[Federal Register Volume 74, Number 56 (Wednesday, March 25, 2009)]
[Notices]
[Pages 12836-12839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-6607]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Action Affecting Export Privileges; Balli Group PLC; Balli 
Aviation; Balli Holdings; Vahid Alaghband; Hassan Alaghband; Blue Sky 
One Ltd.; Blue Sky Two Ltd.; Blue Sky Three Ltd.; Blue Airways; Mahan 
Airways; Blue Airways FZE

    In the matter of:

Balli Group PLC, 5 Stanhope Gate, London, UK, W1K 1AH;
Balli Aviation, 5 Stanhope Gate, London, UK, W1K 1AH;
Balli Holdings, 5 Stanhope Gate, London, UK, W1K 1AH;
Vahid Alaghband, 5 Stanhope Gate, London, UK, W1K 1AH;
Hassan Alaghband, 5 Stanhope Gate, London, UK, W1K 1AH;
Blue Sky One Ltd., 5 Stanhope Gate, London, UK, W1K 1AH;
Blue Sky Two Ltd., 5 Stanhope Gate, London, UK, W1K 1AH;
Blue Sky Three Ltd., 5 Stanhope Gate, London, UK, W1K 1AH;
Blue Airways, 8/3 D Angaght Street, 376009 Yerevan, Armenia;
Mahan Airways, Mahan Tower, No. 21, Azadegan St., M.A. Jenah Exp. 
Way, Tehran, Iran; Respondents;

and

Blue Airways FZE, a/k/a Blue Airways, G22 Dubai Airport 
Free Zone, P.O. Box 393754 DAFZA, Dubai, UAE;
Blue Airways, Riqa Road, Dubai 52404, UAE; Related Persons.

Order Renewing Order Temporarily Denying Export Privileges

    Pursuant to Section 766.24 of the Export Administration 
Regulations, 15 CFR Parts 730-774 (2008) (``EAR'' or the 
``Regulations''), I hereby grant the request of the Bureau of Industry 
and Security (``BIS'') to renew for 180 days the Order Temporarily 
Denying the Export Privileges of Respondents Balli Group PLC, Balli 
Aviation, Balli

[[Page 12837]]

Holdings, Vahid Alaghband, Hassan Alaghband, Blue Sky One Ltd., Blue 
Sky Two Ltd., Blue Sky Three Ltd., Blue Airways and Mahan Airways 
(collectively, ``Respondents'') and Blue Airways FZE and Blue Airways 
(collectively the ``Related Persons''), as I find that renewal of the 
TDO is necessary in the public interest to prevent an imminent 
violation of the EAR. However, I do not renew the TDO against Blue Sky 
Four Ltd., Blue Sky Five Ltd., and Blue Sky Six Ltd., who were each 
Respondents in the initial TDO and the September 17, 2008 Renewal 
Order.

I. Procedural History

    On March 17, 2008, the Assistant Secretary of Commerce for Export 
Enforcement (``Assistant Secretary'') signed an Order Temporarily 
Denying the Export Privileges of Balli Group PLC, Balli Aviation, Balli 
Holdings, Vahid Alaghband, Hassan Alaghband, Blue Sky One Ltd., Blue 
Sky Two Ltd., Blue Sky Three Ltd., Blue Sky Four Ltd., Blue Sky Five 
Ltd., Blue Sky Six Ltd., Blue Airways and Mahan Airways for 180 days on 
the grounds that its issuance was necessary in the public interest to 
prevent an imminent violation of the Regulations (``TDO''). The TDO was 
issued ex parte pursuant to Section 766.24(a), and went into effect on 
March 21, 2008, the date it was published in the Federal Register. On 
July 18, 2008, the Assistant Secretary issued an Order adding Blue 
Airways FZE and Blue Airways, both of Dubai, United Arab Emirates, as 
Related Persons to the TDO in accordance with Section 766.23 of the 
Regulations.\1\ On September 17, 2008, the TDO was renewed for an 
additional 180 days in accordance with Section 766.24 of the 
Regulations, and was effective upon issuance.\2\ The TDO would expire 
on March 16, 2009, unless renewed in accordance with Section 766.24 of 
the Regulations.
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    \1\ The Related Persons Order was issued in accordance with 
Section 766.23 of the Regulations, 15 CFR Sec.  766.23, and was 
published in the Federal Register on July 24, 2008.
    \2\ The September 17, 2008 Renewal Order was published in the 
Federal Register on October 1, 2008.
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    On February 24, 2009, BIS, through its Office of Export Enforcement 
(``OEE''), filed a written request for renewal of the TDO against each 
of the Respondents and Related Persons for an additional 180 days, and 
served a copy of its request on the Respondents and Related Persons in 
accordance with Section 766.5 of the Regulations. On the evening of 
March 9, 2009, Balli Group PLC, Balli Aviation, Balli Holdings, Vahid 
Alaghband, Hassan Alaghband, Blue Sky One Ltd., Blue Sky Two Ltd., Blue 
Sky Three Ltd., Blue Sky Four Ltd., Blue Sky Five Ltd., and Blue Sky 
Six Ltd. (collectively, ``Balli'' or the ``Balli Respondents'') 
submitted an opposition to the renewal request. As part of its 
opposition, the Balli Respondents submitted a request for a copy of the 
TDO renewal request exhibits. On March 12, 2009, I issued an Order 
granting discovery to the Balli Respondents of a copy of all of the 
exhibits referenced in OEE's renewal request, and a copy of the 
exhibits was provided to Balli that same day. No opposition to renewal 
of the TDO was received from Respondents Blue Airways or Mahan Airways.

