Industry News: Volume 6, Number 4


U.S. Commerce and State Departments Suspend Export Licenses to Russia

Effective March 1, 2014, the U.S. Commerce and State Departments have suspended all license applications to Russia in response to the situation in Ukraine. Existing approved licenses are not affected.

United States Suspends Arms Imports from Russia

Under an Executive Order issued by President Obama, all arms imports from Russia have been halted due to the situation in Ukraine. The order bans the import of arms from the Tula and Izmash armories, to include the popular Saiga rifles and shotguns.

Chinese Arms flow into South Sudan

Amnesty International has confirmed that China supplied a further 1,000 tonnes of small arms and light weapons worth US$38 million to the country in early July 2014. “China is playing a dangerous diplomatic game with the lives of millions of people in South Sudan. It has pledged to provide peacekeeping troops to protect civilians, and at the same time has sent more than 1,000 tonnes of arms,” said Elizabeth Ashamu Deng, South Sudan Researcher at Amnesty International. “Such arms are likely to fall into the hands of both parties to the conflict and be used to fuel the atrocities threatening civilian lives.” The UN Security Council, of which China is a permanent member, has already condemned violations of international humanitarian law in South Sudan, including extrajudicial executions and ethnically targeted violence.

How Not to Smuggle Arms into Nigeria

A federal jury in Minnesota convicted a naturalized U.S. citizen on charges that he illegally exported guns to Nigeria without a license. At issue were eight handguns that Sheriff Olaleran Mohammed stuffed into a brown paper bag and placed between the seats of a 1998 Mercury automobile that was being shipped via a cargo ship container to Nigeria. Spanish police discovered the guns when the ship called in Valencia, Spain, on its way to Lagos.

The trial brief filed by Mr. Mohammed’s lawyers before the jury trial gives a pretty clear idea why he was ultimately convicted. First, the brief tries to rely on the exemption in section 123.17(c) of the ITAR for temporary exports of not more than three non-automatic weapons for personal use. Since there were eight guns in the paper bag in the Mercury, the exemption argument failed.

The other argument forwarded by the defendant’s trial brief on the export charge is that Mr. Mohammed had no idea whatsoever that it was illegal to export firearms for personal use to Nigeria without a license.

UN to go Lightly on Cuban Weapons Shipped to North Korea

Chinese and U.S. diplomats at the United Nations may turn a Cuban shipment of weapons to North Korea last year into a sort of “teaching moment” on violations of the U.N. arms embargo on Pyongyang, according to a U.N. publication.

The publication also indicated that U.S. diplomats have prepared proposals to add people or enterprises involved in the Cuban shipment to the U.N. Security Council’s list of violators of the U.N. embargo, but might not submit it.

The report appeared to signal that Cuba will suffer little more than a slap on the wrist for the arms shipment, said Mauricio Claver-Carone, director of the U.S.-Cuba Democracy political action committee, which supports U.S. sanctions on Havana.

“Apparently, they feel Cuba just didn’t understand the rules” of the 8-year-old U.N. arms embargo on North Korea” said Claver-Carone. North Korea’s Chong Chon Gang freighter was seized in Panama on July 15, 2014 with a load of Cuban weapons, hidden under tons of Cuban sugar. It was described by U.N. experts as the largest single shipment intercepted under the U.N. embargo on Pyongyang.
ATF Processing Times Decrease

ATF has taken significant steps to reduce the number of pending NFA applications. As a result, the number of pending NFA applications has been reduced by 25%. Consequently, the processing times of certain NFA applications has also been reduced by as much as 30 days. ATF will continue to take aggressive steps to reduce the number of pending applications and processing times. Average processing time for an ATF Form 9 export permit was 1 month, while ATF Form 6 (import permits) are being processed within 3 months.

Smith and Wesson Agrees to Pay US$2 Million Fine

Smith & Wesson agreed to pay $2 million to the Securities and Exchange Commission for allegedly bribing foreign officials in an effort to secure contracts to supply firearms to military and law enforcement overseas.

Between 2007 and 2010, international sales reps for the Springfield, Massachusetts-based company were “engaged in a pervasive effort to attract new business by offering, authorizing, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia, and other foreign countries,” stated a SEC press release.

In one deal with a Pakistani police department, a S&W sales agent gifted $11,000 in guns to officials as well as additional cash payments to secure a contract that included the sale of 548 pistols, which netted the company over $100,000 in profit, according to the SEC order.

“This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit. “When a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating.”

Meanwhile, company executives were happy to put the matter to bed. “We are pleased to have concluded this matter with the SEC and believe that the settlement we have agreed upon is in the best interests of Smith & Wesson and its shareholders,” said Smith & Wesson’s chief executive, James Debney, in a statement.