Editor’s Note: This is the first column in a 12-part export controls and sanctions series exclusive to Aftermarket Business World. Gregory Husisian is of counsel with Foley & Lardner LLP, a national law firm whose practice areas include corporate governance, compliance, securities and outsourcing, among others.
Last year, the U.S. government imposed record fines in all areas where it regulates exports and international conduct. These included nearly $2 billion in record fines, profit disgorgement and other penalties under the Foreign Corrupt Practices Act (FCPA) and $1 billion in various penalties for U.S. sanctions and export controls. With the government announcing that enforcement of these areas is a top prosecution priority — behind only the fight against terrorism — the likelihood that 2011 will see similar enforcement activity levels is strong.
As a result, all U.S. companies that export or operate abroad, including those in the automotive sector, need to pay increasing attention to compliance with these laws. Main focuses should include the FCPA’s prohibitions on the payment of bribes; the Department of Commerce’s restrictions regarding the export of “dual-use” (largely commercial) goods, information, software and technology; the Office of Foreign Assets Controls (OFAC) economic sanctions and restrictions on the activities of U.S. persons and companies operating abroad in their dealings with banned countries or persons; and, for companies operating in the Middle East or with Middle Eastern countries, the Department of Commerce and the Internal Revenue Service’s restrictions on providing information in support of the boycott of Israel. These complicated regulations expose exporters to potentially large fines, loss of export privileges and even criminal penalties. Even sophisticated companies can run afoul of these laws, as shown by the recent $88,500 fine assessed on GM Daewoo Auto & Technology Company for alleged antiboycott violations.
Further complicating the issue is that there are a number of key enforcement trends that multiply the risks to multinational corporations or exporters subject to U.S. jurisdiction. These include:
- increasing government enforcement activity of laws that apply to international transactions;
- increasing attention to individuals;
- increasing willingness to resort to criminal indictments rather than civil penalties;
- growing fines;
- growing use of dedicated FBI agents with specialized knowledge in identifying violations;
- increasing national and international inter-agency cooperation; and
- simultaneous enforcement of seemingly separate laws regulating the activities of U.S. persons abroad.