Decision and Order

DEPARTMENT OF COMMERCE

Bureau of Export Administration

Decision and Order

In the Matter of: Ian Ace, with addresses at 4 Mimosa Way,

Pinelands, South Africa, A. Rosenthal (PTY) Ltd., P.O. Box 3721, 13

Loop Street, Cape Town, South Africa, and A. Rosenthal (PTY) Ltd.,

P.O. Box 44198, 65 7th Street, Denmyr Building, 2104 Linden, South

Africa, Respondent.

Decision and Order

On November 27, 1995, the Office of Export Enforcement, Bureau of

Export Administration, United States Department of Commerce

(hereinafter ``BXA''), issued a charging letter initiating an

administrative proceeding against Ian Ace. The charging letter alleged

that Ian Ace committed seven violations of the Export Administration

Regulations (currently codified at 15 C.F.R. parts 730-774 (1997))

(hereinafter the ``Regulations''),\1\ issued pursuant to the Export

Administration Act of 1979, as amended (50 U.S.C. app. sections 2401-

2420) (hereinafter the ``Act'').\2\

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\1\ The violations at issue occurred between mid-1990 and early

1992. The Regulations governing those violations are found in the

1990, 1991, and 1992 versions of the Code of Federal Regulations (15

C.F.R. parts 768-799 (1990, 1991, and 1992)) and are referred to

hereinafter as the former Regulations. Since that time, the

Regulations have been reorganized and restructured; the restructured

Regulations, currently codified at 15 C.F.R. Parts 730-774 (1997),

establish the procedures that apply to the matters set forth in this

Decision and Order.

\2\ The Act expired on August 20, 1994. Executive Order 12924 (3

C.F.R. 1994 Comp. 917 (1995)), extended by Presidential Notices of

August 15, 1995 (3 C.F.R. 1995 Comp. 501 (1996)) and August 14, 1996

(3 C.F.R., 1996 Comp. 298 (1997)), continued the Regulations in

effect under the International Emergency Economic Powers Act

(currently codified at 50 U.S.C. 1701-1706).

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Specifically, the charging letter alleged that, between mid-1990

and early 1992, Ace, manager of A. Rosenthal (PTY) Ltd., Cape Town,

South Africa, conspired with James L. Stephens, president and co-owner

of Weisser's Sporting Goods, National City, California, and Karl

Cording, co-owner and managing director of A. Rosenthal (PTY) Ltd.,

Windhoek, Namibia, to export and, on two separate occasions, actually

exported U.S.-origin shotguns, with barrel lengths of 18 inches and

over, to Namibia and South Africa, without applying for and obtaining

from the U.S. Department of Commerce the validated export licenses Ace

knew or had reason to know were required under the Act and Regulations.

In addition, BXA alleged that, in furtherance of the conspiracy, and in

connection with each of those exports, Ace made false or misleading

representations of material fact to a U.S. Government Agency in

connection with the preparation, submission, or use of export control

documents. BXA alleged that, in so doing, Ace committed one violation

of Section 787.3(b), two violations of Section 787.4(a), two violations

of Section 787.5(a), and two violations of Section 787.6 of the former

Regulations, for a total of seven violations of the former Regulations.

BXA issued a charging letter to Ace at his residential address in

Pinelands, South Africa, and at his business address in Linden, South

Africa. BXA has presented evidence that Ace was served with notice of

issuance of the charging letter at his Linden, South Africa, business

address on December 9, 1995.\3\ Ace failed to answer the charging

letter. Thus, on June 26, 1997, pursuant to Section 766.7 of the

Regulations, BXA moved that the Administrative Law Judge find that

facts to be as alleged in the charging letter and render a Recommended

Decision and Order.

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\3\ The copy of the charging letter addressed to Ace at his

residential address was returned to BXA during April 1996. (It had

been marked by South African postal authorities as ``Unclaimed''.)

On April 24, 1996, BXA sent a copy of the November 27, 1995 charging

letter to Ace at a second business address in Cape Town, South

Africa. Ace received this copy of the charging letter on June 13,

1996.

