The Spanish authorities, on May 16, refused permission for a vessel carrying an arms shipment from India to Israel to call at the port of Cartagena.
The vessel, the Marianne Danica, is operated by the company H. Folmer & Co, and was carrying 27 tons of explosives from Chennai (formerly Madras).
It is being reported (e.g. here and here) that a number of large Swedish companies have been called to the Foreign Ministry to attend a meeting also attended by a number of other authorities.
The meeting concerned information received by Sweden from the European Commission about exports to Russia which may have been in breach of, or circumvented, the EU’s sanctions.
The companies called to attend the meeting included Atlas Copco, Ericsson, Volvo, SKF and Sandvik.
The companies deny breaches of sanctions.
The Swedish authorities are now considering what further action to take.
Further to our earlier post regarding an investigation by the Danish Business Authority into allegations that the Danish shipping company Hafnia, was importing refined fuels from a refinery in India that may have been owned or controlled by Rosneft (which is a designated person under the EU’s sanctions), it is now being reported (here – behind a paywall), that the Danish Business Authority has concluded its investigation having determined that it could not establish that there had been a breach of Russian sanctions.
As yet the Danish Business Authority has not issued a statement on its website.
Further to our earlier post, it is being reported that the Lithuanian Prosecutor General is now investigating four separate suspects in relation to the alleged export of dual-use goods to Russia by the Vičiūnai Group.
The alleged recipient of the goods, which includes high-priority battlefield items, was a Russian subsidiary within the Vičiūnai Group.
France’s La Direction Nationale du Renseignement et des Enquêtes Douanières has issued a press release reporting on raids conducted on a company in Ile-de-France on Thursday and Friday of last week.
The raids by 25 customs officers came after a 10-month investigation. The conduct is stated to amount to exports valued at several 10s of millions of Euros, and to have involved 100s of false customs declarations involving several dozen different exporters each using the services of the raided customs agent.
The company had advertised on the darkweb that it could provide a turnkey sanctions evasion service.
The French authorities acknowledged the help from reports from other European countries and noted the investigation highlighted “statistical anomalies, notably an exponential growth of exports of the company in question to third countries bordering Russia”.
Further to our earlier post from July 2023 concerning raids and an arrest in the Netherlands of a 41-year old on suspicion of breaching Russian sanctions, the District Court of Rotterdam has released a judgment concerning a pre-trial application by the accused seeking the release from attachment of the stock in trade of his business.
The criminal trial is stated as “not expected to take place until the autumn at the earliest”.
The court granted the application, ruling that “the complainant has (for some time now) no other source of income, while his fixed costs continue” and that “the interest of the complainant in being able to trade in the company stock … and thus obtain some income, outweighs” the government’s interest in maintaining the attachment.
This is the fourth and final instalment of making public the final administrative criminal decisions imposed by SECO in relation to breaches of the Swiss sanctions against Belarus and Russia.
9. Final administrative criminal decision dated 20 November 2023
Original: 2023-11-20 – I.65 – Strafbescheid
Translation: 2023-11-20 – I.65 – Strafbescheid_Translated to English
The company in question imported a dismantled wooden sauna, and accompanying parts, from a Belarusian company via Kyrgyzstan valued at €3,000. Geneva Rive-Droite customs stopped the importation.
An investigation was commenced on the basis that the products met the criteria for wood products (customs code 4418.9900) rather than the customs code used by the importer which related to prefabricated building structures (customs code 9406).
SECO obtained a ruling from the Federal Customs Office that the goods did indeed fall under the code for wooden products with the other parts being irrelevant as they had no impact on price, and that the customs code for prefabricated buildings was not relevant to a sauna which was to be installed internally rather than as a stand alone structure.
SECO took the view that the breach was negligent and resulted from a breach of the duty to conduct “additional checks on the classification of products prior to the conclusion of a purchase contract with a company based in Belarus” rather than deliberate and given the low value of the goods imposed a fine of CHF 1,000 plus CHF 580 in costs.
Comment: The use of the prohibition against importing “wood products” from Belarus to cover finished items made from wood is noteworthy.
10. Final administrative criminal decision dated 15 January 2024
Original: 2024-01-15 – I.73 – Strafbescheid
Translation: 2024-01-15 – I.73 – Strafbescheid_Translated to English
The company in this case sought to export polyethylene products some of which were prohibited (customs code 3920.10) and some of which were not (*customs code 3916.10) from export to Russia. The value of the prohibited goods was €5,373.
The shipment was stopped by customs at Zürich airport. An investigation was started and the company admitted the facts stating that it had “not even considered that the delivery of polyethylene sheets could fall under the Ukraine Regulation“.
SECO accepted that the breach was negligent and not intentional, and in light of the early cooperation, the low value of the breach, and the provisions of Swiss law permitting the corporation to pay a fine of CHF 5,000 or less rather than investigators seeking to identify culpable individuals, the fine imposed was CHF 2,500 plus costs of CHF 1,260.
Comment: In this case the company gave the name of “the person responsible for the alleged facts”. SECO, however, took the view that this admission was insufficiently detailed to be relied upon for the purpose of imposing personal criminal liability and a fine on that individual.
