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Conviction for evasion of sanctions

Recently, the Rotterdam District Court sentenced a man to 3 years in prison for circumventing sanctions against Russia. The company he worked for was also sentenced to a €200,000 fine. In this blog, you can read exactly what the man was convicted of, and why that violates sanctions rules. Thus we see that it is important to think before one acts.

 

First, the man was accused of, in short, selling so-called "dual-use goods" to Russian companies. Dual-use goods are goods that can be used militarily, even if they are not primarily developed for that purpose. Examples include small boats, which can be used both for pleasure sailing and also for naval purposes, such as military transports. This case involved, among other things, a certain type of electric circuits. The man was also suspected of deliberately participating in activities with the purpose or effect of circumventing sanctions.

 

Among other things, the suspect had to check electronic circuits - which can also be used militarily - ordered from Russia for completeness against invoices. At no point did the Russian customer and the defendant communicate that the circuits did not meet expectations. Therefore, according to the court, it may be assumed that the circuits exported to Russia actually met the customer's expectations and fell within the description stated on the invoice. Because the circuits apparently worked well, could be used militarily, and fell within the description on the invoice (which was used to answer the question of whether or not the product was banned), there is a 'dual-use good'.

 

In addition to exporting goods, the man also issued false invoices by changing the customer's name to non-Russian customers, when in reality the customers were indeed Russian companies. The man's attorney further argued that the invoice listed the Maldives as the destination and that the circuits actually went there. Therefore, the invoices would not be fake.

 

The court disagrees, writing that "everyone knew that the Maldives was not the final destination. All sorts of documents stated that the goods were in transit and that the (final) destination was Russia." This should have mentioned the Russian companies as customers. The man knew that the Russian companies were the real customer - in fact, he had faked the name on the invoices himself.

 

Sanctions

Several sanctions were imposed after Russia started a war in Ukraine. Briefly, the European Regulation 833/2014 contains a provision prohibiting (in principle) the sale, supply or export of dual-use goods to any Russian person or company. In addition, that Regulation also contains a provision against circumvention of the sanctions imposed. It is established that the circuits sold and supplied may serve a military purpose, and thus fall under the 'dual-use goods'-category. This makes it clear that these circuits should never have been sold to a Russian company. It is important to note here that indirect sales, delivery and exports are also prohibited. That the goods first went to the Maldives does therefore not matter in this case, unless perhaps it was completely unknown (and moreover could not have been known) that the goods would eventually go to Russia.

 

Imprisonment

The court further noted that the course of events at the man and the company he worked for continued for 7 months. The man was an "essential link in this circumvention route". He also further ordered these products with a form stating that a company in nota bene Ukraine would be the end user. He inspected the goods and was involved in their delivery. Evading the sanctions had essentially become his earning model, even though he was well aware of the sanctions in place and went ahead anyway. The court took particular note of these circumstances under which the offences were committed, and sentenced him to 3 years in prison.

 

Preventing the same

Prevention, as the saying goes, is better than curing. This is surely the case in when it involves (possible) sanctions. That is why it is important to investigate the (ultimate) customer well, especially when trading in items that could be used militarily or when a delivery is made via an unusual country, such as the Maldives or Kazakhstan. Sanctions regulations are often complicated and change relatively quickly. It is therefore a good idea to seek legal support for questions that might involve sanctions. This way, the risk of (criminal) liability is reduced.

 

Do you have a question about sanctions against Russia, dual-use goods, or about import/export more generally? If so, please feel free to contact one of our lawyers.

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