Economic Sanctions Archives | Page 4 of 6

Questions Emerge Regarding the Legality of European Arms Sales, But Sales Continue

April 20, 2019 by Evan Schleicher Leave a Comment

This week French armed forces minister Florence Parly publicly stated that French weapons have not been used against civilians in Yemen after leaked intelligence published by investigative website Disclose showed that French arms, including tanks and laser-guided missile systems sold to Saudi Arabia and the United Arab Emirates, were believed to have been used in the Yemeni war against civilians. Prior to the release of this report, originally dated September 25, 2018, the French Government had maintained that French arms sold to Saudi Arabia were being used purely for defensive purposes along the border. This information raises new questions about whether the French have been selling the Saudi coalition weapons in contravention of international law.

Human Rights Watch has contended that they have been, pointing to the 2008 European Union Common Position on arms exports as evidence. The position in question, Council Common Position 2008/944/CFSP, which went into effect December 8, 2008, states that European countries should “deny a [weapons] export license if there is a clear risk that the military technology or equipment to be exported might be used in the commission of serious violations of international humanitarian law.” Because this position is codified as a treaty in European Union legal codes, it has universal force within the EU and should act as the basis of actions regarding the arms trade for all European nations.

Expanding on this earlier EU treaty, the 2013 UN Arms Trade Treaty states that “a State Party shall not authorize any transfer of conventional arms…if it has knowledge at the time of authorization that the arms or items would be used in…attacks directed against civilian objects or civilians protected as such, or other war crimes as defined by international agreements to which it is a Party”. Further, it states that if there is an overriding risk of the undermining of peace or of the commitment or facilitation of serious violations of international humanitarian law or human rights law, that the exporting state should not authorize the export. France ratified this treaty on April 2, 2014, meaning that if they have violated any of these principles, they are fully liable, both under international law and under EU law.

There have been significant concerns raised by multiple actors regarding Saudi actions in Yemen, with Germany establishing a unilateral arms embargo against Saudi Arabia in October 2018, which was recently extended until September of this year, in response to evidence of humanitarian and human rights abuses by coalition forces. The United Nations Office of the High Commissioner for Human Rights released a 41-page report written by the Group of Regional and International Eminent Experts on Yemen in late 2018 which strongly suggests that the coalition had perpetuated, and continues to perpetuate, crimes and violations under international law. There are grounds to believe that the coalition “may have conducted attacks in violation of the principles of distinction, proportionality, and precaution that may amount to war crimes”.

UN Human Rights Chief Zeid Ra’ad al Hussein stated in March 2016 that “it would seem that the coalition is responsible for twice as many civilian casualties as all other forces put together, virtually all as a result of air strikes”. Despite the creation of a Joint Incidents Assessment Team and attempts to improve accountability, Hussein argues that Saudi efforts to address these potential violations of international humanitarian law continue to be woefully insufficient. Evidence has emerged that the assessment team has consistently failed to properly investigate allegations of airstrikes killing civilians. Further, the coalition lacks clear rules of engagement regarding compliance to international humanitarian law, meaning that it tends to respond to criticism in the aftermath of civilian casualties rather than working proactively to address potential dangers to civilians. This is reason to believe that abuses will continue. It is especially easy to draw this conclusion when, on March 26^th, an alleged Saudi airstrike struck a hospital run by Save the Children, leading to civilian casualties, including the deaths of four children.

The Saudi coalition has also engaged in the systematic bombing of food and water resources in Houthi-controlled areas. Research on patterns of bombing in Yemen reveals that in the “first 17 months of the Saudi-led bombing campaign there was “strong evidence that coalition strategy has aimed to destroy food production and distribution” in areas controlled by the Houthis and allied forces loyal to former president Ali Abdullah Saleh”. Further, in February 2016, reports indicated that Saudi planes bombed and destroyed a reservoir that served as a source of drinking water for thirty thousand people. Similar actions in 2018 show a consistent pattern of behaviour. The Protection of Objects Indispensable to the Survival of the Civilian Population Protocol Additional to the Geneva Conventions of 12 August 1949 states that “it is prohibited to attack, destroy, remove or render useless objects indispensable to the survival of the civilian population, such as foodstuffs, agricultural areas for the production of foodstuffs [and] drinking water installation and supplies and irrigation works”. Thus, Saudi actions in these instances reflect another clear violation of international law.

Despite clear evidence of violations of international law by Saudi coalition members in Yemen, it remains unlikely that arms sales will slow. This is particularly apparent because the German embargo’s renewal included an exception which would allow Germany to continue to sell systems jointly developed with other countries to Saudi Arabia and its allies. They have already approved a serious of arms sales to the Saudi and UAE groups. Coupled with France’s refusal, at least initially, to curtail its arms sales, this fact suggests that political and economic interests will continue to take precedent over international law, even within “progressive” institutions like European Union.

Evan Schleicher is the Editorial Intern for the International Enforcement Law Reporter. He is currently an MA candidate in Security Policy Studies at George Washington University, focusing on transnational security and humanitarian issues.