II. Discussion

A. Legal Standard

    Pursuant to section 766.24(d)(3) of the EAR, the sole issue to be 
considered in determining whether to continue a TDO is whether the TDO 
should be renewed to prevent an ``imminent'' violation of the EAR as 
defined in Section 766.24. ``A violation may be 'imminent' either in 
time or in degree of likelihood.'' 15 CFR 766.24(b)(3). BIS may show 
``either that a violation is about to occur, or that the general 
circumstances of the matter under investigation or case under criminal 
or administrative charges demonstrate a likelihood of future 
violations.'' Id. As to the likelihood of future violations, BIS may 
show that ``the violation under investigation or charges is 
significant, deliberate, covert and/or likely to occur again, rather 
than technical and negligent[.]'' Id. A ``lack of information 
establishing the precise time a violation may occur does not preclude a 
finding that a violation is imminent, so long as there is sufficient 
reason to believe the likelihood of a violation.'' Id.

B. The TDO and BIS's Request for Renewal

    OEE's request for renewal of the TDO was based upon the facts 
underlying the issuance of the initial TDO, as well as evidence 
developed over the course of this investigation indicating a clear 
willingness on the part of the Balli Respondents to disregard U.S. 
export controls and engage in a pattern of false and deceptive 
statements. The initial TDO was issued as a result of evidence that 
showed that the Respondents engaged in conduct prohibited by the EAR by 
knowingly re-exporting to Iran three U.S.-origin aircraft, specifically 
Boeing 747s (``Aircraft 1-3''), items subject to the EAR and classified 
under Export Control Classification Number (``ECCN'') 9A991.b, without 
the required U.S. Government authorization. Further evidence submitted 
by BIS indicated that Respondents were attempting to re-export three 
additional U.S.-origin Boeing 747s to Iran (``Aircraft 4-6''), and had 
ignored a re-delivery order for these additional three aircraft issued 
by BIS in accordance with Section 758.8(b) of the Regulations.
    As more fully discussed in the September 17, 2008 TDO Renewal 
Order, evidence presented with BIS's August 28, 2008 renewal request 
and Balli's September 10, 2008 opposition and ``supplemental 
disclosure'' indicated that Aircraft 1-3 continued to be flown on Mahan 
Airways' routes after issuance of the TDO, in violation of the 
Regulations and the TDO itself.\3\ It also showed that Aircraft 1-3 had 
been and continued to be flown in further violation of the Regulations 
and the TDO on the routes of Iran Air, an Iranian Government airline. 
The Balli Respondents also made unsubstantiated and unpersuasive 
assertions concerning their level of knowledge of the potential 
unlawfulness of their actions, including long denying any involvement 
by Mahan Airways with Aircraft 1-3 and ignoring warnings from both BIS 
and Boeing concerning their lease and operation, and concerning their 
level of cooperation with BIS and efforts to recover the aircraft.
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    \3\ Engaging in conduct prohibited by a denial order violates 
the Regulations. 15 CFR 764.2(a) and (k).
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    At the time of the TDO, the Balli Respondents had failed to produce 
any documents concerning payments for the leases of Aircraft 1-3, which 
Balli maintained only involved Blue Airways. As part of its renewal 
request, OEE has presented evidence that the Aircraft 1-3 were financed 
by Mahan Air and evidence of contracts between Balli and Mahan Airways 
regarding the acquisition and operation of the aircraft that were 
signed by Balli's Chief Executive Officer (``CEO'') Hassan Alaghband. 
OEE has also produced documents showing that more than one Iranian bank 
was used by the Respondents to facilitate the transaction. OEE argues 
that the contracts and agreements between Balli and Mahan Airways 
provide further evidence of Mahan's involvement with the lease and 
operation of Aircraft 1-3, as well as the false and misleading nature 
of multiple statements by Balli during this investigation that it had 
no knowledge its actions were in violation or potential violation of 
the Regulations and that it was unaware of Mahan's role in the 
acquisition and use of the aircraft.

