Two days ago, the Office of Foreign Assets Control (“OFAC”) announced that CGGVeritas S.A, a French company, and its U.S. and Venezuelan affiliates had agreed to hand over $614,250 to settle allegations that the companies had violated the U.S. embargo on Cuba. Most of the violations involve CGG’s export of U.S.-origin parts and equipment to two vessels engaged in oil exploration activities in Cuban waters.
Under most sanctions regulations, re-export by foreign persons of U.S. origin goods that are EAR99 is not a violation, but the situation for Cuba is different and re-exports by foreign persons of such goods will be a violation. Section 515.201 prohibits “any person” (that includes the French) from “all dealings in” any “property” that is “subject to the jurisdiction of the United States” and in which Cuba or any Cuban national has or had “any interest of any nature whatsoever.” On its face, that prohibits all exports of U.S. origin items by anyone to Cuba.
Because licensing jurisdiction for exports to Cuba has been ceded by OFAC to the Bureau of Industry and Security (“BIS”), section 515.533 provides that exports are authorized under OFAC rules if the export is “licensed or otherwise authorized” by BIS. Section 746.2 of the EAR indicates that a license is required to “export or reexport … all items subject to the EAR,” which of course includes all EAR99 items in the United States or manufactured outside the U.S. with more than 10% controlled U.S. content. There is nothing in either BIS’s rules or OFAC’s rules for Cuba comparable to section 560.205 of the Iranian Transactions and Sanctions Regulations to permit re-exports by foreign persons of EAR99 goods.
CGG, of course, is in an interesting position because under Council Regulation (EC) No 2271/96, CGG would have broken the law in its home country by refusing to send the U.S. parts and equipment based on the U.S. embargo on Cuba. OFAC, naturally, takes the position that the U.S. has jurisdiction over the entire planet (if not the entire universe) and that U.S. law naturally trumps any laws passed by other (and necessarily inferior) countries or governments such as France or the European Union. BIS takes the same position so CGG is no doubt busy bickering with BIS over how much it owes BIS for complying with the law in CGG’s home country.
The other violation cited by OFAC involved CGG’s Venezuelan affiliate, which was a subsidiary of CGG’s U.S. affiliate, engaging in the “processing of data from seismic surveys conducted in Cuba’s Exclusive Economic Zone benefiting a Cuban company.” This was alleged also to be a violation of section 515.201, but that can only be the case if the language of the regulation, which prohibits U.S. persons from dealing in “property” in which Cuba or a Cuban national “has any interest,” is interpreted such that the meaning of “property” is stretched beyond all reasonable bounds. Even given the broad definition of data contained in section 515.311 it doesn’t include within its bounds mere data about Cuba. If it did, is satellite imagery of Cuba property in which Cuba has an interest? Has Google violated the embargo by processing that information for online presentation? Even if that benefits companies in Cuba? There might be an argument that a violation occurred if the seismic data survey was conducted pursuant to a contract with a Cuban entity giving it proprietary rights in those results — but that is not what OFAC says happened.