BIS States Companies May Be Held Liable for Export Violations of Acquired Firms
Broker Power is reminding exporters that pursuant to a 2002 Order issued by the Bureau of Industry and Security, companies may be held liable for export compliance as successors-in interest.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
(The Order, issued against Sigma-Aldrich Business Holdings (SABH) and two of its subsidiaries, Sigma-Aldrich Corporation (SAC) and Sigma-Aldrich Research Biochemicals (SARB), among other things, denied their request not to be held liable as successors-in-interest.
The Order imposed liability for charges involving illegal exports of biological toxins on SABH and SAC as successors-in-interest to Research Biochemicals Limited Partnership (RBLP), a company that sold its partnership interests to these respondents on April 9, 1997. BIS also imposed liability against SARB as both a successor for violations occurring before the transfer of interest on April 9, 1997 and as the actual wrongdoer for violations occurring after the transfer.)
.
Order Set Precedent for Scrutiny of Acquired Firms' Export Compliance
BIS states that the Order set the precedent that when acquiring another firm, a company should scrutinize the export control practices of the acquired company in order to avoid the risk of incurring substantial liability along with the assets of the company.
In this case, the acquiring companies not only failed to discover the prior unlicensed exports, they allowed them to continue for more than one year after the acquisition.
BIS imposed penalties of $1,760,000 on the companies to settle the charges, which BIS stated at that time was the largest imposed by the Commerce Department in a case involving biological toxins, and one of the largest penalties ever paid to Commerce for export control violations.
BIS press release (dated 11/04/02) available at http://www.bis.doc.gov/news/2002/sigmaaldrichpays4acquisition.htm
BIS order available at http://www.bis.doc.gov/enforcement/casesummaries/sigma_aldrich_alj_decision_02.html