U.S. Announces New Sanctions against Cuba, Venezuela and Nicaragua

April 19, 2019 by Bruce Zagaris Leave a Comment

On April 17, 2019, the United States government announced new sanctions against Cuba, Venezuela, and Nicaragua.

In a Miami speech, National Security Advisor John Bolton announced the Trump administration is reimposing limits on the amount of money Cuban Americans can send to relatives in Cuba and ordering new restrictions on U.S. citizen, nonfamily travel to Cuba. In a Miami speech last November, Bolton referred to the three countries as the “Troika of Tyranny.” in his new speech, Bolton called them “the three stooges of socialism.”

Also on April 17, Secretary of State Mike Pompeo said the administration will remove restrictions that have prevented lawsuits from U.S. citizens seeking compensation for property expropriated by the Cuban governments when it came to power in 1958.

Venezuela

OFAC designated Banco Central de Venezuela, or the Central Bank of Venezuela, pursuant to E.O. 13850, as amended, for operating in the financial sector of the Venezuelan economy. Additionally, OFAC designated Josefa Ruzza Terán (Ruzza), pursuant to E.O. 13692, as amended, who is determined to be a current or former official of the Government of Venezuela. Multiple OFAC-designated individuals currently hold leadership positions with the Banco Central de Venezuela, including Simon Alejandro Zerpa Delgado and William Antonio Contreras, both of whom are Directors of the bank and were designated by OFAC pursuant to E.O. 13692 in 2017 and 2018, respectively.

Ruzza Terán is a Director of Banco Central de Venezuela. Additionally, Ruzza was appointed in July 2018 as a Director on the Board of Directors for the Venezuelan Department of Foreign Commerce, also known as CORPOVEX In May 2018, he was appointed the Vice President of Finance of Petroleos de Venezuela, S.A., which was designated on January 28, 2019, pursuant to E.O. 13850.

Nicaragua

On April 17, OFAC also designated Laureano Ortega Murillo, the son of Nicaraguan President Daniel Ortega and Vice President Rosario Murillo, as well as Nicaraguan bank Banco Corporativo SA (BanCorp). Taken pursuant to Executive Order (E.O.) 13851, the sanctions target corrupt financial operations and Ortega regime support networks. OFAC explained the individual and entity designated support a regime that, since April 2018, has cracked down on political opposition, leading to the death of 325 persons, the injury of more than 2,000, the imprisonment of hundreds of political and civil society actors, and over 42,000 Nicaraguans seeking refuge in Costa Rica.

Cuba

Pompeo explained the Trump administration will end waivers, activated by five presidents over the past 20 years, of Title III of Helms-Burton, enacted in 1996, permitting compensation lawsuits by U.S. citizens against any entity or person “trafficking” in confiscated property in Cuba. The law includes foreign companies and persons.

On April 17, 2019, a joint statement by Federica Mogherini, Minister of Foreign Affairs of Canada Chrystia Freeland and EU Commissioner for Trade Cecilia Malmström said “the EU and Canada consider the extraterritorial application of unilateral Cuba-related measures contrary to international law. We are determined to work together to protect the interests of our companies in the context of the WTO and by banning the enforcement or recognition of foreign judgements based on Title III, both in the EU and Canada.” They said their laws allow counter-claims, so the decision will lead to an unnecessary spiral of legal claims.

In a briefing the Assistant Secretary for Western Hemisphere Affairs Kimberly Breier characterized the activation of the Title III suits and reimposition of sanctions as supporting the Cuban people and denying resources to the regime, especially to the security services in Cuba. Yet, especially the travel restrictions will undermine the small amount of economic activity due to U.S. travel, much of which benefits Cubans who have operate their own bed and breakfast places, restaurants, and other Cubans that participate in the tourism sector.

The potentially challenging aspects of the new sanctions will be how to keep the support for U.S. action in Venezuela while reimposing sanctions on Cuba and allow suits under Title III of Helms-Burton, which will hurt Canada and the EU.

The next issue of the IELR will discuss in more detail these developments.

Despite the State Department Banning 16 Saudis, Questions Remain Over Whether the Trump Administration Will Pursue Justice in the Case of Jamal Khashoggi

April 14, 2019 by Evan Schleicher Leave a Comment

On April 8^th, Secretary of State Mike Pompeo announced that 16 Saudis, including one of the closest aides to Crown Prince Mohammed bin Salman, were being barred from entry to the United States under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act of 2019. The full list of individuals can be seen here.

The move was made in response to continued criticism about the lack of accountability for the individuals involved in the Jamal Khashoggi case and it reflects a shift in the Secretary of State’s attitudes on the issue. In January, Secretary Pompeo met with Saudi officials and focused on the internal Saudi investigative and judicial processes as a source of accountability. However, despite this shifting stance, it is still not clear if this new move is a genuine and effective push for justice or simply a political ploy to lessen criticism of the Trump Administration’s policies towards Saudi Arabia.

The confirmation of the new US Ambassador to Saudi Arabia on April 10^th provides some insight into long-term US intentions towards Saudi Arabia. The Senate voted overwhelmingly to confirm the appointment of retired four-star general, John Abizaid, the first US ambassador to the Kingdom since 2016. General Abizaid collaborated extensively with the Saudi military during his time as the Central Command chief from 2003 to 2007, working first with Saudi military commanders at the height of the Iraq War and then with those same commanders and other officials as executive assistant to the Joint Chiefs of Staff.