[[Page 12838]]

    As noted above, OEE also is requesting the TDO be renewed against 
Blue Airways and Mahan Airways based on their participation in the 
violations discussed in the initial and renewed TDOs, as well as 
additional unlawful actions since the TDO was renewed on September 17, 
2008. Specifically, in October 2008, Mahan Airways and Blue Airways 
deregistered Aircraft 1-3 from the Armenian civil aircraft registry and 
subsequently registered the aircraft in Iran. The aircraft have been 
relocated to Iran and have been issued Iranian tail numbers, including 
EP-MNA and EP-MNB, and continue to be operated on Mahan Airway flights 
in violation of the Regulations and the TDO.
    On February 10, 2009, almost one year after the initial TDO was 
issued, the Balli Respondents for the first time acknowledged the 
existence of a side letter agreement between Balli, Mahan Airways and 
other parties which included certain drafted and undated bills of sales 
allowing ownership of Aircraft 1-3 to be transferred to Mahan Airways. 
However, this partial acknowledgment, contained in one of Balli's court 
filings in the United Kingdom, fails to explain the full scope and 
involvement of Mahan Airways in this transaction.

C. The Respondents' Opposition to the Renewal Request

    The Balli Respondents, through counsel, oppose renewal of the TDO 
on three grounds: (1) None of the six aircraft\4\ in the initial TDO 
are currently subject to the control of the Balli Respondents, and 
specifically that Aircraft 1-3 ``were subject to unauthorized release 
by Blue Airways and conversion in October 2008, as set forth in 
documents submitted to OEE investigators on February 10, 2009[,]'' 
Balli Opposition, at 3; (2) Balli is engaged in on-going efforts to 
produce documents and information requested by OEE; and (3) Balli is 
engaged in on-going litigation in the United Kingdom against Blue 
Airways and Mahan Airways regarding ownership and possession of the 
aircraft.
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    \4\ The record indicates that Aircraft 4-6 have been repossessed 
by the lender. This information is only relevant to Respondents Blue 
Sky Four Ltd., Blue Sky Five Ltd. and Blue Sky Six Ltd.
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D. Findings

