International Trade Law News

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has announced that Wilden Pump and Engineering Co., LLC (Wilden), a Grand Terrace, California-based company will pay a $700,000 civil penalty to settle charges that it violated the Export Administration Regulations (EAR) in connection with unauthorized exports of diaphragm pumps from the United States to the Iran, Israel, People's Republic of China, Syria, and the United Arab Emirates (UAE) without the required BIS export licenses. The diaphragm pumps produced and exported by Wilden are classified on the Commerce Control List (CCL) as ECCN 2B350i.4. Wilden is owned by that Dover Resources, Inc., a public company whose shares are traded on the New York Stock Exchange.

BIS's charging letter states that, between 2000 and 2003, Wilden committed 71 violations of the EAR. Specifically, BIS found that Wilden committed 26 violations by exporting diaphragm pumps without the required licenses. BIS claimed that in connection with 22 of the exports, Wilden violated the EAR by transferring diaphragm pumps with knowledge that violations of the EAR would occur. BIS also charged that Wilden committed 23 violations of the EAR by making false statements on Shipper's Export Declarations (SEDs). For example, Wilden issued several SEDs stating that the products were destined for the UAE when the ultimate destination was Iran. In addition, several of the SEDs stated that the products qualified for export from the U.S. as NLR (No License Required) when an export license was required to be obtained prior to shipment.

In a press release announcing the settlement, BIS indicated that "the size of the penalty . . . is due to the significant number of violations, many of them with knowledge that the shipments were destined to an embargoed country." In addition to the civil penalty, Wilden also agreed to be subject to a three-year denial of export privileges for items on the CCL. The denial of export privileges will be suspended for two years provided that Wilden does not commit any violations of the EAR during the suspension period. The denial of export privileges is a signficant additional penalty since Dover's 2004 annual report indicates that over one-half of Wilden's sales are derived from international markets.