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Anti-Boycott Compliance

A review of our compliance responsibilities with BIS’s Anti-Boycott laws

Andy D’Amato / Adamato@linearcorp.com

Sep, 23rd, 2014

Copyright © 2012 Nortek Inc. All rights reserved.

Understanding Boycotts

What is a “Boycott”?

A boycott is an act of voluntarily abstaining from using,

buying, or dealing with a person, organization, or

country as an expression of protest, usually for social or

political reasons.

This can be enacted on a consumer or country-wide

level.

For consumers, it can be used to voice a protest against

a certain type of product or company for political or

personal reasons.

For countries, it can be used to make a political, non-

militant, stand against a country who’s practices,

religion, or politics differ from their own.

Notable boycotts

1767; Colonists of the new British colonies began to

boycott British merchandise in protest of high taxes

1790’s; supporters of abolition of the slave trade in

Britain advocated boycotting slave-produced sugar

1930’s; Anti-Semitic boycott of Jewish-owned businesses

in Nazi Germany

1955; The Montgomery Bus Boycott took place in the era

of the U.S. civil rights movement against the racial

segregation on the public transit system

(Most notable today) Arab League Boycott of Israel

American Colonies boycott against British

Goods

Nazi Boycott against Jewish businesses

Montgomery Bus Boycott

Arab League Boycott against Israel

Office of Antiboycott

Compliance (OAC)

Understanding OAC and what

it means to you

OAC is part of the “Bureau of Industry and Security”

(BIS)

OAC governs the laws which prohibit U.S. companies

from taking part of other country boycotts which is

against U.S. Foreign Policy

Objective (From the BIS site): “The antiboycott laws

were adopted to encourage, and in specified cases,

require U.S. firms to refuse to participate in foreign

boycotts that the United States does not sanction.

They have the effect of preventing U.S. firms from

being used to implement foreign policies of other

nations which run counter to U.S. policy.”

What do Antiboycott laws

prohibit?

Agreements to refuse or actual refusal to do business

with or in Israel or with blacklisted companies.

Agreements to discriminate or actual discrimination

against other persons based on race, religion, sex,

national origin or nationality.

Agreements to furnish or actual furnishing of

information about business relationships with or in

Israel or with blacklisted companies.

How does this apply to your

job?

We must be on the look out for “Antiboycott” language

that may be listed on emails, purchase orders,

requisition forms, etc. we receive from our customers

who support boycotts the U.S. does not sanction.

The primary example of this is any member of the Arab

League who is requesting or asking us to prohibit the

sale of any Israeli made goods or services.

Even if we do not produce goods in Israel (or any other

country subject to a boycott the U.S. does not

sanction), we must report any antiboycott language we

receive as it is unlawful to accept official documents

with such language.

Examples of Antiboycott

language The following examples are taken directly from the BIS

site as antiboycott language:

"In the case of overseas suppliers, this order is placed

subject to the suppliers being not on the Israel boycott list

published by the central Arab League.“

"Goods of Israeli origin not acceptable.“

"Israeli Clause: The Seller shall not supply goods or

materials which have been manufactured or processed in

Israel nor shall the services of any Israeli organization be

used in handling or transporting the goods or materials.“

"Supplies of our purchase order should never be consigned

or shipped by steamers included on Israel Boycott list.“

"The bill of lading shall bear a note that the vessel

delivering the cargo is not on the "Black List" and does not

call at Israeli ports."

BIS Warning letter to a company who failed to

report antiboycott language on a letter of credit

What areas should you look

out for?Most antiboycott language you will see

comes from the countries of the Arab

League

Algeria*

Bahrain

Comoros

Djibouti

Egypt*

Iraq

Jordan*

Kuwait*

Sudan

Syria

Tunisia

Lebanon*

Libya

Mauritania

Morocco*

Oman*

State of Palestine

Qatar*

Saudi Arabia*

Somalia

United Arab Emirates*

Yemen

*Denotes countries we do business in

What to do if you see

antiboycott language

Most importantly, it must be reported to your immediate supervisor

Your supervisor will report it to your companies compliance manager who will in turn report it to the group’s compliance manager and send a copy of the document in question.

Your supervisor will draft a letter to the customer explaining why we cannot accept their purchase order and ask them to revise their PO to remove the antiboycott language

Only after we have received a revised PO can we accept the order

Your group’s compliance manger will report the customer to the BIS as instructed by law for each instance of antiboycott language found

Quarterly, your group’s compliance manager will send a report to Nortek of all antiboycott reports filed with the BIS.

We must offer a voluntary self-disclosure with BIS on previous PO’s we did not report

What if we fail to report the

antiboycott language?

For each violation of the Export Administration

Regulations (EAR) any or all of the following may be

imposed:

General denial of export privileges

The imposition of fines of up to $11,000 per violation

And/or; exclusion from practice

Conclusion

Who’s responsibility is it to look out for this language?

Everyone's! From sales, customer service, buyers, planner, engineers, CEO’s, etc. Everyone in your company is responsible for looking out for this language on any received document and reporting it accordingly

Make sure you turn in your training completion form after this seminar to Andy D’Amato. Any questions my contact info is below:

Office: 707-778-5975/ Mobile: 760-216-8934

Email: Adamato@linearcorp.com

References

www.bis.doc.gov

Regulatory references: 43 FR 3454, 44 FR 66272, 49 FR 18061, 52 FR 2511