Action Affecting Export Privileges; Thane-Coat, Inc.

DEPARTMENT OF COMMERCE

Bureau of Export Administration

Action Affecting Export Privileges; Thane-Coat, Inc.

In the Matters of: Thane-Coat, Inc., 12725 Royal Drive,

Stafford, Texas 77477, Jerry Vernon Ford, President, Thane-Coat,

Inc. 12725 Royal Drive, Stafford, Texas 77477 and with an address at

7707 Augustine Drive, Houston, Texas 77036, and Preston John

Engebretson, Vice-President, Thane-Coat, Inc., 12725 Royal Drive,

Stafford, Texas 77477 and with an address at 8903 Bonhomme Road,

Houston, Texas 77074, Respondents

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Decision and Order on Renewal of Temporary Denial Order

On April 29, 1998, I issued a Decision and Order on Renewal of

Temporary Denial Order (hereinafter ``Order'' or ``TDO''), renewing for

180 days, in a ``non-standard'' format, a May 5, 1997 Order naming,

inter alia, Thane-Coat, Inc.; Jerry Vernon Ford, president, Thane-Coat,

Inc.; and Preston John Engebretson, vice-president, Thane-Coat, Inc.

(hereinafter referred to collectively as the ``Respondents''), as

persons temporarily denied all U.S. export privileges. 63 FR 25817-

25189 (May 11, 1998).\1\ The Order will expire on October 26, 1998.

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\1\ The May 5, 1997 Order also named Thane-Coat, International,

Ltd. and Export Materials, Inc. as persons temporarily denied all

U.S. export privileges. I am issuing a separate Decision and Order

today renewing the TDO against Thane-Coat, International, Ltd.

(under its legal name of TIC Ltd.) and Export Materials in a

``standard'' format.

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On October 6, 1998, pursuant to Section 766.24 of the Export

Administration Regulations (currently codified at 15 C.F.R. Parts 730-

774 (1998)) (hereinafter the ``Regulations''), issued pursuant to the

Export Administration Act of 1979, as amended (50 U.S.C.A. app.

Secs. 2401-2420 (1991 & Supp. 1998)) (hereinafter the ``Act''),\2\ the

Office of Export Enforcement, Bureau of Export Administration, United

States Department of Commerce (hereinafter ``BXA''), requested that I

renew the Order against Thane-Coat, Inc., Jerry Vernon Ford, and

Preston John Engebretson for 180 days in a non-standard format,

consistent with the terms agreed to by and between the parties in April

1998.

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\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)), August 14, 1996

(3 C.F.R., 1996 Comp. 298 (1997)), August 13, 1997 (3 C.F.R., 1997

Comp. 306 (1998)), and August 13, 1998 (63 Fed. Reg. 44121, August

17, 1998), continued the Regulations in effect under the

International Emergency Economic Powers Act (currently codified at

50 U.S.C.A. Secs. 1701-1706 (1991 & Supp. 1998)).

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In its request, BXA stated that, as a result of an ongoing

investigation, it had reason to believe that, during the period from

approximately June 1994 through approximately July 1996, Thane-Coat,

Inc., through Ford and Engebretson, and using its affiliated companies,

TIC Ltd. and Export Materials, Inc., made approximately 100 shipments

of U.S.-origin pipe coating materials, machines, and parts to the Dong

Ah Consortium in Benghazi, Libya. These items were for use in coating

the internal surface of prestressed concrete cylinder pipe for the

Government of Libya's Great Man-Made River Project.\3\ Moreover, BXA's

investigation gave it reason to believe that the Respondents and the

affiliated companies employed a scheme to export U.S.-origin products

from the United States, through the United Kingdom, to Libya, a country

subject to a comprehensive economic sanctions program, without the

authorizations required under U.S. law, including the Regulations. The

approximate value of the 100 shipments at issue was $35 million. In

addition, the Respondents and the affiliated companies undertook

several significant and affirmative actions in connection with the

solicitation of business on another phase of the Great Man-Made River

Project.

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\3\ BXA understands that the ultimate goal of this project is to

bring fresh water from wells drilled in southeast and southwest

Libya through prestressed concrete cylinder pipe to the coastal

cities of Libya. This multibillion dollar, multiphase engineering

endeavor is being performed by the Dong Ah Construction Company of

Seoul, South Korea.

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BXA has stated that it believes that the matters under

investigation and the information obtained to date in that

investigation support renewal of the TDO issued against the

Respondents.\4\ In that regard, in April, 1998 BXA and the Respondents

reached an agreement, whereby BXA sought a renewal of the TDO in a

``non-standard'' format, denying all of the Respondents' U.S. export

privileges to the United Kingdom, The Bahamas, Libya, Cuba, Iraq, North

Korea, Iran, and any other country or countries that may be made

subject in the future to a general trade embargo by proper legal

authority. In return, the Respondents agreed that, among other

conditions, at least 14 days in advance of any export that any of the

Respondents intends to make of any item from the United States to any

destination world-wide, the Respondents will provide to BXA's Dallas

Field Office (i) notice of the intended export, (ii) copies of all

documents reasonably related to the subject transaction, including, but

not limited to, the commercial invoice and bill of lading, and (iii)

the opportunity, during the 14-day notice period, to inspect physically

the item at issue to ensure that the intended shipment is in compliance

with the Export Administration Act, the Export Administration

Regulations, or any order issued thereunder. BXA has sought renewal of

the TDO in a ``non-standard'' format; respondents have advised me that

they do not object to renewal of the TDO in the ``non-standard''

format.

