Crackdown or coincidence?

Last month we noted the $700,000 settlement (pdf) Wilden Pump and Engineering agreed to pay after the government alleged that the company had illegally exported dual use pumps to China and several countries in the Middle East.

Now we learn that a competitor of Wilden, Goulds Pumps, will pony up $123,500 to settle similar allegations (pdf) regarding shipments to China, Egypt, India, Saudi Arabia, and Taiwan.  In both instances the pumps in question were subject to fairly strict controls at the time of the alleged violations due to their usefulness in manufacturing chemical and biological weapons.  (Since then the rules on such pumps have been tightened even further.)  For those who are interested in such things, the ECCN in play here is 2B350.i (pdf, p. 33).  (The much smaller settlement in the Goulds case appears to be a function of (1) fewer alleged violations (26 to Wilden's 71), (2) Goulds' voluntary disclosure (a factor which the Commerce Department says they accord "great weight" in determining penalties) and (3) the fact that some of Wilden's unlicensed exports went to Iran, a major no-no.)

It's dubious to ascertain a trend based on only two data points.  And because both the Wilden and Goulds charging letters posted to the BIS FOIA site are oddly undated we cannot know exactly when the companies were notified that the government intended to pursue penalties (though from references in the letters it is clear that both were sent sometime during or after August, 2004).  Wilden and Goulds signed their settlement agreements on April 21 and June 29, respectively.  Still, these aren't the first recent enforcement cases involving pumps controlled for chemical/biological weapons reasons.  Versa-Matic Pump, Hamilton Sundstrand, and Saint Gobain Performance Plastics have all been penalized since 2003 in cases involving pumps classified 2B350.  And the fines were substantial -- all but one of these five firms have ultimately settled for six-figure sums with two settlements exceeding half a million dollars.

If I were accountable for export compliance at a company whose business includes international sales of pumps subject to US controls (including non-US reexporters), I would be taking a magnifying glass to my compliance program sometime about now and seeking out any gaps.  Recent enforcement actions, especially when considered in combination with related US Government policy decisions to adopt a harder line on CB-controlled exports, mean it's a lousy time to take any chances.