Canada's export control and economic sanctions rules relating to Iran are not as strict and prohibitive and the export controls laws of the United States. This provides opportunities to Canadian businesses and also significant risk. The risk is associated with being offside the U.S. export control laws (OFAC rules, EAR and ITARs).
A story in today's Washington Post about an Iranian businessman being arrested at the san francisco airport contains information that is relevant to Canadian companies (even though the article does not suggest any connection to Canada (and I have no knowledge of a Canadian connection)).
The Washington Post article entitled “Iranian Suspected of Smuggling Weapons for Tehran Jailed in U.S.” contains information about a Tehran businessman, Hossein Ali Khoshnevisrad, 55, who was charged with multiple export-related crimes. He allegedly used a company, Ariasa, which relied chiefly on Malaysian trading partners -- including a phony "book trader" -- to circumvent bans on direct exports of technology to Iran. He also is alleged to have routed purchases through the United Arab Emirates. Also, according to the indicatment, the export transactions involved companies in Ireland and the Netherlands and American freight carriers, one of which was described in court records as "the Irish trading company's designated freight forwarder from New York."
It is alleged that Mr. Khoshnevisrad purchased aircraft parts, valued at more than $4 million, from U.S. firms and he routed the parts through a network of front companies. According to the indicatment, among the purchases were 17 Rolls-Royce helicopter engines, manufactured at a factory in Indiana and allegedly destined for Iran Aircraft Manufacturing Industrial Co., and 11 aerial-surveillance cameras sold by a Pennsylvania distributor and allegedly intended for mounting on Iran's F-4 fighter jets. The U.S. firms apparently were unaware that the parts were intended for Iran, federal officials said.
Khoshnevisrad was arrested after U.S. Customs and Border Protection discovered that the he was traveling from Iran to the United States, on a stop over flight from Europe. The investigation of Khoshnevisrad relied in part on intercepted e-mails (going back into 2007 and maybe earlier) between him and his business partners. One of the "questionable" emails stated:
"We have your 'three engines' ready to ship/deliver in Kuala Lumpur," a representative of the Irish trading company wrote in a Jan. 15, 2007, e-mail, one of several cited in the Commerce affidavit. "We are giving you . . . top-quality service . . . under extreme[ly] difficult conditions (embargo[es] . . . export controls)."
In another e-mail to Khoshnevisrad about three weeks later, the Irish trading company wrote, "Aviation/Equip[ment] . . . embargo . . . very, very 'strong' right now on 'Iran.' Extreme vigilance 'worldwide' in place."
Canadian companies involved in the export of controlled goods and goods that would be captured by U.S. law should review their records to determine if they have dealt with Ariasa or Mr. Khoshnevisrad. They should be proactive to learn from this case and determine whether they have been dealing with companies in Malaysia, Ireland, the netherlands, the United Arab Emirates or other countries that may be trading with Iran.
In addition, companies should review the emails of their sales persons who may be selling to "questionable" persons located in countries of concern and look for similar sorts of statements. If emails to Khoshnevisrad wer interepted, other emails from other companies may have been intercepted too. Corporate email policie may need to be considered to enable managment to review employees' and consultants' emails relating to sales of equipment manufactured or distributed by the company.
This case highlights the need for vigilence - because - it is better for the company to exercise due diligence and ask the questions before people start getting arrested as they travel through U.S. airports.