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The Office of Antiboycott Compliance (OAC) is responsible for implementing the antiboycott provisions of the Export Administration Act (EAA) and The Export Administration Regulations (EAR). The Office performs three main functions: enforcing the antiboycott provisions of the EAR, assisting the public in complying with the antiboycott provisions of the EAR, and compiling and analyzing information regarding international boycotts. Compliance officers enforce the antiboycott provisions of the EAR through investigations and audits. The Compliance Policy Division provides advice and guidance to the public concerning application of the antiboycott provisions of the EAR and analyzes information about boycotts.
The investigators of the Enforcement Division implement the investigative and enforcement functions of the Office, which include conducting compliance reviews, investigating potential violations, issuing pre-charging letters for alleged violations, and negotiating settlements when violations have been alleged. The Enforcement Division also prepares settlement documents or charging letters to initiate administrative proceedings and prepares cases for civil litigation through the Office of the Chief Counsel for Export Administration or for criminal prosecution through the Department of Justice.
The Compliance Policy Division is responsible for developing and coordinating policies and initiatives to promote compliance with the antiboycott policies and requirements of the EAA. This includes preparing amendments, interpretations, and clarifications of the antiboycott provisions of the EAR; reviewing international boycott activity through communication with diplomatic posts; analyzing reports received by OAC; reviewing information from other sources; preparing reports on boycott activity for use by U.S. embassies and others in efforts to bring an end to the boycott; developing public education programs to assist U.S. companies in complying with the antiboycott provisions of the EAR; counseling parties on requirements of the law and how to comply with it; reviewing enforcement actions to ensure consistency with policy guidelines; processing all boycott reports filed with the Department; and supervising the informal telephone advice provided by OAC professionals to members of the public.
During FY99, the U.S. government continued to press for complete dismantlement of the Arab League's boycott of Israel. OAC continued to focus its efforts in four major areas: (1) enforcing the law against antiboycott violators, (2) continuing to provide information concerning the boycott to the State Department, (3) continuing the active educational and counseling program of the full time telephone advice line, which handled 1,143 calls during FY99, and (4) continuing the outreach program to increase public awareness and understanding of the antiboycott provisions of the EAR. During FY99, OAC officials spoke at 14 events sponsored by BXA, B.A.'s Office of Export Enforcement, banking groups, trade associations and local bar associations. Presentations included updates on OAC enforcement efforts and detailed reviews of the regulatory program. OAC also issued a new edition of its guide to boycott requests commonly appearing in letters of credit.
The antiboycott provisions of the EAA require U.S. persons to report to the Department of Commerce requests they receive to take actions that have the effect of furthering or supporting unsanctioned foreign boycotts. The reports filed by U.S. persons are to contain information concerning both the request and the transaction(s) to which the request relates. The transactions referred to in this context are specific business activities generally involving documents such as invitations to bid, contracts, export shipment documents, and letters of credit. In connection with these transactions, the reporting person would have received one or more requests to take specific boycott-based action, such as responding to a boycott questionnaire, furnishing information about business relationships with a boycotted country, discriminating against U.S. persons on the basis of religion, or refusing to do business with a blacklisted firm or boycotted country.
In interpreting the data presented in the Tables 8-1 through 8-5, it is important to keep two factors in mind. First, the number of reported transactions may be fewer than the number of reported requests because a single transaction may involve more than one boycott request. Second, the number of both transactions and requests (as well as the value of the transactions) may be somewhat inflated because boycott reports involving the same reportable transaction are required to be filed by each party to a transaction for the same reportable transaction.
During FY99, 389 persons reported receipt of 1,524 documents containing boycott requests in 1,524 transactions. The corresponding figures for FY98 were 461 persons, 1,609 boycott requests, and 1,609 transactions. Exporters were the principal category of reporters, constituting approximately 70 percent of the reporting entities in FY99.
Prohibited boycott requests totaled 450 of the 1,524 boycott requests reported to OAC in FY99. A prohibited request is a request to take action that is prohibited by the antiboycott provisions of the EAR (e.g., a request not to use suppliers blacklisted by a boycotting country).
