U.S. BIS imposes $300 million penalty to resolve violation of foreign direct product rule
Alleged violations of U.S. export controls related to selling hard disk drives (HDDs) to a Chinese technology company
Violation of foreign direct product rule
The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce has imposed a $300 million civil penalty against a U.S. technology company based in Fremont, California and its international headquarters based in Singapore to resolve alleged violations of U.S. export controls related to selling hard disk drives (HDDs) to a Chinese technology company in violation of the foreign direct product (FDP) rule.
According to the BIS release (April 19, 2023), the resolution includes a multi-year audit requirement and a five-year suspended denial order.
Summary
- BIS in August 2020 imposed controls over certain foreign-produced items related to Huawei, as further described below.
- The U.S. company in September 2020 announced it would continue to do business with the Chinese company, despite the fact that its only two competitors had stopped selling HDDs to the Chinese company.
- BIS’s investigation determined that the U.S. company engaged in conduct prohibited by the Export Administration Regulations (EAR) by ordering or causing the reexport, export from abroad, or transfer (in-country) of more than 7.4 million HDDs without BIS authorization.
For more information, contact a professional with KPMG Trade & Customs services:
Doug Zuvich |
John L. McLoughlin |
Andy Siciliano |
Steve Brotherton |
Luis (Lou) Abad |
Irina Vaysfeld |
Amie Ahanchian |
Christopher Young |
Gisele Belotto |
George Zaharatos |
Andy Doornaert |
Jessica Libby Principal E: jlibby@kpmg.com |
| John Anderson Managing Director E: johneanderson@kpmg.com |
Jenna Leigh Glass Managing Director E: jennaleighglass@kpmg.com |
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