    In determining whether to renew the TDO in order to prevent 
imminent violation of the Regulations, I have reviewed the entire 
record, including OEE's and Balli's current and prior submissions and 
related evidence. I find that violations of the Regulations have 
occurred and continue to occur involving the unlicensed re-export of 
Aircraft 1-3 to Iran. Moreover, Aircraft 1-3 are currently located in 
Iran and are registered and/or operated by the Respondents in violation 
of the Regulations and the TDO. In addition, the Balli Respondents have 
engaged in a repeated pattern of making false and deceptive statements 
to BIS in order to both conceal the true nature of their activities and 
to seek termination of the TDO against them. Contrary to Balli's 
previous submissions and efforts to mislead BIS, OEE's investigation 
has obtained evidence that Balli was dealing directly with Mahan 
Airways officials to obtain financing and to negotiate and enter 
agreements pertaining to the purchase and lease of three Boeing 747 
aircraft (Aircraft 1-3). Moreover, the record shows that more than one 
Iranian bank was used by Balli and Mahan Airways to transfer funds for 
the acquisition of the aircraft.
    This evidence directly calls into doubt the veracity of prior 
submissions by the Balli Respondents to the Assistant Secretary and 
BIS. For example, by letter dated October 10, 2007, BIS warned Balli, 
via its English counsel, that ``[i]t has come to BIS's attention there 
is evidence that during this lease agreement Blue Airways operated the 
three 747s aircraft by or for the benefit of an Iranian entity, 
specifically Mahan Air.'' Despite the fact that Balli Respondent and 
CEO Hassan Alaghband signed contracts with Mahan Airways in May of 
2007, Balli stated in its September 10, 2008 submission that the Balli 
Respondents had ``failed to focus on the underlying substantive legal 
concerns associated with Boeing and BIS communications,'' because they 
believed they were targets of a ``disinformation campaign'' 
orchestrated by ``Iranian expatriate groups that have a long history of 
hostility to Balli interests and the Alaghband family[,]'' including 
``militant opposition groups hostile to Iran, including the Mujahedin-
e-Khalq.'' BIS and Boeing's communications involved warnings to Balli 
that the aircraft were being operated in violation of the Regulations 
and were being flown by or for the benefit of Mahan Airways. Balli's 
production of requested documents and information has been delayed, 
limited and halting at best, and its repeated pattern of false and 
misleading statements further undermines its assertions concerning 
complete, good faith cooperation with BIS.
    Balli's opposition asserts that Aircraft 1-3 ``were subject to 
unauthorized release by Blue Airways and conversion in October 2008, as 
set forth in documents submitted to OEE investigators on February 10, 
2009.'' Balli Opposition, at 3. Balli also has asserted that Blue 
Airways and Mahan Airways ``have previously fabricated documents--in 
the offices of Mahan Airlines in Teheran, Iran--which were used to 
unlawfully effect transfer of control of the subject aircraft for use 
in Iran.'' Id., at 2. These assertions feed into the Balli Respondents' 
remaining arguments that the TDO should be terminated against them on 
the grounds that they no longer control Aircraft 1-3 and are litigating 
with those entities in England, with an expected July 2009 trial date.
    I find Balli's argument that it is currently in litigation against 
Mahan Airways and Blue Airways in England to be an unpersuasive and 
insufficient basis to terminate the TDO against Balli, particularly in 
light of recent evidence that, contrary to prior statements and 
submissions to BIS and the Assistant Secretary, Balli negotiated 
directly with Mahan Air regarding the financing and operation of the 
aircraft. However, I find based upon the entire record before me, 
including submissions from OEE and Balli, that Aircraft 4-6 have been 
physically and legally repossessed by the lender, which is not a 
respondent in this action. Therefore, the TDO shall not be renewed as 
to Respondents Blue Sky Four Ltd., Blue Sky Five Ltd., and Blue Sky Six 
Ltd.
    Unlike the facts involving Aircraft 4-6, Balli's argument based on 
the asserted ground that Aircraft 1-3 are not currently under its 
control due to the alleged conversion--which Balli asserts resulted (as 
referenced above) in the transfer of control of the subject aircraft 
``for use in Iran''--is unpersuasive and insufficient. Although the 
Balli Respondents refused until September 10, 2008, to admit or 
acknowledge Mahan Airway's involvement, the record indicates that 
Aircraft 1-3 were already in use in Iran under the leases between Balli 
and, at least nominally, Blue Airways. Moreover, the record before me 
contains evidence indicating that the Balli Respondents knowingly 
arranged for the financing of the aircraft with Mahan Airways. This 
evidence may well explain why the Balli Respondents were unable to 
produce evidence demonstrating any lease payments by Blue Airways. In 
any event, the fact that Balli is now involved in an apparent 
contractual dispute with its co-conspirators involving items re-
exported in violation of the Regulations is simply not a proper basis 
to let the TDO expire, especially in light of Balli's pattern of false 
and misleading statements to BIS.

[[Page 12839]]

    I have considered all of Balli's arguments and with the exception 
of the argument involving Aircraft 4-6 find them without merit. I find 
that the evidence presented by BIS convincingly demonstrates that the 
Respondents have violated the EAR and the TDO involving re-exports of 
aircraft to Iran, that such violations have been significant, 
deliberate and covert, and that there is a likelihood of future 
violations. As such, a TDO is needed to give notice to persons and 
companies in the United States and abroad that they should continue to 
cease dealing with the Respondents in export transactions involving 
items subject to the EAR. Such a TDO is consistent with the public 
interest to prevent or preclude violations of the EAR.
    Accordingly, I find pursuant to Section 766.24, that renewal of the 
TDO for 180 days against Balli Group PLC, Balli Aviation, Balli 
Holdings, Vahid Alaghband, Hassan Alaghband, Blue Sky One Ltd., Blue 
Sky Two Ltd., Blue Sky Three Ltd., Blue Airways and Mahan Airways and 
both Related Persons is necessary in the public interest to prevent an 
imminent violation of the EAR.

