By Dan McCue
Staff Writer

The Security and Accountability for Every Port Act, overwhelmingly endorsed in the U.S. House of Representatives and now awaiting Senate approval, doesn’t require most of the security measures bandied about in the press during the Dubai Ports imbroglio.

However, it may very well spawn a cottage industry in a new kind of port security consultancy, according to attorney Jonathan M. Fee, a speaker at the recent South Carolina International Trade Conference

His presentation was a standing-room-only event at this year’s trade conference, which saw a record crowd of 514 individuals.

Fee, a partner in the International Trade and Regulatory Group of Alston & Bird LLP in Washington, D.C., said the bill does provide $400 million in grants in each of the next six years to fortify ports around the country.

But it doesn’t provide the kinds of bells and whistles that will get a member of Congress booked on the “O’Reilly Factor.”

For instance, Fee said, the full House rejected electronic container seals or requiring 100% inspection of all U.S. bound containers at foreign ports.

“It made for a good sound bite, but it just wasn’t practical,” Fee said of the latter proposal. “No one had the staff to do those kinds of inspections and no one can afford it.”

Traders against terrorism

What the law does do is affect international traders’ participation in the Customs-Trade Partnership Against Terrorism. Participation in the program, which is largely unknown to the non-trading public, is limited to businesses that can demonstrate a two-year history of involvement in international commerce.

Businesses that belong to C-TPAT agree to follow a long list of security procedures and also to certify that the traders they do business with follow the same procedures. In theory, parties that participate in the program have fewer difficulties and fewer delays in getting their cargo through customs.

But Congress found that the U.S. Customs Service doesn’t have the time or resources to certify all participating businesses. Instead, the SAFE Act requires C-TPAT participants to contract, at their expense, with an independent third-party entity to certify their security programs.

“A new route to certification opens the door to a new level of entrepreneurship,” he said. “That will drive up shippers costs, which will no doubt then be passed along through the economy.”

Protecting technology secrets

Sharing a spot on the port security panel with Fee was Rick Shimon, special agent in charge of the Bureau of Industry and Security for the U.S. Custom Service.

While Shimon acknowledges that port security is a huge task that taxes resources, he emphasized that the Customs Service has never gone it alone.

“National security is a shared responsibility between the exporting community and law enforcement,” he said.

The service’s biggest concern, Shimon said, isn’t dangerous cargo coming in, but rather proprietary technology being exported to rogue states and terrorists.

“What we’re talking about aren’t obvious items, like guns being shipped overseas, but dual-use commodities,” he said.

The example he cited was the case of Asher Karni, an Israeli living in South Africa, who tried to purchase a piece of hospital technology used to treat kidney stones—trigger spark gaps—for Islamic terrorists in Pakistan.

The terrorists, planned to use the triggers to detonate nuclear devices.

How was the U.S. manufacturer to know what the end use of his innocent product was? The tip off, Shimon said, was that at the same time Karni purchased the triggers, he also tried to purchase several oscilloscopes, a fixture of electronics shops that in the wrong hands are used to measure a nuclear explosion.

But in this case, the U.S.-based seller, whom Shimon didn’t identify, realized something was fishy. “Typically, individual hospitals buy one or two of the devices every five years or so,” he said.

The triggers were disarmed, and then sent on to Karni in South Africa. His e-mails complaining about the nonworking cargo helped form the paper trail that eventually led to his conviction.

He was arrested when he came to the United States for a face-to-face meeting with company representatives.

“The lesson here is that everyone in the supply chain needs to be diligent to these bad actors,” Shimon said.

Steep penalties for participation

Penalties for willfully participating in such a scheme were recently increased under the reauthorized Patriot Act to include criminal penalties of between 10 and 20 years in prison, a $250,000 fine for individuals, plus an additional fine of $1 million or five times the value of the exported contraband for the company involved.

There are also a series of administration fines that include a civil penalty of $10,000 to $50,000, and a denial of export privileges; the latter penalty is something Shimon described as fatal to trade-dependent businesses.

“And remember, it’s a strict liability crime under the law, meaning the business owners don’t need have direct knowledge of the transaction to be held liable,” he told conference attendees. “Also remember, convictions are based on a preponderance of the evidence, not the higher standard of beyond a reasonable doubt.”

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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