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Following BXA's motion, on July 8, 1997, Chief Administrative Law

Judge Joseph A. Angel issued a Recommended Decision and Default Order

in which he found the facts to be as alleged in the charging letter. He

concluded that those facts constituted violations of the Act and

Regulations. The Administrative Law Judge also concurred with BXA's

recommendation that the appropriate penalty to be imposed for these

violations is a denial, for a period of 20 years, of all of Act's

export privileges. As provided by Section 766.22(a) of the Regulations,

the Administrative Law Judge referred the Recommended Decision and

Order to me for final action.

Based on my review of the entire record, I affirm the findings of

fact and conclusions of law in the Recommended Decision and Order of

the Administrative Law Judge. I believe that the Administrative Law

Judge's recommended denial of export privileges for 20 years is

appropriate. This case is aggravated by the fact that Ace violated

export controls that were designed to express U.S. abhorrence with

apartheid as then practiced in South Africa. These violations were

serious and undetermined important U.S. foreign policy interests. A

lengthy period of denial will help keep U.S.-origin items out of his

hands and make future violations less likely. Finally, this penalty is,

as the Administrative Law Judge explained, consistent with the

penalties received by the other participants in these violations.

Accordingly, it is therefore ordered, First, that for a period of

20 years from the date of this Order, Ian Ace, with the following

addresses, 4 Mimosa Way, Pinelands, South Africa; A. Rosenthal (PTY)

Ltd., P.O. Box 3721, 13 Loop Street, Cape Town, South Africa; and A.

Rosenthal (PTY) Ltd., P.O. Box 44198, 65 7th Street, Denmyr Building,

2104 Linden, South Africa, may not, directly or indirectly, participate

in any way in any transaction involving any commodity, software or

technology (hereinafter collectively referred to as ``item'') exported

or to be exported from the United States that is subject to the

Regulations, or in any other activity subject to the Regulations,

including, but not limited to:

A. Applying for, obtaining, or using any license, License

Exception, or export control document;

B. Carrying on negotiations concerning, or ordering, buying,

receiving, using, selling, delivering, storing, disposing of,

forwarding, transporting, financing, or otherwise servicing in any way,

any transaction involving any item exported or to be exported from the

United States that is subject to the Regulations, or in any other

activity subject to the Regulations; or

C. Benefiting in any way from any transaction involving any item

exported or to be exported from the United States that is subject to

the Regulations, or in any other activity subject to the Regulations.

[[Page 43504]]

Second, that no person may, directly or indirectly, do any of the

following:

A. Export or reexport to or on behalf of the denied person any item

subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted

acquisition by a denied person of the ownership, possession, or control

of any item subject to the Regulations that has been or will be

exported from the United States, including financing or other support

activities related to a transaction whereby a denied person acquires or

attempts to acquire such ownership, possession or control;

C. Take any action to acquire from or to facilitate the acquisition

or attempted acquisition from the denied person of any item subject to

the Regulations that has been exported from the United States;

D. Obtain from the denied person in the United States any item

subject to the Regulations with knowledge or reason to know that the

item will be, or is intended to be, exported from the United States; or

E. Engage in any transaction to service any item subject to the

Regulations that has been or will be exported from the United States

and that is owned, possessed or controlled by a denied person, or

service any item, of whatever origin, that is owned, possessed or

controlled by a denied person if such service involves the use of any

item subject to the Regulations that has been or will be exported from

the United States. For purposes of this paragraph, servicing means

installation, maintenance, repair, modification or testing.

Third, that after notice and opportunity for comment as provided in

Sec. 766.23 of the Regulations, any person, firm, corporation, or

business organization related to the denied person by affiliation,

ownership, control, or position of responsibility in the conduct of

trade or related services may also be made subject to the provisions of

this Order.

Fourth, that this Order does not prohibit any export, reexport, or

other transaction subject to the Regulations where the only items

involved that are subject to the Regulations are the foreign-produced

direct product of U.S.-origin technology.

Fifth, that a copy of this Order shall be served on Ace and BXA,

and shall be published in the Federal Register.

This Order, which constitutes final agency action in this matter,

is effective immediately.

Dated: August 8, 1997.

William A. Reinsch,

Under Secretary for Export Administration.

[FR Doc. 97-21453 Filed 8-13-97; 8:45 am]

BILLING CODE 3510-DT-M