2010-5107. Action Affecting Export Privileges; Aviation Services International, B.V.

In the Matter of: Aviation Services International, B.V. also known as Delta Logistics, B.V., P.O. Box 418, Heerhugowaard, Netherlands 1700AK and Flemming Straat 36, Heerhugowaard, Netherlands 1700AK Respondent; Order Relating to Aviation Services International, B.V.

The Bureau of Industry and Security, U.S. Department of Commerce (“BIS”), has initiated an administrative proceeding against Aviation Services International, B.V., also known as Delta Logistics, B.V. (collectively referred to herein as “ASI”) pursuant to Section 766.3 of the Export Administration Regulations (currently codified at 15 CFR parts 730-774 (2009)) (“EAR”),^[1] and Section 13(c) of the Export Administration Act of 1979, as amended (50 U.S.C. app. §§ 2401-2420) (the “EAA”),^[2] through issuance of a Proposed Charging Letter to ASI that alleged that ASI committed one violation of the EAR. Specifically:

Charge 1 15 CFR 764.2(d)—Conspiracy

Between on or about October 1, 2005, and continuing through on or about October 30, 2007, ASI conspired and acted in concert with others, known and unknown, to violate the Regulations and to bring about acts that constitute violations of the Regulations. The purpose of the conspiracy was to export U.S.-origin items including aircraft parts, electronic components, and polymide film on multiple occasions, from the United States to Iran, via the Netherlands, Cyprus, and the United Arab Emirates (“UAE”), without the required U.S. Government authorization. Pursuant to section 746.7 of the Regulations, authorization was required from OFAC before the aircraft parts, electronic components, and polymide film, items subject to the Regulations ^[3] and the Iranian Transactions Regulations, 31 CFR part 560 (“ITR”), could be exported from the United States to Iran. Pursuant to section 560.204 of the ITR, an export to a third country intended for transshipment to Iran is a transaction subject to the ITR. In furtherance of the conspiracy, ASI and its co-conspirators devised and employed a scheme to purchase these items from the United States on behalf of Iranian customers and give U.S. manufacturers false information regarding the ultimate destination, end user, and end use of the items, thereby causing false export control documents to be submitted to the U.S. Government listing countries other than Iran as the ultimate destination for the items. These acts were taken to export U.S.-origin items to Iran without the required U.S. Government authorization and avoid detection by law enforcement. By engaging in this activity, ASI committed one violation of section 764.2(d) of the Regulations.

Whereas, BIS and ASI have entered into a Settlement Agreement pursuant to Section 766.18 of the EAR, whereby they agreed to settle this matter in accordance with the terms and conditions set forth therein; ^[4] and

Whereas, I have approved of the terms of the Settlement Agreement; ^[5]

It is therefore ordered:

First, that a civil penalty of $250,000 is assessed against ASI. Payment of the $250,000 penalty shall be suspended for a period of three (3) years from the date the BIS Order is issued and thereafter shall be waived provided that during the period of suspension, ASI has committed no violation of the EAA, EAR or any order or license issued thereunder.

Second, that for a period of seven (7) years from the date of this Order, Aviation Services International, B.V., also known as Delta Logistics, B.V., P.O. Box 418, Heerhugowaard, Netherlands 1700AK and Fleming Straat 36, Heerhugowaard, Netherlands, 1700AK, its successors or assigns, and, when acting for or on behalf of ASI, its officers, representatives, agents or employees (“Denied Person”) may not participate, directly or indirectly, in any way in any transaction involving any commodity, software, or technology (hereinafter collectively referred to as “item”) exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations, including, but not limited to:

A. Applying for, obtaining, or using any license, License Exception, or export control document;

B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or

C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.

Third, that no person may, directly or indirectly, do any of the actions described below with respect to an item that is subject to the Regulations that has been, will be, or is intended to be exported or reexported from the United States:

A. Export or reexport to or on behalf of a Denied Person any item subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted acquisition by a Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby a Denied Person acquires or attempts to acquire such ownership, possession or control;

C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from a Denied Person of any item subject to the Regulations that has been exported from the United States;

D. Obtain from a Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or

E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and that is owned, possessed or controlled by a Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by a Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.

Fourth, that, after notice and opportunity for comment as provided in Section 766.23 of the Regulations, any person, firm, corporation, or business organization related to ASI by affiliation, ownership, control, or position of responsibility in the conduct of trade or related services may also be made subject to the provisions of the Order.

Fifth, that this Order does not prohibit any export, reexport, or other transaction subject to the EAR where the only items involved that are subject to the EAR are the foreign-produced direct product of U.S.-origin technology.

Sixth, that the Proposed Charging Letter, the Settlement Agreement, and this Order shall be made available to the public.

Seventh, that this Order shall be served on the Denied Person and shall be published in the Federal Register.

This Order, which constitutes the final BIS action in this matter, is effective immediately.

Issued this 2nd day of March 2010.

David W. Mills,

Assistant Secretary of Commerce for Export Enforcement.

Footnotes

1.  The violation alleged by BIS occurred between 2005 and 2007. The governing provisions of the EAR are found in the 2005-2007 versions of the Code of Federal Regulations (15 CFR Parts 730-774 (2005-2007)). The 2009 version of the EAR establishes the procedures that apply to the BIS administrative proceeding.

2.  Since August 21, 2001, the EAA has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), as extended most recently by the Notice of August 13, 2009 (74 FR 41325 (August 14, 2009)), has continued the EAR in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (“IEEPA”).

3.  The items were classified as Export Control Classification Numbers (“ECCN”) 9A991, 1C008.A.3, 5A991. Additionally, some of the aircraft parts were designated EAR99, which is a designation for items subject to the Regulations but not listed on the Commerce Control List. (2005-2007).

4.  The Settlement Agreement also resolves allegations by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”), which is also a party to the Settlement Agreement, of apparent violations of the Iranian Transactions Regulations, 31 CFR part 560 (“ITR” or the “OFAC Regulations”). ASI's apparent violations of the OFAC Regulations are contained in an OFAC Prepenalty Notice that was issued by OFAC on or about September 24, 2009, identified as FAC Number IA-365318.

5.  This Order signifies my approval of the Settlement Agreement based on the violations alleged in the Proposed Charging Letter, and not the OFAC Prepenalty Notice referenced in note 4, supra.