During his confirmation hearing, Abizaid discussed the Khashoggi murder as a short-term problem that requires a forceful discussion. He has previously pointed to the Saudi internal reform plan Vision 2030 as evidence that Saudi Arabia can be a long-term, moderate partner within the Middle East, despite concerns regarding the actions of the Crown Prince. Although the Senate and House of Representatives have both passed resolutions that would end U.S. support for the Saudi-led coalition in Yemen, an important rebuke of Riyadh, Abizaid has repeatedly said that it is important for support to continue, making it clear that his calls for justice in the case of the Khashoggi murder do not exceed his and the Administration’s support for the Saudi regime.

General Abizaid’s attitudes towards the Kingdom, combined with evidence that the US recently provided authorization for the sharing of nuclear technology and expertise with Saudi Arabia, makes it highly likely that the US will remain committed to a strong bilateral partnership, despite symbolic actions like the banning of individuals connected to the Khashoggi murder. The case itself will remain an important part of the US-Saudi dynamic, though, as the domestic trial of those involved in Khashoggi’s murder continues within the Kingdom. Amid allegations that Khashoggi’s family has accepted blood money from the Saudi government, Salah Khashoggi, Jamal’s son, has affirmed that the trial will continue and that those responsible will be brought to justice. Absent a strong American push for accountability, it will likely fall entirely on the Saudi legal system to seek out justice for the murder of Jamal Khashoggi.

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In Targeting Venezuela, The Trump Administration Targets Cuba

April 9, 2019 by Alex Psilakis Leave a Comment

On April 5, 2019, the Trump administration announced its decision to issue sanctions against 34 ships owned or operated by Petroleos de Venezuela, S.A., the state-run oil company. The administration also levied sanctions against two international companies that ship Venezuelan oil to Cuba. Days later, on April 8, the Trump administration issued another ruling against Cuba, prohibiting Cuban athletes from playing in the MLB unless they defected. Although MLB officials asserted that they worked closely alongside the Treasury Department in 2018 before signing any sort of agreement with Cuba, the Trump administration displayed no hesitancy in striking down such a deal. Both of these decisions, which took place within a week of each other, reveal a new, serious strategy of the Trump administration: to pressure Venezuela and Cuba.

While the Trump administration has unquestionably issued these sanctions to further tighten the financial stranglehold on Venezuela, one primary objective of these levies is to cut off the oil trade to Cuba. On average, Venezuela ships Cuba 20,000 to 50,000 barrels of oil a day. In response, Cuba shares intelligence and counterintelligence services with them.

This relationship is founded in history. Although Venezuela proved a close ally of the U.S. during the Cold War, that position changed when Hugo Chavez rose to the presidency in 1999. Chavez, who viewed Cuba’s Fidel Castro as a sort of mentor, sought to aid the state, which had been struggling economically due to U.S. sanctions and the collapse of its long-time ally – the Soviet Union. After nearly falling victim to a coup attempt in 2002, Chavez eagerly embraced a new relationship with Cuba. In return for providing the Caribbean country free and subsidized oil, Cuba would offer Venezuela intelligence and military assistance, as well as doctors and teachers. Under Chavez’s successor, Nicolas Maduro, oil shipments to Cuba climbed as high as 100,000 barrels a day. Yet the number of Cuban operatives in Venezuela, as well as what role those operatives are acting in, remains a subject of debate. The Trump administration alleges that 20,000-25,000 Cuban individuals are serving in Venezuela’s military and intelligence services, as well as Maduro’s private guard. The Cuban government, which asserts that the number is 20,000, has stated that nearly all Cuban personnel in Venezuela are working in humanitarian roles, specifically as doctors and teachers.

Nevertheless, the Trump administration is anxious to limit Cuba’s role of influence in Venezuela however possible. In a statement on April 5, Treasury Secretary Steven T. Mnuchin made this clear, noting,

“Cuba has been an underlying force fueling Venezuela’s descent into crisis. Treasury is taking action against vessels and entities transporting oil, providing a lifeline to keep the illegitimate Maduro regime afloat. Cuba continues to profit from, and prop up, the illegitimate Maduro regime through oil-for-repression schemes as they attempt to keep Maduro in power. The United States remains committed to a transition to democracy in Venezuela and to holding the Cuban regime accountable for its direct involvement in Venezuela’s demise.”

To continue this pressure, the Trump administration announced – just three days after their implementation of sanctions – that Cuban athletes could not play in the MLB unless they defected from Cuba. On December 19, 2018, the MLB Players Association and the Cuban Baseball Federation (FCB) signed a deal that made is possible for Cuban nationals to play in the MLB without defecting from their home country. Similarly to agreements with Japan or Korea, the FCB would streamline the process for players joining the MLB, while retaining approximately 15-25% of their financial earnings. The MLB pursued this deal because, under the sanctions regime, Cubans must go to dangerously great lengths to play baseball in the U.S., often working with – and falling victim to – the ploys of smuggling syndicates. The MLB received legal authority to carry out such a deal in 2016, when the Treasury Department’s Office of Foreign Assets Control (OFAC) granted them a license to enter into a business arrangement with the FCB. Even though the Trump administration displayed skepticism of the deal’s legality up until its signing, OFAC nevertheless assured the MLB that the license was still valid.

