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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; processing all boycott reports filed with the Department; and supervising the informal telephone advice provided by OAC professionals to members of the public.
During FY 2000, 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 1,139 calls during FY 2000, and (4) continuing the outreach program to increase public awareness and understanding of the antiboycott provisions of the EAR. During FY 2000, OAC officials spoke at 17 events sponsored by BXA, BXA'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 made significant improvements to its Web site.
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. U.S. persons are required to report if they receive 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 7-1 through 7-6, 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 FY 2000, 350 persons reported receipt of 1,177 documents containing boycott requests in 1,177 transactions, and 1,425 boycott requests. The corresponding figures for FY 1999 were 389 persons, 1,524 documents in 1,524 transactions, and 1,775 boycott requests. As is generally the case, exporters were the principal category of reporters, constituting approximately 62 percent of the reporting entities in FY 2000.
Prohibited boycott requests totaled 392 of the 1,425 boycott requests reported to OAC in FY 2000. A prohibited request is a request to take action that is prohibited by the antiboycott provisions of the EAR, for example a request to not to use suppliers blacklisted by a boycotting country.
The United Arab Emirates was the leading country from which prohibited boycott requests originated with a total of 105 requests. The next four countries originating boycott requests were Syria (74), Oman (48), Saudi Arabia (42), and Bahrain (34).
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 FY 2000 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. Several involved involved failure to report receipt of requests to engage in restrictive trade practices or boycotts, as required by the regulations. The large majority of the settlements involved alleged violations of two or more sections of the regulations.
Ten enforcement actions were completed in FY 2000. All 10 were settlement agreements. Additionally, eight investigative cases were closed because violations were not found.
All of the OAC investigations which involved allegations of serious violations were resolved through settlement. Settlement agreements are used as a vehicle for these dispositions. Historically, an overwhelming majority of cases brought by the OAC have been settled in this way. These settlement agreements may provide for payment of civil penalties, for denial of export privileges and, occasionally, for the establishment of compliance programs.
Civil penalties imposed in the 10 settlement agreements totaled $164,000 in FY 2000.
Kenclaire (West) Electrical Agencies, Inc.
The Department of Commerce imposed a $104,000 civil penalty on Kenclaire (West) Electrical Agencies, Inc., a Fresno, California electrical supply company, to settle allegations that the company committed 30 violations of the antiboycott provisions of the EAR. The Department alleged that, in 11 transactions, Kenclaire (West) agreed to refuse to do business with other companies pursuant to a requirement of, or a request from or on behalf of a boycotting country. The Department also alleged that Kenclaire (West) failed to report its receipt of 19 boycott requests as required by the regulations.
Panalpina, Inc.
The Department of Commerce imposed a $20,000 civil penalty on Panalpina, Inc., a Humble, Texas, freight forwarder, for ten alleged violations of the antiboycott provisions of the EAR when it furnished information about other companies' business relationships with Israel.
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 $10,000 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. If neither party appeals, the decision of the ALJ becomes the final agency decision. The OAC did not issue any charging letters in FY 2000.
On July 27, 2000, the U.S. Department of Justice entered into a consent agreement with Serfilco, Ltd. and Jack H. Berg, president of Serfilco, Ltd., to settle a collection action brought by the Justice Department to collect the civil penalties imposed by the Under Secretary of the Bureau of Export Administration for violations of the antiboycott provisions of the EAR. The penalties were pursuant to charging letters issued to the Northbrook, Illinois, manufacturer of commercial filtration and pumping equipment and its president on August 25, 1994. Under the terms of the consent agreement, Serfilco and Berg paid $87,500 in civil penalties.
All of the final orders issued during FY 2000 imposing administrative sanctions, including civil penalties, resulting from OAC investigations are summarized in the following table:
Summary of Settlements and Charging Letters - FY 2000 |
| Company Name and Location |
Order Signed | Alleged Violations | Penalty Amount |
|---|---|---|---|
| Rosemount Inc. Eden Prairie, MN | 11/29/99 | 10 violations of 769.6 or 760.5 Failed to report. | $10,000 |
| Rosemount GmbH & Co. (Wessling, Germany | 11/29/99 | 2 violations of 769.2(d) Furnished prohibited business information. | $ 4,000 |
| Brooks Instruments Division Hatfield, PA |
11/29/99 | 1-769.2(d) Furnished prohibited business information; 6-769.6 Failed to report. |
$ 7,000 |
| Panalpina, Inc. Humble, TX | 3/2/2000 | 10 violations of 769.2(d) Furnished prohibited business information. | $20,000 |
| BDP International, Inc. Des Plaines, IL |
3/22/2000 | 1-769.2(d) Furnished prohibited business information. | $4000 |
| Best Power Technology Limited Winchester, Hampshire, England | 4/19/2000 | 2-769.2(d) Furnished prohibited business information. | $4,000 |
| ITOCHU Project Management Corp. Houston, TX |
4/24/2000 | 1-769.2(d) Furnished prohibited business information. | $4,000 |
| Design Direction, Inc. Indianapolis, IN |
4/24/2000 | 1-769.2(d) Furnished prohibited business information; 1-769.6 Failed to report. |
$3,000 |
| Kenclaire (West) Electrical Agencies, Inc. Fresno, CA. | 6/15/2000 | 30 violations: 11- 769.2(a) Agreed to refuse to do business; 19-769.6 Failed to report. |
$104,000 |
| Bailey International, Inc. Houston, TX |
7/25/2000 | 4 violations: 1-769.2(d) Furnished prohibited business information; 3-769.6 Failed to report. | $4,000 |
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.