The Commerce Department announced today that Sigma-Aldrich Corporation of St. Louis, Missouri and two of its subsidiaries have agreed to pay a $1,760,000 fine to settle charges involving illegal exports of biological toxins. The settlement was reached after a significant legal ruling in the Commerce Department's favor by an administrative law judge adjudicating the dispute.
The penalty is the largest imposed by the Commerce Department in a case involving biological toxins, and one of the largest penalties ever paid to the Department for export control violations. The Department had instituted administrative enforcement actions against the Sigma-Aldrich companies alleging that a company they had acquired in 1997 had made unauthorized exports of controlled biological toxins to Europe and Asia on numerous occasions prior to the acquisition and had continued the unlicensed exports for more than a year after the acquisition. In a 15-page opinion, an administrative law judge held that companies can be held liable for export control violations that have been committed by firms that they acquire. A copy of the opinion is available on this Web site [pdf | html]
Commenting on the cases, Under Secretary of Commerce for Industry and Security Kenneth I. Juster stated: "This settlement, and the administrative law judge ruling upon which it is based, make two things quite clear. First, this Commerce Department will vigorously enforce our export control laws to prevent the spread of biological toxins and other substances that can be used for weapons purposes. Second, corporations will be held accountable for violations of U.S. export control laws committed by companies that they acquire."
Assistant Secretary of Commerce for Export Enforcement Michael J. Garcia issued an Order to implement the settlement. The Order is based on 318 charges, including 268 charges of unlicenced exports of biological toxins. The penalty was mitigated because the evidence available to the Department indicated that none of the exports in question was destined for biological weapons-related uses.
In issuing the Order, Assistant Secretary Garcia explained: "These cases set the important precedent that when acquiring another firm, a company should scrutinize the export control practices of the acquired company in order to avoid the risk of incurring substantial liability along with the assets of the company. In this case, the acquiring companies not only failed to discover the prior unlicenced exports, they allowed them to continue for more than one year after the acquisition."
Assistant Secretary Garcia commended the efforts of Special Agent Michael Imbrogna from the Office of Export Enforcement's field office in Boston for his investigation of the case.