The Trump administration’s ruling on April 8 overruled that assurance. Justifying their decision, a Trump administration official argued that the Obama administration inadequately interpreted the law. Additionally, they claimed that the Cuban government was taking part in human trafficking. Citing “facts recently brought to their attention” and discussions with the State Department, OFAC instead decided to prohibit the deal. OFAC further claimed that the FCB was tied to the Cuban government, and therefore ineligible to receive payments from U.S. businesses like the MLB. While such financial arrangements were possible under the Obama administration, the Trump administration has pulled a sharp one-eighty, implementing sanctions and embargos, while offering fiery rhetoric.

The Trump administration has made no secret of the fact that these rulings – the imposition of sanctions on April 5 and the overruling of the MLB-FCB agreement on April 8 – are direct retaliatory measures for Cuba’s assistance to the Maduro regime. When asked on Fox News if the MLB ruling was meant to pressure Cuba, Secretary of State Mike Pompeo replied, “Yep.” He further stated that the administration was “going to do everything we can to pull [Cuba] out” of Venezuela.

The timing of these decisions is by no means a coincidence. As the Trump administration is desperate to unseat Maduro as President of Venezuela, the U.S. is attempting to weaken his regime however possible. But even this has become more complicated, as Russia recently sent 100 military personnel to Venezuela offer technical assistance, dramatically disrupting any U.S. decision to pursue further involvement in the region. Since the administration has made clear from its first day in office how deeply it opposes Cuba’s regime, this mutual pushback against Venezuela and Cuba can be regarded as a sort of two-for-one deal. Yet it remains to be seen how effective these measures will prove in their effort to pull Cuba out of Venezuela. With a relationship rooted in over two decades of history, both regimes – who are desperate to hang onto power in times of economic trouble – will continue to oppose the Trump administration. Russia’s willingness to get involved in the region, regardless of the scale of such involvement, will further bolster the confidence of Cuba and Venezuela, while forcing the U.S. to deeply consider how they wish to proceed.

Trump Administration Set to Label Iran’s Islamic Revolutionary Guard Corps a Foreign Terrorist Organization

April 8, 2019 by Alex Psilakis Leave a Comment

On April 8, 2019, the Trump administration announced their plan to designate Iran’s Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization (FTO), as noted under Section 219 of the Immigration and Nationality Act. President Trump elaborated on the decision in a statement, declaring that,

“This unprecedented step, led by the Department of State, recognizes the reality that Iran is not only a State Sponsor of Terrorism, but that the IRGC actively participates in, finances, and promotes terrorism as a tool of statecraft. The IRGC is the Iranian government’s primary means of directing and implementing its global terrorist campaign.”

The State Department released a Fact Sheet outlining the specific reasons for which they declared the IRGC an FTO. They note, for example, that they held the IRGC responsible for the deaths of at least 603 American service members in Iraq since 2003, which constitutes 17% of American personnel killed in the region from 2003-2011. The State Department singles out one unit within the IRGC for specific condemnation – the Qods Force. They argued that the Qods Force has planned to carry out terrorist attacks in countries such as Germany, Kenya, and Turkey. Additionally, the Fact Sheet asserts that the Qods Force plotted an attack against the Saudi Ambassador to the U.S. in the U.S. Even though these attempted terrorist attacks in the U.S. and abroad were foiled, the Fact Sheet places great emphasis on the fact that they were plotted and nearly carried out. The State Department further criticizes the IRGC for their continued support to terrorist organizations, noting their tendency to offer groups like Hezbollah and Hamas assistance through means including financial and material support, training, and technology transfer. The Fact Sheet also points to Iran’s tendency to harbor terrorists sanctioned by states like the U.S. as a reason for the designation.

The State Department emphasizes that this designation is another step in the Trump administration’s long-term effort to maximize pressure against Iran’s present regime. Prior to the designation, the Trump administration had already sanctioned over 900 individuals, entities, aircrafts, and vessels related to Iran. Yet the State Department Fact Sheet makes clear that the Trump administration is not taking a wholly unprecedented step. Instead, they are building off of the legacy of past administrations. The Fact Sheet notes, for example, that the IRGC was previously sanctioned via Executive Order in 2007, 2011, and 2012. The organization was sanctioned in 2007 for supporting Iran’s nuclear and ballistic missile program, and again in 2011 and 2012 for its connection to Iran’s human rights abuses.

In his statement, President Trump made clear the consequences of violating this designation:

“If you are doing business with the IRGC, you will be bankrolling terrorism.”

