U.S. Embargo laws tend to be loom much larger for manufacturers than most service businesses. Perhaps this is because the products themselves leave an obvious trail back to the companies that produced them. Or perhaps it is because there is so much unique and cutting edge technology coming out of the United States that manufactured goods from here have a heightened desirability -- kind of a "forbidden fruit" aspect.
For whatever reason, if you are involved in an International U.S.-based business that manufactures products, or in one dealing in sensitive services such as consulting, you're eventually likely to hear from someone somewhere that your work product has found its way into an embargoed country.
When that rumor surfaces, think long and hard about what you'll do in response. Because, you see, the U.S. government is serious about these laws, and if there is any chance at all there might be any truth to the rumors, you can expect every action you take (or failed to take) in response to be put under a microscope. How serious are the laws? Enormous fines. Personal criminal penalties. Jail time, potentially for you, personally -- at least if you ignore warnings, fail to take action, or turn a blind eye.
Learn the law. Take the time to have an expert explain, in painful detail, how these laws work. They aren't the same from one embargo to another. Then put in place a compliance program. You might not stop every violation with it, but your efforts to ensure compliance are definately worth something if the proverbial shit hits the proverbial fan.
And never, ever, let the rumor of a violation come to rest on your desk without action. Do that, and you are effectively shouldering the blame yourself (and providing cover for those above you in the organization). Don't kid yourself into believing that by burying this kind of problem, you'll earn any loyalty from above -- senior execs will eagerly feed you to the government sharks to save their own skins.
I had several personal experiences with embargo rumors during my career. The first one involved a possible sale of my division's products to a customer in Canada, of all places. It seems this entity owned assets in Cuba, and had previously purchased goods in Canada for their operations to the south, thus earning blacklisting by the U.S. government.
Unfortunately, I soon learned that while my company was strictly forbidden by the U.S. government to sell to this company, Canadian law made it illegal for my Canadian-based sales manager to refuse to complete the sale if that refusal was based on the provisions of the U.S. law. Catch 22.
To correct the situation, we had to set up a crazy system where all Canadian sales had to be referred to our U.S. office for final "approval" before a sales contract could be accepted. The sole purpose of that "approval" was to check the customer's name against the blacklist. Ultimately, this solution proved to be workable, but for a while we worried we might actually have to give up our Canadian sales office and its employees.
In another situation, my business was preparing to sue a former licensee, when the company threatened to turn over "evidence" that we had "authorized" them to sell into an embargoed country. I knew it was a preposterous claim, and after examining the documentation behind this threat, we realized it was forged.
But the mere threat of getting the government involved led us to conduct our own forensic investigation, and it turned up a different, more incriminating document. That document was an email from one of our salesmen to a customer in an embargoed country, telling the customer we would be unable to do business with him due to the provisions of the U.S. embargo. That part of the email was fine. The problem came when the salesman then referred the customer to a competitor in Europe who wouldn't face the same restrictions. Yep, that was a violation, although the salesman had no idea it was against the rules.
In that instance, we weren't required to report that particular incident to the government, but in some ways I wished we would have since not doing so took the wind out of our sails. As a result of that one email, we backed down in our lawsuit against the licensee, and that decision ultimately had major competitive repercussions.
In the worst incidence, which I won't go into here as it is too long and complex a tale, the business I was running lost millions of dollars when an internal investigation turned up a scheme to sell product into an embargoed country. We also lost several key international employees, were forced to self-report the incident to the government, and had to sit on pins an needles waiting as the government decided what action (if any) to take. It took years.
Fortunately, in that case, the government decided to let the statute of limitations run out without assessing a fine or engaging in their own investigation.
The bottom line is U.S. Embargo Laws are serious stuff. Violations carry huge fines and potential personal criminal liability. If you're selling your products or services internationally, you have to be prepared to deal with these laws. To do so you must:
- Know the details of the laws. What specific actions are permitted and prohibited?
- Set company policy so that you are clearly in compliance. There are a few ways you can try to get "cute" with the laws (such as pretending you didn't see certain red flags), but I recommend you stay far, far away from these.
- Have a compliance program that documents your efforts to stay within the law on each and every sale. Policy is nice, but this is where the rubber meets the road.
- Never, ever let any rumors or other evidence of violations come to rest on your desk -- at least not without a thorough investigation.
- Make sure every action you take, and every word you speak on this subject, is something you feel comfortable having printed in the newspaper, or repeated in church.
There really isn't any viable alternative. Comply, or else. 13.1
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If you are intriqued by the ideas presented in my blog posts, check out my other writing.
Non-Fiction: NAVIGATING CORPORATE POLITICS
Novels: LEVERAGE, INCENTIVIZE, DELIVERABLES and now HEIR APPARENT (published 3/2/2013)-- note, the ebook version of DELIVERABLES (a prequel to HEIR APPARENT) is on sale for a limited time at Amazon for $4.99.
These novels are all based on extensions of my experiences as a senior manager in the world of corporations.