III. Order

    It is therefore ordered:
    First, that the Respondents, BALLI GROUP PLC, 5 Stanhope Gate, 
London, UK, W1K 1AH; BALLI AVIATION, 5 Stanhope Gate, London, UK, W1K 
1AH; BALLI HOLDINGS, 5 Stanhope Gate, London, UK, W1K 1AH; VAHID 
ALAGHBAND, 5 Stanhope Gate, London, UK, W1K 1AH; HASSAN ALAGHBAND, 5 
Stanhope Gate, London, UK, W1K 1AH; BLUE SKY ONE LTD., 5 Stanhope Gate, 
London, UK, W1K 1AH; BLUE SKY TWO LTD., 5 Stanhope Gate, London, UK, 
W1K 1AH; BLUE SKY THREE LTD., BLUE AIRWAYS, 8/3 D Angaght Street, 
376009 Yerevan, Armenia; and MAHAN AIRWAYS, Mahan Tower, No. 21, 
Azadegan St., M.A. Jenah Exp.Way, Tehran, Iran (each a ``Denied 
Person'' and collectively the ``Denied Persons''), and BLUE AIRWAYS 
FZE, a/k/a Blue Airways, G22 Dubai Airport Free Zone, P.O. Box 
393754 DAFZA, Dubai, United Arab Emirates and BLUE AIRWAYS, Riqa Road, 
Dubai 52404, United Arab Emirates (each a ``Related Person'' and 
collectively the ``Related Persons'') may not, directly or indirectly, 
participate in any way in any transaction involving any commodity, 
software or technology (hereinafter collectively referred to as 
``item'') exported or to be exported from the United States that is 
subject to the Export Administration Regulations (``EAR''), or in any 
other activity subject to the EAR including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the EAR, or in any other activity 
subject to the EAR; or
    C. Benefiting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the EAR, or in any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of the Denied Persons or 
Related Persons any item subject to the EAR;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the Denied Persons or Related Persons of the ownership, 
possession, or control of any item subject to the EAR that has been or 
will be exported from the United States, including financing or other 
support activities related to a transaction whereby the Denied Persons 
or Related Persons acquires or attempts to acquire such ownership, 
possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the Denied Persons or Related Persons of 
any item subject to the EAR that has been exported from the United 
States;
    D. Obtain from the Denied Persons or Related Persons in the United 
States any item subject to the EAR with knowledge or reason to know 
that the item will be, or is intended to be, exported from the United 
States; or
    E. Engage in any transaction to service any item subject to the EAR 
that has been or will be exported from the United States and which is 
owned, possessed or controlled by the Denied Persons or Related 
Persons, or service any item, of whatever origin, that is owned, 
possessed or controlled by the Denied Persons or Related Persons if 
such service involves the use of any item subject to the EAR that has 
been or will be exported from the United States. For purposes of this 
paragraph, servicing means installation, maintenance, repair, 
modification or testing.
    Third, that, after notice and opportunity for comment as provided 
in section 766.23 of the EAR, any other person, firm, corporation, or 
business organization related to any of the Denied Persons by 
affiliation, ownership, control, or position of responsibility in the 
conduct of trade or related services may also be made subject to the 
provisions of this Order.
    Fourth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the EAR where the only items involved that 
are subject to the EAR are the foreign-produced direct product of U.S.-
origin technology.
    In accordance with the provisions of Section 766.24(e) of the EAR, 
the Respondents may, at any time, appeal this Order by filing a full 
written statement in support of the appeal with the Office of the 
Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40 
South Gay Street, Baltimore, Maryland 21202-4022.
    In accordance with the provisions of Section 766.24(d) of the EAR, 
BIS may seek renewal of this Order by filing a written request not 
later than 20 days before the expiration date. The Respondents may 
oppose a request to renew this Order by filing a written submission 
with the Assistant Secretary of Commerce for Export Enforcement, which 
must be received not later than seven days before the expiration date 
of the Order.
    A copy of this Order shall be served on the Respondents and the 
Related Persons and shall be published in the Federal Register.

    This Order is effective immediately and shall remain in effect 
for 180 days.

    Entered this 16th day of March 2009.
Kevin Delli-Colli,
Acting Assistant Secretary of Commerce for Export Enforcement.
 [FR Doc. E9-6607 Filed 3-24-09; 8:45 am]
BILLING CODE 3510-DT-P