[Weekly Compilation of Presidential Documents Volume 29, Number 28 (Monday, July 19, 1993)]
[Pages 1323-1325]
[Online from the Government Publishing Office, www.gpo.gov]
<R04>
Letter to Congressional Leaders on Economic Sanctions Against Libya
July 12, 1993
Dear Mr. Speaker: (Dear Mr. President:)
I hereby report to the Congress on the developments since the last
report of December 30, 1992, concerning the national emergency with
respect to Libya that was declared in Executive Order No. 12543 of
January 7, 1986. This report is submitted pursuant to section 401(c) of
the National Emergencies Act, 50 U.S.C. 1641(c); section 204(c) of the
International Emergency Economic Powers Act (``IEEPA''), 50 U.S.C.
1703(c); and section 505(c) of the International Security and
Development Cooperation Act of 1985, 22 U.S.C. 2349aa-9(c).
1. There has been one amendment to the Libyan Sanctions Regulations,
31 C.F.R. Part 550 (the ``Regulations''), administered by the Office of
Foreign Assets Control (``FAC'') of the Department of the Treasury,
since the last report on December 30, 1992. The amendment, published on
March 10, 1993, 58 Fed. Reg. 13198, added an interpretation of the
Regulations' prohibition against the exportation of services to Libya
from the United States, and a general license and statement of licensing
policy concerning the provision of certain legal services. A copy of the
amendment is attached to this report.
The prohibition against exportation of services to Libya contained
in section 550.202 of the Regulations is interpreted in new section
550.422. Services (including legal services) are considered to be
exported to Libya if their benefit is received in Libya and the services
are performed (1) in the United States; (2) by an entity located in the
United States, including its overseas branches; or (3) outside the
United States by an individual U.S. person ordinarily resident in the
United States. The benefit of services performed anywhere in the world
on behalf of the Government of Libya, including a controlled entity or
Specially Designated National of the Government of Libya, is presumed to
be received in Libya. Legal services performed by U.S. persons outside
the United States with respect to property interests of the Government
of Libya are prohibited pursuant to section 550.209, which prohibits
U.S. persons from dealing in any property (including contracts) in which
the Government of Libya has an interest. Section 550.205, which
prohibits performance by U.S. persons of any contract in support of an
industrial or other commercial or governmental project in Libya, may
also be applicable in these instances. For example, sections 550.205 and
550.209 of the Regulations, taken together, prohibit U.S. persons from
representing a foreign entity in contract negotiations, contract
performance, or arbitration with the Government of Libya. Such
representation may be authorized only by specific license from FAC.
New section 550.517 of the Regulations states that the provision of
legal services to the Government of Libya or to a person in
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Libya generally requires the issuance of a specific license, and that
the receipt of compensation for such legal services must, in all cases,
be specifically licensed by FAC. However, the provision of the following
legal services to the Government of Libya or to a person in Libya (but
not receipt of compensation for those services) is generally licensed:
(1) the provision of legal advice and counselling to the Government of
Libya or to a person in Libya on requirements of and compliance with
U.S. law, provided that such advice and counselling are not provided to
facilitate transactions in violation of the Regulations; (2)
representation of the Government of Libya or of a person in Libya when
named as a defendant in domestic U.S. legal, arbitration, or
administrative proceedings; (3) initiation of domestic U.S. legal or
administrative proceedings in defense of property interests subject to
U.S. jurisdiction of the Government of Libya that were in existence
prior to January 8, 1986, or of a person in Libya; (4) representation of
the Government of Libya or of a person in Libya before any Federal
agency with respect to the imposition, administration, or enforcement of
U.S. sanctions against Libya; and (5) provision of legal services in any
other context in which prevailing U.S. law requires access to legal
counsel at public expense. The enforcement of any judgment, decree,
attachment, or lien through execution, garnishment, or other judicial
process purporting to transfer or otherwise alter or affect a Government
of Libya property interest is prohibited unless specifically licensed.
2. During the current 6-month period, FAC made numerous decisions
with respect to applications for licenses to engage in transactions
under the Regulations, issuing 60 licensing determinations--both
approvals and denials. Consistent with FAC's ongoing scrutiny of banking
transactions, the majority of the determinations (51) concerned requests
by non-Libyan persons or entities to unblock bank accounts initially
blocked because of an apparent Libyan interest. Three determinations
involved license applications for export sales transactions from the
United States to Libya. Four determinations concerned registration of
individuals pursuant to a general license authorizing travel to Libya
for the sole purpose of visiting close family members. Finally, FAC has
also issued two licenses authorizing U.S. landlords to liquidate the
personalty of the People's Committee for Libyan Students, with the net
proceeds from the sale paid into blocked accounts.