As a result of the designation, the U.S. may deny entry to individuals that provided the IRGC material support, or take actions one step farther and prosecute those individuals for sanctions violations. Since many European and Asian companies deal with one of the IRGC’s numerous affiliates, this could further stress diplomatic relations between said countries and the U.S. The designation may also limit who U.S. troops and diplomats can communicate with in the Middle East, as Iraqi and Lebanese authorities are known to interact with IRGC officials or surrogates. Previous administrations have held back from making this great of a move against the IRGC for this very reason. The Pentagon, alongside U.S. intelligence agencies, have voiced concerns over how such a designation will limit their ability to interact with allies like those in Iraq and Lebanon. Shia militias associated with the Qods Force fought alongside the U.S. Air Force against the Islamic State at the Battle of Tikrit, proving key allies that helped achieve victory. Additionally, U.S.-backed Iraqi and Kurdish personnel have embraced the titanic burden of taking in the tens – if not hundreds – of thousands of refugees spawned from the recent fighting. Such cooperation will become immensely complicated, if not prohibited, when the designation takes effect on April 15.

Iran, meanwhile, has sharply condemned the Trump administration’s decision. Iran’s Foreign Minister, Javad Zarif, has urged President Hassan Rouhani to label U.S. forces in the region as terrorists. He has specifically sought to target the U.S. Central Command (CENTCOM), which oversees U.S. operations across 20 states in the Middle East and parts of Asia. Iranian parliamentarians have also threatened to label portions of the U.S. military as terrorist groups.

While the decision to designate the IRGC as an FTO emphasizes how seriously the U.S. treats the threat of Iran, it further reveals the short-sighted nature of the Trump administration’s overall policy toward the Islamic Republic. By failing to adequately communicate with U.S. agencies like the Department of Defense, as well as isolating U.S. allies that have proven essential partners in military operations including the fight against ISIS, the Trump administration is set to implement a policy that leaves far too much room for collateral damage. As eager as past presidential administrations have been to punish the IRGC for their illicit, dangerous actions, those same administrations recognized that labeling the group an FTO would make an overly-complex situation nearly unmanageable. Even though this decision suits the Trump administration’s interests, it has frustrated parties within the U.S. and around the globe. Yet as this type of approach has not hindered the Trump administration’s dedication unraveling the Iran nuclear deal, it will almost certainly not hinder their approach here.

GCHQ Report Raises Security Concerns over Huawei, but international legal frameworks remain ill-equipped to handle these concerns

March 31, 2019 by Evan Schleicher Leave a Comment

On March 28^th, the Government Communications Headquarters (GCHQ), a British intelligence agency, released a report assessing that Chinese telecom company Huawei poses significant security risks to British telecom networks. It came to a similar conclusion last year. In this year’s report, specific focus was given to the fact that security risk management of products new to the UK or of new software releases for products already in the UK will be increasingly difficult.

These concerns are supported, most notably, by US lawmakers, who have argued that Chinese government involvement with Huawei will pose significant physical and intelligence threats to Western governments. A recent update to Chinese law, Article 28 of the 2016 Cybersecurity Law, which “states that network operators, which include telecommunications companies such as Huawei, have to provide “technical support and assistance” to government offices involved in protecting national security,” foretells that these fears may not be totally unfounded. American lawmakers are particularly concerned that Huawei and other companies would be compelled into turning over 5G data, thus compromising the data security of anyone utilizing 5G networks in Western countries, and even into embedding malicious code into new Huawei equipment and software updates.

Several close American allies, such as Japan, New Zealand, and Australia, have totally banned Huawei from partaking in 5G trials within their countries, while the United Kingdom, Canada, Italy, India, and Germany have considered similar bans, but have not yet acted. Troublingly, countries like Germany, India, the United Kingdom, and the United Arab Emirates seem unlikely to fully support US efforts to ban Huawei from 5G network development. The United Kingdom, despite identifying significant risks in Huawei networks both this year and last year, has continued to argue that hackers pose a more significant threat to networks than foreign governments and that the stated threats can be managed.

Huawei has not been silent in the face of these accusations. They commissioned a 37-page legal opinion by Zhong Lun, a Chinese law firm, which concluded that Chinese law cannot compel corporations to gather intelligence against the interests of their customers. Despite the reported soundness of this opinion, legal experts and advisers warn that a lack of legal testing makes it difficult to know exactly how insulated from Chinese government control and influence Chinese companies actually are. Some legal experts concluded that Huawei would have a very difficult time rejecting a request for data sharing from the Chinese government due to the nature of Chinese laws.

These concerns are further justified because there is no international legal framework for protecting corporations from the abuse of states. Although there are a multitude of corporate-focused treaties and agreements at the international level, including the ILO Convention No. 29 on Forced Labor, the International Covenant on Economic, Social, and Cultural Rights (ICESCR), and the ILO Declaration on Fundamental Principles and Rights at Work, these agreements impose obligations on states, not on companies. Further, corporations generally enjoy rights under international law only when rights are authorized through formal lawmaking processes such as international treaties or national statutes. As such, Huawei relies almost exclusively on the good will of the Chinese government to not coerce or misuse its systems. Conversely, other nations must rely almost exclusively on the assurances of Huawei and the Chinese government that they are not misusing the information networks that Huawei has developed.

Due to the absence of international legal standards, much of the fight over Huawei’s access to markets has taken place in national courts. This reliance on national-level courts has produced heavily disparate results between US and Chinese companies.