The United Arab Emirates was the leading country from which boycott requests originated, with a total of 116 requests. The next five countries originating boycott requests were Oman (83), Syria (74), Saudi Arabia (49), Qatar (34), and Bahrain (25).
During the fiscal year, OAC continued to pursue more serious violations of the antiboycott provisions of the EAR, such as discrimination based on religion, refusals to do business with other companies for boycott reasons, and furnishing prohibited information. Most of the settlements reached in FY99 involved alleged violations of the prohibition against furnishing information about business relationships with or in Israel or with companies on the boycott list of boycotting countries. Several involved refusals to do business or agreements to refuse to do business, for boycott purposes. Others involved failure to report receipt of requests to engage in restrictive trade practices or boycotts, as the regulations require. The large majority of the settlements involved alleged violations of two or more sections of the antiboycott provisions.
Ten enforcement actions were completed in FY99. Of that total, nine were settlement agreements. OAC closed one case with a warning letter for minor violations. Additionally, 17 investigative cases were closed because violations were not found. Therefore, the total number of investigations closed in FY99 was 27.
All of the OAC investigations that involved allegations of serious violations were resolved through settlement. Settlement agreements are used as a vehicle for these dispositions. This is in line with historical practice; an overwhelming majority of cases brought by OAC have been settled in this way. These settlement agreements may provide for payment of civil penalties, denial of export privileges and, occasionally, the establishment of compliance programs.
Civil penalties imposed in the nine settlement agreements totaled $79,000 in FY99.
The Department of Commerce imposed a $5,000 civil penalty on Deutsche Bank AG, a New York City branch of Deutsche Bank AG of Germany, to settle allegations that the New York Branch committed one violation of the antiboycott provisions. The Department alleged that, in a 1998 transaction involving a sale to Lebanon, the New York Branch confirmed a letter of credit that contained a prohibited condition, in violation of the antiboycott provisions.
The Department of Commerce imposed a $5,000 civil penalty on The SABRE Group, Inc., a Texas provider of travel-related products and services, for two alleged violations of the antiboycott provisions. The Department alleged that, in a 1998 contract with a Pakistani company, The SABRE Group agreed to refuse to subcontract any work to Israeli-based businesses or individuals. The Department further alleged that The SABRE Group failed to report its receipt of the boycott requests in the contract.
The Department of Commerce imposed a $35,000 civil penalty on Alaris Medical Systems, Inc., located in San Diego, California, to settle allegations that the company violated the antiboycott provisions. The Department alleged that Alaris Medical Systems, Inc., formerly IMED Corporation, failed on ten occasions to report its receipt of requests from Kuwait to engage in restrictive trade practices or boycotts. The Department also alleged that, in six of the transactions, the company failed to maintain records as required by the regulations.
Once allegations of violations are made to a respondent, OAC offers the respondent the opportunity to discuss the alleged violations. If the company and OAC cannot reach a mutually satisfactory resolution of the matter, a charging letter is issued. The case is then referred to an administrative law judge ("ALJ") for formal adjudication. The Office of the Chief Counsel for Export Administration represents OAC before the ALJ, who decides the case and may impose a civil penalty of not more than $1,000 per violation or a period of denial of export privileges or both. Either party may appeal the decision of the ALJ to the Under Secretary for Export Administration. The decision of the ALJ becomes the final agency decision unless one of the parties appeals. The OAC did not issue any charging letters in FY99.
On August 25, 1994, OAC issued a charging letter to Serfilco, Ltd., a Northbrook, Illinois manufacturer of commercial filtration and pumping equipment. The Department charged that Serfilco furnished prohibited business information to a distributor in Iraq. The Department also alleged that Serfilco failed to report its receipt of seven boycott requests. A hearing was conducted on August 23, 1995. In his decision, the ALJ found that Serfilco had violated the antiboycott provisions and imposed a $118,000 civil penalty on the company Also, the ALJ denied for one year Serfilco's export privileges to export to Bahrain, Iraq, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and the Republic of Yemen. Serfilco appealed the ALJ's decision to the Department's Under Secretary for Export Administration.
