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Fine and compound penalty for exporting without a licence - July 2007

Chemical company fined for pre-cursor export and multinational company pays HMRC £10,000 for exporting controlled technology to the US electronically without a licence

Avocado Research Chemicals Ltd (ARC Ltd) were fined £600 and ordered to pay £100 costs on 27 July 2007 after pleading guilty at City of London Magistrates' Court to the unlawful exportation of a controlled chemical substance.

In July 2005, ARC Ltd exported 100g of 2-diisopropylaminoethyl chloride hydrochloride (also known as DCH) and 10g of hafnium, with a total value of around £60. DCH can be used as a pre-cursor to VX nerve gas. Hafnium can be used in the production of nuclear control rods. Both chemicals were exported without a necessary license to a broker in Egypt, a non-signatory to the Chemical Weapons Convention (CWC)

In July 2006 ARC Ltd submitted its annual return of exports of chemicals covered by the CWC to the Department of Trade and Industry (now BERR), who noticed that ARC did not have the relevant export license. ARC Ltd subsequently made voluntary declarations to DTI in relation to both chemicals. The case was referred to the Revenue and Customs Prosecutions Office (RCPO), the authority responsible for prosecuting non-licensed exports.

A subsequent internal investigation at ARC Ltd concluded that the failure to apply for an export license or stop the export was a result of human error.

David Green QC, Director of RCPO said:

"Today's successful result shows how important it is for firms to make sure that correct exporting procedures are in place. ARC Ltd did the right thing once they noticed their mistake and contacted the authorities. But other companies should note that, even in a case where small quantities and genuine human error are involved, some action must be taken. The unlicensed export of potentially lethal substances is too serious to be ignored at any level."

Another case in May where a multinational company transferred controlled technology electronically to the US without a licence resulted in a £10,000 compound penalty being paid.

Compounding is the means by which HMRC can offer to settle out of court a case where they would normally prosecute to save both the tax payer and the company time and legal fees.