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\4\ On October 6, 1998, BXA requested that I renew the April 29,

1998 TDO against TIC Ltd. and Export Materials.

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Based on BXA's showing, I find that it is appropriate to renew the

order temporarily denying the export privileges of Thane-Coat, Inc.,

Jerry Vernon Ford, Preston John Engebretson in a ``non-standard''

format, incorporating the terms agreed to by and between the parties in

April 1998. I find that such renewal is necessary in the public

interest to prevent an imminent violation of the Regulations and to

give notice to companies in the United States and abroad to cease

dealing with these persons in any commodity, software, or technology

subject to the Regulations and exported or to be exported to the United

Kingdom, the Bahamas, Libya, Cuba, Iraq, North Korea, Iran, and any

other country or countries that may be made subject to the future to a

general trade embargo by proper legal authority, or in any other

activity subject to the Regulations with respect to these specific

countries. Moreover, I find such renewal is in the public interest in

order to reduce the substantial likelihood that Thane-Coat, Inc., Ford

and Engebretson will engage in activities which are in violation of the

Regulations.

Accordingly, it is therefore ordered:

First, that Thane-Coat, Inc., and all of its successors or assigns,

officers, representatives, agents, and employees when acting on its

behalf, Jerry Vernon Ford, and all of his successors, or assigns,

representatives, agents and employees when acting on his behalf, and

Preston John Engebretson, and all of his successors, or assigns,

representatives, agents, and employees when acting on his behalf (all

of the foregoing parties hereinafter collectively referred to as the

``denied persons''), may not, directly or indirectly, participate in

any way in any transaction involving any commodity, software or

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

to the Export Administration Regulations (hereinafter the

``Regulations'') and exported or to be exported from the United States

to the United Kingdom, The Bahamas, Libya, Cuba, Iraq, North Korea, or

Iran, to any other country or countries that may be made subject in the

future to a general trade embargo pursuant to proper legal authority

(hereinafter the ``Covered Countries''), or in any other activity

subject to the Regulations with respect to the Covered Countries,

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,

[[Page 58709]]

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

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

any transaction involving any item that is subject to the Regulations

and that is exported or to be exported from the United States to any of

the Covered Countries, 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 to any of the Covered

Countries that is subject to the Regulations, or in any other activity

subject to the Regulations.

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

following:

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

any item subject to the Regulations to any of the Covered Countries;

B. Take any action that facilitates the acquisition, or attempted

acquisition by any of the denied persons of the ownership, possession,

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

be exported from the United States to any of the Covered Countries,

including financing or other support activities related to a

transaction whereby any of the denied persons 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 any of the denied persons of any item

subject to the Regulations that has been exported from the United

States to any of the Covered Countries;

D. Obtain from any of the denied persons 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

to any of the Covered Countries; 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 to

any of the Covered Countries, and which is owned, possessed or

controlled by any of the denied persons, or service any item, of

whatever origin, that is owned, possessed or controlled by any of the

denied persons if such service involves the use of any item subject to

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

States to any of the Covered Countries. For purposes of this paragraph,

servicing means installation, maintenance, repair, modification or

testing.

Third, that, at least 14 days in advance of any export that any of

the denied persons intends to make of any item from the United States

to any destination world-wide, the denied person will provide to BXA's

Dallas Field Office (i) notice of the intended export, (ii) copies of

all documents reasonably related to the subject transaction, including,

but not limited to, the commercial invoice and bill of lading, and

(iii) the opportunity, during the 14-day notice period, to inspect

physically the item at issue to ensure that the intended shipment is in

compliance with the Export Administration Act, the Export

Administration Regulations, or any order issued thereunder.

Fourth, that, after notice and opportunity for comment, as provided

in Section 766.23 of the Regulations, any person, firm, corporation, or

business organization related to any of the denied persons 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.

Fifth, 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.

Sixth, that, in accordance with the provisions of Section 766.24(e)

of the Regulations, Thane-Coat, Ford, or Engebretson may, at any time,

appeal this Order by filing a full written statement in support of the

appeal with the Office of the Administrative Law Judge, U.S. Coast

Guard ALJ Docketing Center, 40 South Gay Street, Baltimore, Maryland

21202-4022.

Seventh, that this Order is effective immediately and shall remain

in effect for 180 days.

Eighth, that, in accordance with the provisions of Section

766.24(d) of the Regulations, BXA may seek renewal of this Order by

filing a written request not later than 20 days before the expiration

date. Any respondent may oppose a request to renew this Order by filing

a written submission with the Assistant Secretary for Export

Enforcement, which must be received not later than seven days before

the expiration date of the Order.

A copy of this Order shall be served on each Respondent and shall

be published in the Federal Register.

Entered this 23rd day of October, 1998.

F. Amanda DeBusk,

Assistant Secretary for Export Enforcement.

[FR Doc. 98-29269 Filed 10-30-98; 8:45 am]

BILLING CODE 3510-DT-M