013 Baker & McKenzie Amsterdam N.V.
  11. 11. What if youdiscover aviolation? © 2012 Baker & McKenzieAntidumping and Countervailing Duties© 2013 Baker & McKenzie Amsterdam N.V. 11 11
  12. 12. What NOT to do if you discover a violation– Nothing (…)– Pass the ‘hot potato’ and the blame– Discuss widely in the business or externally– ‘Call the cops!’– Explain away or work around– Delete the evidence– “Repair after the fact”© 2013 Baker & McKenzie Amsterdam N.V. 12
  13. 13. What to do if you discover a violation?– Can you still undo the violation?  Block shipment/order– Check for pending transactions with similar risks  If necessary: stop them– Investigate the facts and causes  Think about legal privilege & external auditors– Assess the risk– Determine how future violations can be avoided  Remedial action© 2013 Baker & McKenzie Amsterdam N.V. 13
  14. 14. Remediation– Disciplinary Actions– Increased Live Training– Improved Code of Conduct and Specific Policies and Procedures– Improved Internal Controls– Increased Internal Audits– Rotation of Certain Positions– Audit Committee Interaction© 2013 Baker & McKenzie Amsterdam N.V.
  15. 15. VoluntaryDisclosures © 2012 Baker & McKenzieAntidumping and Countervailing Duties© 2013 Baker & McKenzie Amsterdam N.V. 15 15
  16. 16. Deciding to disclose or not– Carefully consider legal situation– Avoid premature disclosure – is it possible to conclude that some or all of the transactions are not violations?– Are the items actually controlled?  Careful review of relevant control entry and exemptions / decontrol notes  Consider classification request (suitably backed up by legal, technical and policy advocacy to push for NLR response)– Were any licences in place?– Do any defences apply?– Were the relevant legislative provisions in force at the date the transaction took place?– Who was the “exporter” with licensing obligations? Consider title to the items, control over the items, contractual obligations.© 2013 Baker & McKenzie Amsterdam N.V.
  17. 17. Deciding to disclose or not– How serious is the violation?– Is a disclosure to government authorities required by contract, foreign regulation or materiality from a securities law perspective?– Importance of notifying the government first– Risk of current / former employees, business partners or customers disclosing infringements as part of their own disclosure or whistle- blowing– Likelihood of detection– Compliance culture– Multi-jurisdictional investigations – how disclosure in one jurisdiction will affect non-disclosure in other jurisdictions– Voluntary cooperation – has it previously been credited? How certain and predictable is it?© 2013 Baker & McKenzie Amsterdam N.V.
  18. 18. Deciding to disclose or not– National administrations may have duty to report violations to Prosecuting Authorities– Prosecuting Authorities may not have discretion to refrain from prosecution– What response to expect: transparancy varies between EU MS  Guidelines for prosecution not commonly established or publicly available  No public reporting on concrete cases in most EU MS  Where settlements occur, these are not commonly published  Where settlement is possible, no published guidelines for amounts/measures– In some EU MS, legal entities can not be prosecuted for export controls violations, only individuals  Legal representatives (appointed directors/officers) liable  Company staff directly involved in relevant transactions (most EU MS)© 2013 Baker & McKenzie Amsterdam N.V.
  19. 19. Disclosure pros and cons– Benefits of making a voluntary – Disadvantages of making a disclosure: voluntary disclosure:  Fines and penalties may be  Government involvement lower may increase scope of  Cooperative resolution may investigation be less onerous, costly and  Timing of the process will be distracting to business dictated by the government  Greater control over the  Compliance program likely timing of the process to be reviewed  Avoid risk of disclosure by  The authorities may conduct third party their own investigations  Being seen by the  Potential additional scrutiny authorities to be doing the by law enforcement right thing agencies in other countries  Greater expectation from authorities that voluntary disclosures are made© 2013 Baker & McKenzie Amsterdam N.V.
  20. 20. Considerations in the Netherlands– No regulated context or procedures– ‘Black or white’ statutes: either criminal prosecution or no action– But: there always is the possibility of license withdrawal (though rarely applied)– Appropriate internal trade compliance programmes and responsabilities are expected from business, and will be reviewed after disclosure– Few resources, so response and follow up can take long (but quick response signifies your case is considered as serious)– If government investigation follows: state your case in the investigation phase as there is very little awareness of the area with prosecutors– Test for follow up: “would the transaction have been licensed if applied for?”© 2013 Baker & McKenzie Amsterdam N.V.
  21. 21. Proceeding with a voluntary disclosure– Consider whether to use internal or external resources– Ensure attorney/client privileged information is not inadvertently produced– Structure of voluntary disclosure:  Full and frank → including supporting documents  What happened?  Why did it happen?  Why will it not happen again? → steps taken to rectify in short and longer term  Aggravating and mitigating circumstances© 2013 Baker & McKenzie Amsterdam N.V.
  22. 22. Wrap up: Voluntary Disclosures– Benefits of voluntary disclosure  avoid prosecutions  reduced penalties  expectation from authorities– Ensure well prepared – a poor disclosure will worsen situation and reduce gov’t confidence– Full and frank– Aggravating and mitigating circumstances– Timely filings, coordinated with filings in other countries© 2013 Baker & McKenzie Amsterdam N.V.
  23. 23. Speaker Practice Focus Economic sanctions and EU export controls (dual-use and military products and technologies) and interaction with US sanctions and US export controls rules (e.g. ITAR and EAR). Representative legal matters: • Voluntary self-disclosure concerning prohibited transactions with an EU-sanctioned party, including negotiation of a settlement with Dutch authorities. • Advising various clients on compliance with the transfer of funds provisions under EU Jasper Helder sanctions against Iran and related voluntary self-disclosures.Partner International Trade • Advised a client on the EU sanctions against Iran and the restrictions for key technologies for the oil & gas sector, as well as the interaction of the EU sanctions with US government procurement regulations, CISADA and other US Iran sanctions. • Representing clients in litigation for contract performance and damages by EU, Iranian and Syrian parties concerning contracts suspended or terminated due to EU sanctions against Syria and Iran. • Advised various clients on EU and national blocking laws in relation to US Cuba sanctions and related US voluntary self-disclosures. • Advising oil & gas exploration services and offshore construction clients on the procurement of global export licenses under EU export controls regulation for equipment hubs supporting their global operations. • Assisting with simultaneous voluntary self-disclosures to US and Dutch authorities in respect of unlicensed exports of military items and technical violations under ITAR. • Obtaining exemptions from authorities in EU countries for exportation of commodities and related payments under the EU sanctions against Ivory Coast. © 2013 Baker & McKenzie Amsterdam N.V. 23
  24. 24. Thank you for your attention– Jasper Helder– Partner, International Trade– jasper.helder@bakermckenzie.com– + 31 (0) 6 46 17 94 82 © Baker & McKenzie 2012. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a Indirect Tax Steering Committee I Annual Meeting NY 2012 partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. © 2013 Baker & McKenzie Amsterdam N.V. 24

×