After the US blocked the purchase of Huawei equipment due to national security concerns, Huawei filed a lawsuit in the U.S. District Court in Texas which argued that the prohibition unfairly punishes the Chinese company without due process and without proof of an espionage threat to the United States. The Chinese government came out in support of this lawsuit almost immediately, saying it did not want to see the company “victimized like silent lambs”. Huawei also filed a notice of civil claim in the British Columbia Supreme Court in Canada in early March over the detainment of Meng Wanzhou, the daughter of the company’s founder. She had been detained at the request of US officials on allegations of subverting Western sanctions against Iran and participating in bank fraud and corporate espionage.

Somewhat hypocritically, the Chinese government has frequently banned US companies, quoting national security concerns, and these companies have never been able to bring lawsuits against the Chinese government. Apple, McAfee, Citrix, and Cisco were all dropped from official state purchasing lists in 2015, effectively banning the sale of their products within China. According to Zhang Lin, an independent Chinese economist and columnist, “It’s hard for a (Chinese) company to bring such an administrative lawsuit, even harder for a foreign company. It could be blocked in the first place when it tries to open a case”. Tellingly, not one of the previously mentioned Western companies has been able to sue the Chinese government.

This legal framework is clearly neither sustainable nor preferable. In a world in which corporations increasingly wield significant power in dictating security and connectivity across multiple regions and countries, there must be international assurances that those companies will not be weaponized by national governments.

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Evan Schleicher is an Editorial Intern with the International Enforcement Law Reporter. He is also an MA candidate in Security Policy Studies at George Washington University’s Elliott School of International Affairs.

Third Russian Individual Potentially Tied to Skripal Under Investigation By Bulgaria

February 14, 2019 by Evan Schleicher Leave a Comment

Bulgaria has reopened a 2015 investigation into the poisoning of a prominent arms dealer after it emerged that this case might be connected to the nerve agent attack on former Russian spy Sergei Skripal, who was poisoned last year in the U.K. This occurred after Bellingcat, a watchdog that lauds itself as “the home of online investigations,” released a report which suggested that a third, “unknown” Russian operative in the British case was also connected to the 2015 case in Bulgaria.

A previous blog post, authored by Maria O’Sullivan, noted that “On June 27, 2018, the Organization for the Prohibition of Chemical Weapons (OPCW) gained the power to assign blame for chemical weapons attacks.” In a hopeful final note, this blog post mused that the measure “was a large stepping stone towards international accountability.” However, despite the promise which this measure still holds for accountability, measures taken by Russia and other countries have stifled its implementation and, by consequence, its potential effectiveness. Principally, Russia has refused to provide funding to the attribution mechanism and has demanded the return of its share of the unspent budget. It defends this decision by noting that of 193 nations, only 82 approved of the measure, while 24, including China, India, Russia, and Iran, opposed it, and many abstained. It is also telling that the Russian who sits on the Executive Council of the OPCW, Vladimir Kuznetsov, is a convicted money launderer who has been charged with accepting bribes and undermining humanitarian operations. While there is presently no publicly available evidence of corruption within the OPCW involving Kuznetsov, it is irrefutable that he has been involved in similar crimes in the past. When taken in concert with evidence that Syrian and Russian sources have colluded to obstruct investigations by the OPCW into chemical weapon use in Syria, this evidence seems to strongly indicate that Russia is attempting to escape culpability for attacks which it is widely believed to have committed.

Despite clear evidence of Russian evasion of OPCW investigations, it is unclear whether the Russian agents involved in the poisonings of Emilian Gebrev used substances banned by the Chemical Weapons Convention. In fact, Bulgarian investigators said on February 11, 2019 that “No substances from the Chemical Weapons Convention’s banned list were found” in the case of Gebrev. Additionally, they have not yet found a connection between this case and the case of Skripal, though the investigation is still ongoing at the time of this writing. However, despite the lack of a connection between these cases and despite an extensive Russian information campaign, it is clear that Russia was involved in the poisoning of Skripal and potentially that of Gebrev. Hard evidence including surveillance images of individuals who appear to be GRU operatives near the site of Skripal’s poisoning has made it difficult for Russian denials to gain major traction.

Given the previously mentioned facts, it is necessary to ask: Are U.S. and EU. sanctions against Russia legitimate and do they conform to the legal strictures of the Chemical Weapons Convention? The Russian Foreign Ministry has stated that “the EU is demonstrating a disregard for existing international legal instruments, including the Chemical Weapons Convention, by abrogating to itself the right to attribute blame for chemical weapons incidents.” This shift seems to concede to OPCW the ability to assign blame, which Russia had previously rejected. Further, it does little to respond to the base level justification of EU actions, which is that Russians have been tied to a chemical weapon attack on an individual. Having reviewed the evidence, the author believes that Russian agents were clearly implicated in the attacks, which would justify response by OPCW. However, because the OPCW did not claim the unilateral right to attribute blame for chemical weapons incidents, U.S. and EU actions would only be problematic if they directly contradicted conclusions made by OPCW. In the absence of an OPCW decision, it is instructive to look to the respective domestic laws of the U.S. and the EU to see if any violation has occurred.

