Defense Contractors Settle Anti-Boycott Charges

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The Bureau of Industry and Security (BIS), declared the enforcement of financial penalties against two defense companies,  resolving alleged infractions of the antiboycott regulations of the Export Administration Regulations (EAR). The violations reportedly took place at a 2019 trade show in Bahrain.

Profense LLC, a Phoenix-based gatling-style machine gun manufacturer, has agreed to pay a civil penalty of $48,500, settling four allegations of breaching antiboycott regulations. B.E. Meyers & Co, Inc., a photonics defense contractor in Redmond, WA, will pay $44,750, settling three allegations. Both settlements are detailed in BIS's Proposed Charging Letters.

Both Profense and Meyers voluntarily reported the actions to BIS, collaborated with the investigation by the BIS Office of Antiboycott Compliance, and took remedial measures after identifying the problematic conduct. These proactive steps significantly reduced the penalties.

Assistant Secretary for Export Enforcement, Matthew S. Axelrod, expressed, "Today’s penalties send a clear message to those receiving boycott requests, even as a participant in a trade show: You must not furnish prohibited information and you must report any such requests to BIS."

According to the settlements, both companies admitted to the allegations outlined in the Proposed Charging Letters, which included the provision of information about their business relationships with boycotted countries or blacklisted individuals, and their failure to report requests to support a foreign boycott of a country friendly to the United States.

Specifically, while participating in a 2019 Bahrain trade show, both companies certified to their freight forwarder that the goods for display were not of Israeli origin nor manufactured by a company on the "Israeli Boycott Blacklist," which is prohibited by Section 760.2(d) of the EAR. They also failed to report the receipt of such a request as required by Section 760.5 of the EAR

The Order, Settlement Agreement and Proposed Charging Letter for Profense are available here, and for Meyers, here.