Treasury Department Accused of 'Secret Settlements'

By Jeff Johnson | July 7, 2008 | 8:21 PM EDT

Capitol Hill ( - Ralph Nader's Public Citizen's Litigation Group said Monday that the Treasury Department office tasked with ensuring that American companies do not do business in countries considered enemies of the U.S. is withholding information from the public to protect businesses that violate the law.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS, formerly known as the Bureau of Export Administration) is responsible for regulating the export of "sensitive" technologies and products that could be used militarily or for commercial advantage by enemies of the U.S. Visitors to that agency's website can click on a link entitled "News" to find a list of press releases detailing various enforcement actions BIS has taken against U.S. companies that have violated export control laws.

"Illinois Company Fined $65,000" and "Two Swiss Companies Settle Charges of Attempted Exports to Iran" are typical headlines of reports detailing the names of the companies involved and the violations for which they have been fined. The documents also include extensive details about the violations, naming the country or countries to which the violator illegally exported and the amount of fines paid or other sanctions.

Visitors to the website of the Treasury Department's Office of Foreign Asset Control (OFAC) face a very different journey if they seek information on U.S. companies fined or otherwise sanctioned for violations of the Trading with the Enemy Act - which imposes sanctions against Cuba and North Korea - or the International Emergency Economic Powers Act - which penalizes trading with or transferring assets to Burma, Iran, Iraq, Libya, Sierra Leone, the Sudan, the Taliban in Afghanistan, foreign narcotics traffickers or foreign terrorists.

Prior to February of 2002, OFAC apparently released no information about the fines it assessed American companies or the settlements it entered into with them as a result of violations of U.S. trade laws. Nader's Public Citizen's Litigation Group (PCLG) sued the agency under the federal Freedom of Information Act on behalf of the Corporate Crime Reporter (CCR), a weekly newsletter published in Washington.

As a result of that lawsuit, OFAC began posting heavily redacted versions of "Civil Penalty Related Documents" on its website.

Michael Tankersley, an attorney with PCLG, described the OFAC civil enforcement program as "shrouded in secrecy" because of the agency's unwillingness to release information.

"They are not providing any meaningful disclosure of the conduct that's involved in these various offenses," he said. "They're not providing disclosure of what settlements were offered by the companies who were cited.

"And they're not providing any disclosure about the reasoning behind the decision to impose a particular penalty," Tankersley added.

While PCLG and CCR were unhappy with the redacted "Settlement Memoranda" OFAC posted on its website beginning in February of 2002, they are even less pleased with the agency's latest move.

OFAC stopped posting the redacted memoranda in September of 2002. No documents were posted between then and April 4, 2003. On that date, the agency began releasing only a chart with a one-line listing for each case, as opposed to the redacted memoranda released in the past.

"First of all, OFAC buries this chart in its website so that it's really hard to find, and I think the result is that there's been no press to any of these cases, and most of them have been up for more than 10 days now," said Russell Mokhiber, editor of CCR.

"Second, it's really hard to figure out what exactly is going on here," he continued. "We have no details."

The chart to which Mokhiber referred is displayed as an Adobe Acrobat document file four levels past the OFAC home page.

The name and address of the violator, a code for the executive order or federal law violated and another code for a brief description of the violation committed are provided. There is no key provided with the chart as to which foreign countries are covered by which section of the Code of Federal Regulations or executive order.

Whether a company voluntarily disclosed the violation, the amount paid to the government and whether the money was a fine or a voluntary settlement are also disclosed. No additional information is given.

"OFAC should make these records, including the redacted portions, available immediately without waiting to be asked," Tankersley said. "The public has a right to know the reasoning behind the agency's decisions in these cases so that it can evaluate whether the program is being properly administered."

Tankersley said Monday that he is confident the information will eventually be released, even if only as the result of a federal court order. Until then, he said, the public will just have to wait to be fully informed.

Calls to the U.S. Department of Treasury Office of Foreign Assets Control's public affairs division seeking a response to this report were not returned.

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