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BIS Fines US company for Illegal Exports to Huawei, HiSilicon

The Bureau of Industry and Security fined a Pennsylvania-based scientific equipment manufacturer $80,000 for illegally exporting goods to Huawei and HiSilicon Technologies in 2019, according to a Nov. 8 enforcement order. The company, SP Industries, exported more than $170,000 worth of goods to the Chinese technology companies just after they were added to the Entity List (see 1905160072).

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In total, SP Industries committed four violations of the Export Administration Regulations and voluntarily disclosed two of the illegal exports. The violations stemmed from “errors in its export screening process,” BIS said, adding that the company agreed to perform two BIS-monitored export compliance audits over the next two years to prove it’s complying with U.S. export regulations.

On May 29, 2019, about one week after Huawei was added to the Entity List, SP industries sent the company a “ThermoJet-ES Precision Temperature Cycling System” worth about $26,000. The company continued to export the temperature cycling systems throughout the year, including another shipment to HiSilicon in July worth about $104,000 and two August shipments to Huawei and HiSilicon, each worth about $26,000. Each of the shipments was classified as EAR99, a category of items that generally don’t require a license unless they are destined for some sanctioned companies and entities, including Huawei and HiSilicon.

Along with the fine, SP Industries must complete an audit of its export compliance program within one year, a second audit the year after that and submit the results of both to BIS. The audit should show the company’s compliance program is in “substantial compliance” with BIS’s Export Compliance Program sample audit module, the agency said, including all record-keeping requirements. If the audit shows “actual or potential” EAR violations, SP Industries must provide BIS with a “detailed plan of corrective actions” to address the issues and copies of “pertinent air waybills and other export control documents” related to the “compliance concerns.” If the company doesn’t complete the audits or pay its fine, BIS may revoke its export privileges.

BIS agents are continuing to “aggressively investigate export violations” where Huawei or its subsidiaries are party to an export, said Kevin Kurland, the agency’s acting assistant secretary for export enforcement. Kurland also stressed that BIS will look to mitigate penalties when companies cooperate with its investigations. An SP Industries spokesperson declined to comment.