It appears as though the EU is operating within its domestic legal frameworks, since these actions were undertaken after a domestic “decision in October to broaden the sanctions regime.” The U.S. has a similar domestic obligation to sanction individuals connected to Chemical and Biological Weapons Control and Warfare Elimination Act. From a purely legal perspective, this Act allows the U.S. to take the actions which it has taken, since the President is authorized under this Act to sanction individuals which he determines to have violated international law.

In sum, the actions taken against Russian GRU agents in response to the poisoning of Sergei Skripal are legal from an international perspective and fall in line with the intentions and direction of the OPCW. Corruption and political maneuvering have rendered the OPCW far less capable of making and enforcing decisions in cases such as that of Mr. Skripal. As such, it seems that the question is not whether the OPCW should blame Russians for the poisoning of Mr. Skripal, but whether it will, given the large, potentially corrupting influence of Russians within the organization.

US Unseals 2 Indictments against Huawei Corporate Entities – One for Money Laundering, Obstruction of Justice and Sanctions Violations and Another for Theft of Trade Secrets, Wire Fraud et al

January 29, 2019 by Bruce Zagaris Leave a Comment

On January 28, 2019, the U.S. Department of Justice unsealed two indictments against Huawei corporate entities and the Huawei Chief Financial Officer Wanzhou Meng.

In the U.S. Court Eastern District of New York, a 13-count indictment was unsealed, charging four defendants, including Huawei Technologies Co. Ltd. (Huawei), and two Huawei affiliates – Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom) as well as Meng.

The indictment alleges that starting in 2007, Huawei employees lied about Huawei’s relationship to a company in Iran called Skycom, and falsely asserting it was not an affiliate of Huawei. The company allegedly claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations concerning Iran. Even after the media reported in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial affiliate in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and especially Meng, falsely claimed that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and that Skycom was only Huawei’s local business partner in Iran. In reality, the indictment alleges Skycom was Huawei’s longstanding Iranian affiliate, and Huawei initiated the 2007 sale to appear as an arm’s length transaction between two unrelated parties, when Huawei actually controlled the company that bought Skycom.

The indictment charges that, in reliance of Huawei’s misrepresentation, U.S. banks continued their banking relationships with Huawei in violation of the Iran sanctions. One bank cleared more than $100 million worth of Skycom-related transactions through the U.S. between 2010 and 2014.

The indictment charges that Huawei and its principals repeatedly lied to U.S. government authorities on Huawei’s business in Iran.

In 2017, when Huawei became aware of the government’s investigation, Huawei and Huawei USA allegedly tried to obstruct the investigation by moving witnesses with knowledge about Huawei’s Iran-based business to the PRC, and by concealing and destroying evidence of Huawei’s Iran-based business that was located in the U.S.

In December 2018, Canadian authorities detained Meng in Vancouver pursuant to a provisional arrest warrant issued under Canadian law. The U.S. government is seeking Meng’s extradition to the U.S.

Indictment against Huawei Corporate Entities for Stealing Trade Secret Technology

On January 28, 2019, a 10-count indictment was unsealed in the U.S. District Court for the Western District of Washington, charging Huawei Device Co., Ltd. and Huawei Device Co. USA with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice. On January 16, a grand jury returned the indictment, detailing Huawei’s efforts to steal trade secrets from Bellevue, Washington based T-Mobile USA and then obstruct justice when T-Mobile threatened to sue Huawei in U.S. District Court in Seattle. The alleged conduct occurred from 2012 to 2014, and includes an internal Huawei announcement that the company was offering bonuses to employees who succeeded in stealing confidential information from other companies.

The FBI obtained emails revealing that in July 2013, Huawei offered bonuses to employees based on the value of information they stole from other companies around the world, and provided to Huawei through an encrypted email address.

The unsealing of the indictments occurs at a critical time, since the U.S. had until January 30 to send to Canada its formal extradition request for Meng. The unsealing of the indictments occurs during intensive trade negotiations between the U.S. and China over tariffs. Among the controversial issues are U.S. complaints about China’s theft of trade secrets and violations of U.S. sanctions.

Canada Arrests Huawei Executive on U.S. Extradition Warrant for Sanctions Charges

December 9, 2018 by Bruce Zagaris Leave a Comment

On December 1, 2018, Canada arrested Meng Wanzhou, Huawei’s global chief financial officer, on a U.S. extradition warrant to answer fraud charges in the U.S. District Court for the Eastern District of New York.[1]During a bail hearing on December 7, 2018, John Gibb-Carsley, a lawyer with the Canadian federal Justice Department, told the court Ms. Meng committed multiple acts of fraud against financial institutions and should be denied bail. He told B.C. Supreme Court Justice William Ehrcke that Meng does not have meaningful connections to Canada, has enormous resources, and poses a serious flight risk, especially since each offense carries a maximum of 30 years in prison.[2]

In particular Gibb-Carlsey said Ms. Meng had “direct involvement” with Huawei’s representation to banks and tricked them into engaging in transactions that violated U.S. sanctions against Iran.

