The Legal Corner, October 2013 Issue:
For the last 30 years, I have advised carriers, customs brokers, freight forwarders, importers, and exporters of foreign goods subject to Customs restrictions regarding pitfalls of U.S. and foreign Government controls. The laws are often misunderstood, not only by the private sector but also by Government officials who are charged with the responsibility to ensure that the laws restricting import and export and procedure associated with import and export are properly enforced following our caveats that generally apply to those transactions.
I.INVESTIGATIONS – WEIGHING YOUR OPTIONS
APPEARANCE OF AN AUTHORIZED GOVERNMENT OFFICIAL, U.S. CUSTOMS, FDA, AND OTHERS.
If you or another employee of your Company is approached by any Government official investigating procedures or other activity involving import or export, your first response should be to listen to what the Agent has to say and then to politely suggest that before any further discussion, you are obligated to speak to your attorney because of rules in place by your business.
A.WHAT’S NEXT?
The following analysis should be done before or at the same time as you contact your legal advisor:
- WHO IS CONDUCTING THE INVESTIGATION?
- WHAT DOCUMENTS HAVE THEY REQUESTED?
a) Was an Administrative Summons issued?
b) Were the records requested on a voluntary basis?
c) Are they pressing for an immediate review of the records?
II.DETERMINE WHAT PROBLEMS MAY ACCRUE AS A RESULT OF DIVULGING REQUESTED RECORDS
A.Has there been a review of the records to ensure that all documents relating to the import, purchase or sale are properly maintained? And is there an internal policy relating to appropriate documentation to be produced upon sale or consignment?
B.Identify the problems the records would reflect if reviewed by Government officials that could result in a penalty or restriction of import. (All of the above questions should, if possible, be answered together with your attorney.)
III.DO I COOPERATE WITH THE INVESTIGATION?
A.Cooperation is usually only an alternative after all of the concerns in “I” and “II” above have been adequately answered.
B.If, after that analysis, it appears that the question is routine, and would not result in any adverse action by the Government no matter what your response, then cooperation is probable.
C.If the questions clearly “relate to issues that could result in a seizure or penalty,” then any further interaction should be between “the Government official” and your attorney.
IV.WHAT CRITERIA EXISTS FOR OPPOSING REQUESTED INFORMATION?
A.In all instances, you should be aware that any Government seizure, removing the object from your custody, will make your attempt to retrieve the object more expensive and less probable.
B.Normally, the Government will be unable to obtain possession of the import unless “redelivery notice” or similar administrative order is presented. In most other instances, the Government would only be permitted to remove the import, post-entry, if the owner voluntarily agrees to give up possession.
C.In the event that it is agreed to allow the Government, with your permission, to take an object, an agreement must be prepared whereby the Government is responsible for any damage that may occur as well as a time limit being set for either the return of the object or a “legal” seizure being made.
D.The determination as to whether or not to resist almost always mandates a risk analysis:
a) How much is the merchandise worth?
b) What is the economic cost of resisting the claim?
c) Is there a benefit in the future for agreeing not to resist a claim?
V.AM I PROPERLY PREPARED?
A.An analysis of the possible results of the investigation should be fully completed prior to any documentation or information being supplied to a Government claim.
B.All information regarding the Government’s investigation should be obtained, if possible, prior to disclosing any documentation or information.
C.All persons having any knowledge or involvement should be identified and interviewed prior to disclosing any information to the Government.
D.If a determination is made to fully cooperate, all records should be properly organized and described so that the Government can identify the item.
E.Intermediate positions should be considered where full opposition or full cooperation may be inappropriate.
Attached are three of the most common documents used by the Government to obtain information:
1.Administrative Summons
2.A Search Warrant
3.A Subpoena
CONCLUSION
Usually Government inquiries into imports/exports are routine and not “enforcement actions.” The above concerns should always be heeded, but, in most instances a “non-enforcement” inquiry can be treated as routine, and an effort by the Government to ensure that the i’s are dotted and the t’s crossed.
by Carl R. Soller
McBreen & Kopko
Carl R. Soller, Special Customs, International Cargo and Regulatory Compliance Counsel to McBreen & Kopko is counsel to the JFK Airport Customs Brokers and Freight Forwarders Association and a recognized expert in his practice areas. He and his firm concentrate their Air Cargo Practice in all business and regulatory matters on a nationwide basis. He offers advice on supply chain security and its related Government Regulations to the Air Cargo Community as well as advice and a vast range of assistance to importers and exporters of all kinds of consumer goods. He can be reached at (646) 502-5791 or csoller@mklawnyc.com