On 23rd February, The Diplomat carried an article analysing the 2017 case where Chinese telecoms manufacturer ZTE was hit by US sanctions.  It was assessed a $1.19 billion penalty for illegal exports to Iran and North Korea, amounting to the largest civil penalty ever assessed for violation of the US Export Administration Regulations (EAR). The article says that ultimately, ZTE paid $892 million dollars to US enforcement agencies, including the Bureau for Industrial Security (BIS) and the Department of Justice (DoJ). The penalty was especially harsh because ZTE was found to have attempted to obstruct the investigation.  The article asks, what are the important lessons for multinationals — other than don’t break the law and don’t obstruct justice?  It says there are 3 –

  • US sanctions and export controls have far-reaching jurisdiction and can disrupt global value chains, inflicting collateral damage on a host of innocent parties;
  • “national security” sensitivities are on the rise, and Washington is gearing up for an aggressive campaign of sanctions and stringent export licensing requirements; and
  • technology has become both an enabler and a disrupter, bringing a further expansion of “controlled item” lists — which means more penalties can be expected.

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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