Back in April we posted about a Compound Penalty imposed by HMRC on a company for breaching the UK’s Russian Sanctions Regulations.
The company was fined £1,058,781.79.
HMRC has today issued a changed Notice to Exporters about this fine. The changed description removes any reference to the UK’s Russian sanctions regulations and replaces it with:
“March 2024 – £1,058,781.79 was paid relating to the unlicensed exports of dual use goods controlled by Retained Regulation 428/2009“.
No explanation for the change is given.
This is the third instalment in our series of publishing the 10 final administrative criminal decisions reached by SECO in Switzerland. The examples below relate to Russian and Belarusian sanctions.
7. Final administrative criminal decision dated 19 September 2023
Original: 2023-09-19 – I.60 – Strafbescheid
Translation: 2023-09-19 – I.60 – Strafbescheid_Translated to English
This final decision relates to a company which sought to export to Belarus an embossing roll used in the embossing of cigarette packaging. The value of the products was stated as €21,300. The products were stopped at Zürich airport customs and an investigation was commenced.
The company sought to argue that, while its product was covered by the customs code annexed to the Swiss regulation it was not “machinery” and so not covered by the wording of the export prohibition contained in art. 6 of the Belarus Ordinance.
SECO disagreed saying that if the product was covered by the customs code included in the Annex then it was covered by the prohibition in the Ordinance itself but invited the company to seek (if it wished) a ruling as to whether an embossing roll fell within customs code 8420.9120.
The company sought that ruling and the FOCBS confirmed that the rolls were properly covered by that number.
The company then communicated to SECO that based on the company’s own view that its product was a part and not itself machinery “the only criticism that can therefore be made of our company is its interpretation of the regulatory provisions“.
SECO disagreed and found that the company was in negligent, but not intentional, breach of the sanctions with the company having “a responsibility to carefully analyse the embargo orders imposed by Switzerland and to take the necessary measures to avoid contravening them [and that] additional checks on the classification of its products before the conclusion of new orders to Belarus were reasonably required“.
SECO, however, determined that the appropriate course was reliance on the provisions permitting a fine of CHF 5,000 or less in order to avoid a disproportionate investigation to determine individual culpability.
The company was also given credit for cooperation and was fined CHF 3,000 plus CHF 1,070 in costs.
Comment: Given that the company said it carefully analysed the regulations in question and that it sought to rely on what it saw as an inconsistency between the customs codes listed in the Annex which attached to their products, and the company’s narrow reading of the wording of the prohibition in the Ordinance, a regulator or prosecutor might have been entitled to conclude that the breach was intentional. The company knew that the product code attached to its goods was barred from export to Belarus.
There is also scope for querying the mitigation credit for cooperation in the circumstances of this investigation.
8. Final administrative criminal decision dated 28 September 2023
Original: 2023-09-28 – I.71 Strafbescheid
Translation: 2023-09-28 – I.71 – Strafbescheid_Translated to English
The company sought to export 700 rubber seals (customs code 4016.93) and 3,750 valves (customs code 8481.20) to Russia. The products were stopped by customs at Geneva Airport in December 2022. The goods were valued at €69,315.
On 1 January 2022 the company had written to SECO to obtain advice on whether it could export its products to Russia. It was not until 2 June 2022 that SECO replied stating that the products were prohibited from export to Russia but that for contracts which pre-dated 28 April 2022 there was a sunset provision enabling export up until 29 July 2022.
Further, because the products were for use in prosthetic knees, there was a licence exception for medical goods that was available.
Nonetheless the company proceeded to try and export the products in December 2022 without applying for the available licence.
After the commencement of the investigation the company applied for, and obtained a licence permitting export of the goods.
SECO emphasized that “a request for a derogation must have been submitted to SECO prior to any sale, delivery and export, and SECO must have granted the necessary approval. It is not possible to legalize the sale, supply or export of goods listed in Annex 23 unlawfully by an authorization granted on a retroactive basis. … The fact that the goods in question were issued at the beginning of February 2023 for a use in accordance with the law is irrelevant to the question of the lawfulness of the sale, delivery and export of the goods in December 2022“.
Despite the company having been told in writing that the unlicensed export of the products to Russia would certainly be prohibited after July 2022, SECO proceeded on the basis that the breach was negligent and not intentional.
The company was fined CHF 1,000 with costs of CHF 1,270.
Comment: Practitioners will note the clarity of the view from SECO as to the impossibility of retrospective authorisation.
It is also seems likely, however, that the medical nature of the products in question played a role in the generous conclusion of a negligent rather than intentional breach in the circumstances of this case.
It is being reported in Cyprus that two cases have been referred to the Prosecutor’s Office for instituting criminal proceedings. No other information was published on these matters.
In addition, yesterday the Economic Crime Investigation Unit provided updates to the Law Office on the progress with 10 of their ongoing cases, including (as we have previously noted) the investigation into asset transfers allegedly in breach of the EU’s sanctions by Alexei Mordashov.