3. During the current 6-month period, FAC has continued to emphasize
to the international banking community in the United States the
importance of identifying and blocking payments made by or on behalf of
Libya. The Office worked closely with the banks to implement new
interdiction software systems to identify such payments. As a result,
during the reporting period, more than 44 transactions involving Libya
have been blocked.
The proactive compliance programs initiated by FAC have resulted in
the imposition of substantially fewer civil penalties for banks' failure
to block payments in which an interest of the Government of Libya
exists. Since December 30, 1992, FAC has collected $140,000 in civil
penalties for violations of U.S. sanctions against Libya. Fewer than
one-third of the violations involved the failure of banks to block funds
transfers to Libyan-owned or -controlled banks, with the remainder about
equally divided between violations involving merchandise transshipment
and illegal representation of the Government of Libya.
Various enforcement actions carried over from previous reporting
periods have continued to be aggressively pursued. Several new
investigations of potentially significant violations of the Libyan
sanctions have been initiated by FAC and cooperating U.S. law
enforcement agencies. Many of these cases involved complex conspiracies
to circumvent the embargo through the use of international diversionary
shipping routes to and from Libya. For example, during the current
reporting period, a U.S. citizen was indicted for his employment as a
manager at a German oil refinery, Holborn Europa Raffinerie GmbH, which
dealt primarily in Libyan crude oil and and in which the Government of
Libya had acquired a majority ownership interest. In addition, a foreign
national and two foreign firms for whom that individual acted as agent
were indicated by a Federal grand jury for illegally transshipping
agricul-
[[Page 1325]]
tural equipment from the United States to Libya.
FAC has worked closely with the Departments of State and Justice to
identify several U.S. persons who had entered into contracts or other
agreements with the Government of Libya, or other third-country parties,
to lobby United States Government officials and to engage in public
relations work on behalf of the Government of Libya without obtaining
FAC authorization, in violation of the Regulations. In one such case,
FAC levied civil penalties totaling $35,000 against three individuals
who had engaged in such activity.
In addition, during this reporting period, FAC blocked a foreign
merchant vessel under the management and control of a Specially
Designated National of Libya, following the vessel's unauthorized entry
into a U.S. port. FAC imposed and received a civil penalty in the amount
of $10,000 from agents of the shipping company prior to authorizing
release of the vessel and its departure from the U.S. port.
FAC has continued to pursue its Operation Roadblock initiative,
issuing an additional 70 warning letters and demands for information
during the reporting period to persons believed to have travelled to and
worked in Libya, or made travel-related payments to Libya in violation
of U.S. law. To date, Operation Roadblock's ongoing investigative
efforts have resulted in one criminal conviction and several civil
penalty assessments. In addition, these investigations have yielded
substantial information concerning alleged criminal violations of the
embargo by businesses and individuals. FAC is aggressively pursuing its
investigations of such suspected violators in cooperation with other
agencies of the United States Government, including the Departments of
State and Justice, the Treasury Department's Financial Crimes
Enforcement Network (FinCEN), the Federal Bureau of Investigation, and
the U.S. Customs Service.
4. The expenses incurred by the Federal Government in the 6-month
period from January 7 through July 6, 1993, that are directly
attributable to the exercise of powers and authorities conferred by the
declaration of the Libyan national emergency are estimated at
approximately $2.7 million. Personnel costs were largely centered in the
Department of the Treasury (particularly in the Office of Foreign Assets
Control, the Office of the General Counsel, and the U.S. Customs
Service), the Department of State, and the Department of Commerce.
5. The policies and actions of the Government of Libya continue to
pose an unusual and extraordinary threat to the national security and
foreign policy of the United States. I shall continue to exercise the
powers at my disposal to apply economic sanctions against Libya fully
and effectively, so long as those measures are appropriate, and will
continue to report periodically to the Congress on significant
developments as required by law.
Sincerely,
William J. Clinton
Note: Identical letters were sent to Thomas S. Foley, Speaker of the
House of Representatives, and Albert Gore, Jr., President of the Senate.