The My Friend Harry and the Iranian Story
A true story about how a friend of mine did his business and the surprise he got.
Written 12/2015 and rewritten 05/23/2016 unedited
For most of my business career, I have been in the commercial automotive parts business, and like many other companies we always exported parts overseas. Exporting parts was for me and many companies like mine a very normal every day thing to do. However, once we started dealing in military
Vehicular parts, we learned that it was a whole different story, and the parts business was closely monitored by the U.S. government. In order to export military related parts a company needed a Department of State License. And there are many rules and regulations that must be adhered to.
One of the most important things is to keep abreast of black listed countries. This list of countries changes on a regular basis, and all U.S. suppliers are not allowed to ship anything to them. That doesn’t mean that some companies will not try and break the law by shipping to blacklisted countries, they do it all the time. Sometimes they try doing it by selling to a good country and then re-shipping to a black listed country. When they get caught the U.S. Government arrests the company owners and prosecutes them.
Many times we received overseas inquiries, and if they are requesting prices on commercial items, that may have military applications, we have to check to be sure that the country they want to sell to is not on the governments black list. If they are not on the black list, we would require “End user certification”, this is done so that if an order is placed we can apply for a Department of State license, and if it is approved we can ship.
Early on we learned our lesson regarding knowing who your customer is. We had received a large order for Caterpillar replacement electrical parts, the order was from a company in Minnesota that we had done business with for several years. About a year after we shipped, a U.S. Customs officer came to our office with copies of all our invoices. He told us that our parts had been confiscated while being shipped to Iran which is a blacklisted country. Worse than that, the Caterpillar electrical parts we sold, had dual usage, they also fit a M60 Tank.
The Customs agent said that our customer in Minnesota sold the parts to a Canadian Company, and they in-turn had sold the parts to a French Company and the French Company tried to ship it to Iran. They were all arrested and jailed. I told the Customs Agent that the parts we sold were commercial in nature and we had no idea they fit a tank, also I told him that we had no way of knowing who our customer was selling to, and that’s when he set me straight on the subject. He said that he knew we had no bad intentions, but when it came to parts that can be used by the military, it was our responsibility to know who our customer is selling to. He said that the law was very clear about that, and next time it happens to us, we could be in a lot of trouble, consider yourself warned, and we did.
Now on with the story.
When doing commercial business, many times, our customer request that we make a drop shipment for them, it’s a common practice. Our customer is asking us to ship directly to his customer, and he is trusting us that we will not disclose who we are. We always made sure we did as our customer requested and we always made sure that when we made a drop shipment, there was nothing in the shipment showing that it was originally bought from us
However that was not the case with other vendors. Some of them would go out of their way to make sure their name was in the shipment, hoping that the final customer would see it and next time buy from them directly. It was an underhanded thing to do, but they did it.
We had a friend named Harry, and Harry had a very successful truck parts business in Cleveland Ohio. Harry represented several large original equipment supplier, so many of his customers would buy from him and they would ask for Harry to drop ship direct to their customer. That gave Harry the unique opportunity to find out who the end customer was and steal him away.
Being the greedy guy that Harry was, he would load the shipment down with his calendars and catalogs and business cards. He wanted to make sure everyone knew he was the supplier.
One day Harry received an order for a large quantity of turbocharger parts. His customer told him the shipment was going to Dubai a non-black listed Country. The customer requested that Harry make a drop shipment for him. Harry was excited he saw this as his opportunity to stick his advertisements in every shipping crate.
About a month passed, when 2 Customs agents and 2 FBI agents walked into his company and arrested him. It appears his customer was shipping the parts to Iran, a black listed country. But Harry claimed that he had no idea of what was going on, he said that he had sold the parts to one of his regular customers, and he had nothing to do with Iran. The agents were very sympathetic, but they arrested him anyway, they knew he was lying as they had found all the crates loaded with his catalogs, calendars and business cards, so Harry was charged as a co-conspirator.
Harry told me he obtained a lawyer, and before the case was settled, and he was acquitted, he estimated that it had cost him over $385,000.00 in legal fees and he was just about to lose the building his business was in.
Needless to say, Harry never put his brochures and business cards in any ones shipment again.