The U.S. Bureau of Industry and Security (BIS) recently settled with Mattson Technology of Fremont, CA, in a case which alleges 47 EAR violations from 2006 to 2008. According to the order from BIS, Mattson “sold, transferred or otherwise serviced” pressure transducers “with knowledge that violations of the Regulations were about to occur or were intended to occur.” These transducers are controlled under ECCN 2B230 in the EAR. They require a license for export to most countries in the world.
BIS alleged that Mattson sold these transducers to customers in Israel, Malaysia, China, Singapore and Taiwan without first obtaining the required export licenses. Apparently, the transducers are needed to help produce weapons-grade uranium (among other things).
One interesting thing about this case is the penalty — $850,000 total, of which $600,000 is being suspended pursuant to Mattson not having any more problems or violations. Still, the $250,000 penalty stems from orders totaling just $78,000 for Mattson. Put another way, the company will end up paying about $5300 for each of its 47 EAR violations – a tough pill to swallow, considering that its average sale price was somewhere in the neighborhood of $1600 to $2000.
Of course, one of the reasons behind this high penalty amount is the BIS allegation that Mattson “had knowledge” of the violations and proceeded with the exports, anyway. Although the “prior knowledge” charge is sometimes difficult to prove, apparently BIS has evidence that one of Mattson’s suppliers informed the company that the transducers required a license prior to export. (If you ever needed proof that your company should be actively communicating the export control status of its products and services to all customers and suppliers – this is it!)
This is one of the reasons why we always recommend adequate (and documented!) communication between all parties in the supply chain. The cost of EAR and ITAR violations is just too high.
What are your thoughts? Please comment below.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.