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Export Control Reform, Individual Prosecutions May Increase

Last week was the annual export control conference hosted by the Department of Commerce, Bureau of Industry and Security (BIS) – it was a sold out crowd comprised of defense contractors, freight forwarders, high tech companies, and many others – such as lawyers.  I tend not to attend D.C. conferences because I have a business to run, clients to attend to, and no matter how well we plan, we always seem to get a rush of  “urgent” requests for work right around event day. Every now and then you can pick up a nugget or two at these confabs, so if you have the time, they are well worth the money and time.

Most of the speakers post their remarks online.  Of the speeches I was able to read at the BIS website, the more informative and balanced was Eric Hirschorn’s, a BIS Under Secretary.  While it had some of the perfunctory pro-Obama rhetoric, the Bushies would have done the same, it was a good overview of forthcoming and some overdue reforms to the export control system.  It was not a speech that I could share with my friends outside the beltway, but it was not designed to be.  In fact, most of what we do in this field for our clients is like a foreign language even for folks who follow these issues for a living.

The one comment that stood out deals with enforcement.  Hirschorn said that the Administration is “planning increased efforts against individuals (emphasis added) who flout the rules and against companies whose inadequate internal compliance programs tell us that they are indifferent to whether they follow the rules.”  I have worked with many clients that had excellent compliance programs in place, but also had individuals who found ways to make a lot of trouble for companies. In the end, the companies carry the brunt of the legal (and public relations) exposure, while the individuals seem to skate by with what seems to be a slap on the wrist.

Hopefully the Obama folks will provide sufficient funds for more robust enforcement.   Not surprisingly, you will find that this is the case in most areas of the federal government.  The enforcement folks always seem to lack money and people to do their job. When I used to work on the Hill, no matter the subject area, the enforcement folks at the agencies could always use a little more, sometimes a great deal more. No matter how much they wrap themselves in the reform mantra, it will mean little in the long-run if the Obama team fails to provide the enforcement folks with the tools that they need to take a bite out of crime.

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