On August 25, 1994, OAC issued a charging letter to Mr. Jack H. Berg, president of Serfilco. The Department charged that Mr. Berg furnished prohibited business information to a distributor in Iraq. A hearing was conducted on August 23, 1995. In his decision, the ALJ found that Berg had violated the antiboycott provisions and imposed a civil penalty of $90,000 on Berg. Mr. Berg appealed the ALJ's decision to the Under Secretary for Export Administration.
In his June 10, 1996, "Final Decision and Order," the Under Secretary upheld the ALJ's decision to deny for one year Berg's and Serfilco's privileges to export to Bahrain, Iraq, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and the Republic of Yemen. However, the Under Secretary reduced the $118,000 penalty imposed on Serfilco to $38,000 and reduced the penalty imposed on Berg to $80,000. Berg and Serfilco have refused to pay the civil penalties. At the request of the Commerce Department, the U.S. Department of Justice has filed a law suit in Federal court against Berg and Serfilco to collect the civil penalties.
All of the final orders issued during FY99 imposing administrative sanctions, including civil penalties, resulting from OAC investigations are summarized in the following table.
| Company Name &Location | Date Order Signed | Alleged Violations |
Penalty Amount |
|---|---|---|---|
| MKD International, Inc. Nashville, TN |
10/22/98 | 2 violations alleged: 1- 769.2(a) Required a person to refuse to do business. 1- 769.2(d) Furnished prohibited information. |
$ 10,000 ($6,000 suspended) |
| Allison Engine Company, Inc. Indianapolis, IN |
12/23/98 | 2 violations alleged: 1- 769.2(d) Furnished prohibited information. 1- 769.6 Failed to report. |
$ 3,000 |
| Fritz Companies, Inc. San Francisco, CA |
2/1/99 | 6 violations of 769.2(d) Furnished prohibited information. |
$12,000 |
| Hanson Aggregates West, Inc. Dallas, TX |
3/8/99 | 2 violations alleged: 1- 769.2(d) Furnished prohibited information. 1 769.6 Failed to report. |
$3,000 |
| The SABRE Group,Inc. Texas |
5/20/99 | 2 violations alleged: 1- 760.2(d) Agreement to refuse to do business. 1- 760.5 Failed to report. |
$5,000 |
| Langham Transport Services, Inc. Indianapolis, IN |
5/20/99 | 1 violation of 769.2(d) Furnished prohibited information. |
$2,000 |
| Alaris Medical Systems, Inc. San Diego, CA |
6/14/99 | 16 violations alleged. 10 - 769.6 Failed to report. 6 - 769.6(b) Recordkeeping. |
$35,000 |
| Deutsche Bank A.G. New York, NY |
6/14/99 | 1 violation of 760.2(f) Implemented a letter of credit. |
$5,000 |
| Najarian Furniture Co., Inc. City of Industry, CA |
7/26/99 | 4 violations of 769.2(d) Furnished prohibited information. | $4,000 |
INDIVIDUAL FIRMS, TRANSACTIONS, REQUESTING DOCUMENTS AND RESTRICTIVE TRADE PRACTICES BY FIRM TYPE [PDF Format]
NUMBER OF RESTRICTIVE TRADE PRACTICES AND TYPE OF RESTRICTIVE TRADE PRACTICE
[PDF Format]NUMBER OF RESTRICTIVE TRADE PRACTICES BY ORIGINATING COUNTRY AND TYPE OF PRACTICE
[PDF Format]NUMBER OF REQUESTING DOCUMENTS BY ORIGINATING COUNTRY AND BY TYPE OF DOCUMENT
[PDF Format]NUMBER AND VALUE OF EXPORTER TRANSACTIONS BY ORIGINATING COUNTRY AND DECISION ON REQUEST [PDF Format]
Go to Chapter Nine
In April of 2002 the Bureau of Export Administration (BXA) changed its name to the Bureau of Industry and Security(BIS). For historical purposes we have not changed the references to BXA in the legacy documents found in the Archived Press and Public Information.