According to Gibb-Carsley, between 2009 and 2014, Huawei used a Hong Kong company, Skycom Tech, to make Transactions in Iran and engage in business with telecom companies there, in violation of U.S. sanctions. U.S. banks cleared financial transactions for Huawei, inadvertently doing business with Skycom.[3]

In 2013, articles by Reuters alleged Huawei used Skycom to do business in Iran and attempted to import U.S.-made computer equipment into Iran in violation of sanctions. When several financial institutions inquired about the Huawei-Skycom relationship, Ms. Meng arranged a meeting with an executive from one of the financial institutions. During the meeting, she presented PowerPoint slides in Chinese, saying that Huawei operated in Iran in strict compliance with U.S. sanctions. She allegedly falsely stated that Huawei had sold the shares it had held in Skycom. However, Mr. Gibb-Carsley said no distinction existed between Skycom and Huawei. Huawei secretly operated Skycom as an unofficial subsidiary.

In this regard, Skycom employees used Huawei email addresses and made badges and a letterhead showing the Huawei logo. Skycom documents showed that Huawei also controlled the entity to which the company was sold in 2009 until at least 2014.[4]

Gibb-Carsley said Relying on misrepresentations by Meng and other Huawei representatives, one of the banks and its U.S. subsidiary cleared more than $100 million worth of transactions concerning Skycom through the U.S. between 2010 and 2014.[5]

HSBC had officials from Exiger, a monitor due to HSBC’s prior sanctions and anti-money laundering violations, review its compliance. Exiger officials observed suspicious Iranian-connected transactions involving Huawei. Exiger reported them to the Justice Department.[6]

With respect to bail, David Martin, counsel for Meng, said Meng has two Vancouver properties with a value of $14 million that would be available to be put up for bail. Violating her bail would humiliate her father who she loves. Her father is a former Chinese army intelligence officer and the founder of Huawei. Martin observed that the PowerPoint presentation made by Meng wad done in 2013, and questioned why it has taken so long to start a criminal prosecution. Martin continued that Meng’s connections to Canada include her formerly having permanent residence status and her husband and several children having lived in Vancouver at one point. Martin said a number of conditions could be imposed for bail, including a curfew, the surrender of any passports, and surveillance if necessary.[7][8]

The bail hearing is adjourned until Monday December 10, when Martin is expected to call several witnesses to describe a program of “community custody” that could apply to Meng is she is granted bail.[9]

The case has increased uncertainty in global financial markets, producing another day of sharp losses from Asia to Wall Street. Worries about potential Chinese retaliation exist.[10] On December 8, China warned Canada of severe consequences if it did not immediately release Meng, calling the case “extremely nasty.”[11]

The U.S. and Canada have strong extradition relations, so Meng has an uphill battle

[1] Emily Rauhala and Anna Fifield, Chinese tech executive lied to evade sanctions on Iran, U.S. charges, Wash. Post, Dec. 7, 2019, at A1, col. 1.

[2] Reuters, China warns Canada of ‘consequences’ if it fails to release Huawei CFO, Globe & Mail, Dec. 8, 2018.

[3] Kate Conger, Huawei Official Charged In Iran Sanctions Fraud, N.Y. Times, Dec. 8, 2018, at A7, col. 1.

[4] Id.

[5] Keith Fraser, Huawei exec committed fraud by deceiving multiple banks: Crown, Vancouver Sun, Dec. 8, 2018.

[6] Conger, supra.

[7] Fraser, supra.

[8] Id.

[9] Id.

[10] Rauhala and Anna Fifield, supra.

[11] Reuters, supra.

U.S. Treasury Expands GTO to 12 Metropolitan Areas and Lowers Reporting Threshold to $300,000

November 20, 2018 by Bruce Zagaris Leave a Comment

On November 15, 2018, the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) announced the issuance of revised Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is also requiring that covered purchases using virtual currencies be reported.

Prior GTOs resulted in valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime,fraud, narcotics trafficking, and other violations. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.

The latest GTOs cover certain counties within the following major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu;Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.

FinCEN also realized Frequently Asked Questions. The FAQs explain that one of the four criteria that triggers a Covered Transaction, is that “(s)uch purchase is made, at least in part,using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, or a money order in any form, a funds transfer, or virtual currency.” Accordingly, payment of at least part of the purchase price using one of these methods, such as virtual currency, a wire transfer, a cashier’s check (sometimes referred to as a “bank check,” “official check,” or “treasurer’s check”), a personal check, a business check, or a certified check, triggers a Covered Transaction, assuming the other criteria to trigger a GTO are met: “residential real property”; foreign beneficial owner,which means each individual who,directly or indirectly, owns 25% or more of the equity interests of the Purchaser; and a Covered Business’s “agents” refers to people or entities that are authorized by the Covered Business, usually through a contractual relationship, to act on its behalf to provide title insurance underwritten by the Covered Business (or its subsidiaries).

The U.K. already has initiated a New Beneficial Ownership Register for UK Properties owned by Overseas Companies and other Legal Entities that will go live in 2021. The British Columbia government has released regulations to create a new condo and strata assignment register, in part in response to the significant number of foreign purchases of residences, some of which appear to be connected to proceeds of crime. With the international developments and the continuing extension of the GTOs by FinCEN, pressure is building for the GTOs to become permanent.