BIS Denies Exports by Enterysys for 10 Years for Control, Entity List Violations
The Enterysis Corp., based in India and San Jose, Calif., had its export privileges denied for 10 years after the Bureau of Industry and Security found it violated the Export Administration Regulations by exporting controlled items to India without the required license. Enterysys was charged with (1) exporting ceramic cloth to India without the required license; (2) evasion; (3) engaging in prohibited conduct by exporting electronic components to a company on then Entity List without a license; and (4) acting with knowledge of a violation. BIS found the company to be in default after it received no response to a charging letter, and no response to an administrative law judge’s recommended decision and order.
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Enterysys Exported Items w/ National Security Controls to India Without License
In or about May 2006, Enterysys purchased ceramic cloth, classified under ECCN 1C010, controlled for national security reasons (NS2), and valued at $15,460. When Enterysys asked the manufacturer to ship the material to its freight forwarder instead of directly to Enterysys, the manufacturer informed the company that the ceramic cloth was “a controlled commodity in terms of export to India,” BIS said, and asked for a guarantee that the ceramic cloth would not be exported to India. “This is not going out of the USA,” replied Enterysys.
Enterysys then asked the manufacturer not to put any packing list, invoice, or certificate of conformance in the box with the ceramic cloth, but to instead fax the documents to Enterysys, said BIS.
Meanwhile, Enterysys arranged for its freight forwarder to ship the ceramic cloth to Enterysys in India. Once the merchandise was in possession of the freight forwarder, Enterysys provided the freight forwarder with shipping documentation, including a packing list and invoice that falsely identified the ceramic cloth as twenty square meters of “used waste material,” with a value of $200, BIS said. The ceramic cloth was then exported to India without the required license, in violation of 15 CFR 764.2(a) and 15 CFR 762(h), it said.
Also Exported Other Goods to Entity List Company, Acted with Knowledge
During the same period, Enterysys was also exporting electronic components from the U.S. to Bharat Dynamics Limited (BDL), an Indian company designated in the Entity List. Although the items were EAR99, a license was required to export the items. Enterysys obtained no license to export the electronic components, in violation of 15 CFR 764.2(a).
Enterysys had knowledge of at least some of the violations, said BIS, because in May 2007, a freight forwarder informed the company that the items being exported required an export license and that BDL was on the Entity List, BIS said. Enterysys found another freight forwarder after the first one returned the items.
Subsequently, Enterysys emailed BIS requesting guidance about license requirements for exports to BDL, and in response was provided with a copy of the Entity List and advised that all exporting companies need to check transactions against certain lists, BIS said. Then, Shekar Babu, president of the company, wrote an email saying that he was “working directly with the US Govt on the export license” and that the license would “take a month.” But Enterysys never applied for a license, despite having knowledge it was acting contrary to the EAR in violation of 15 CFR 764.2(e).