The BIG News at Last Week's 2010 Update Conference on Export Controls and Policy Was Not President Obama’s Comments

Although it was precedent setting and reassuring to hear the President of the United States talk about and avidly support needed and long overdue export control reforms and use a variety of terms known to trade and export control practitioners (i.e. control lists, jurisdiction, licensing policies, transparency…), the news with immediate and significant impact that you may have missed is the pronounced shift in enforcement to focus on individual accountability.

Note, Under Secretary for Industry and Security Eric Hirschhorn’s opening remarks: ”But--and this is an important but--we are planning increased efforts against individuals who flout the rules and against companies whose inadequate internal compliance programs tell us that they are indifferent to whether they follow the rules.”

And Assistant Secretary for Export Enforcement David Mills’ expanding comments: “But, we will also be taking a harder line in other circumstances involving willful misconduct. While we have typically sought penalties against companies more so than individual employees, as Under Secretary Hirschhorn pointed out yesterday, this is about to change. Going forward, when a violation is a deliberate action of an individual, we will consider seeking penalties against that individual - including the denial of export privileges, fines and imprisonment. The same will hold true for a supervisor who is complicit in these deliberate violations by subordinates.”

The Commerce Department case against Carol Wilkins at RF Micro Devices may have been an early indicator of this direction. Stay tuned here on upcoming settlements and investigations across the US Government to see how this plays out and whether it is a much more extensive initiative. In light of the overall enforcement direction in conjunction with export control reform, I would not be surprised. For example, let’s watch what happens to the 5 indicted senior managers at Blackwater who are on the block at the Department of Justice for knowing and willful violations?

In balance, it appears that accountability and responsibility will now more equitably fall on both the organization and individual. Will that combination have a greater impact on compliance and send a clearer message about corporate and individual exposure, liability, risk and the consequences of intentional wrongdoing? Will it also be a much more effective deterrent?

As food for thought: What impact will this change have on you, your trade compliance team, senior management, engineers, marketing/business develop types and others in your organization? What action will you take to ensure this message gets out?

*Mr. Priecko is the President and Managing Partner of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience. He can be reached at 703-895-1110 or jpriecko@comcast.net.