July 1993 - Volume 12, Issue 7

Drug Myopia!

How NOT to Increase Exports and Improve Relationships in the Business World . . . A Case Study

We have become a society that allows Congress, the Administration and its bureaucrats to make rules and regulations that prevent the use of common sense. More importantly, most, if not all, government employees are either afraid, or unable, to make a decision unless they have played the CMA (Cover My A**) game.

We have let the War on Drugs become a weapon to seize property on mere suspicion of wrong doing without due process. The framers of our constitution would find property seizures without due process totally against the constitution. The Supreme Court has just ruled that property seizures might be unconstitutional without due process but failed to specify any guidelines.

Drug Myopia!

Recently, a young Saudi businessman (26 years old) made his first visit to the United States to purchase used automobiles in person and to meet with his U.S. suppliers. His English is very limited.

As the plane was about to land at Dallas - Ft. Worth Airport from overseas, the flight attendant passed out the standard customs declaration form. One question asks if the passenger has over $10,000 in currency in their possession. Not understanding what constituted "currency," the visitor asked some of his fellow passengers for clarification. According to those he asked, the $125,000 of Barclays Bank travelers checks and a letter of credit issued by Barclays Bank for $150,000 were not currency. So the Saudi businessman checked No, as he was carrying only $2,900 in cash.

At immigration, the Saudi businessman presented his Customs Declaration form. When asked if he had over $10,000, he answered "No" but then said, "I have $125,000 in Barclays Bank travelers checks and a letter of credit for $150,000." He voluntarily showed the Immigration agent, a Hispanic female, the travelers checks and letter of credit. Technically, by answering No, the law had been broken. Whether he really understood the definition of currency can be debated. (Especially since currency is defined as "the money in circulation in a country.") However, he had not attempted to hide anything from the Immigration agent, and, of course, he was nervous about entering the country for the first time.

A Failure of Communications . . . Spanish is not Arabic.

The Immigration agent then called a supervisor, another Hispanic female. Following a two-hour interrogation (which the Saudi characterized as difficult as the language barrier was almost insurmountable), the Hispanic Immigration supervisor decided to arrest the Saudi for falsification of the Customs form. She called a Customs agent to make the arrest and to seize the entire amount of cash, travelers checks and the letter of credit from the Saudi. (According to a source inside the Customs Department, the amount of property obtained by seizure is an important component of an INS supervisors or agents personnel review.)

The Saudi requested an interpreter be found among the people awaiting his arrival. Finally, after two hours, his host, an American citizen of Middle Eastern descent, was informed of the reason for his friend's delay in clearing customs. The host then tried to explain the Saudi's difficulty with the language and that the host had business dealings with his customer for many years. After a long discussion with the Customs agent, the Saudi businessman was released. However, Customs only allowed the Saudi businessman to keep $500 of his cash and declared the remaining $2,400 and the $125,000 in travelers checks forfeited as the Immigration supervisor had written a formal complaint.

After hearing about this injustice, several Dallas area businessmen volunteered to assist. To begin, a multi-page document was filed with Customs seeking the return of the funds. Customs responded by asking for verification of the source of the money and suggested that copies of the Saudi's income tax returns were needed to prove the source of income. But Saudi Arabia has no income tax. However, the Saudi Arabian embassy provided Customs with written assurance that the businessman had been in the auto import business in Riyadh for several years.

The Saudi bank from which the travelers checks and letters of credit were obtained also faxed Customs documentation showing that the funds had been withdrawn from his business accounts. Customs then declared that the money could still be used to purchase drugs and that the auto business was just a cover. The penalty for drug dealing in Saudi Arabia is death. What's the penalty for stupidity by Customs agents? Talk about drug myopia!

Calls to our Elected Officials aren't really effective ... after all, they wrote the laws!

The Dallas businessmen also asked their U.S. Representative and Senators to make inquiries of Customs. While Customs officials became more cordial to the Saudi businessman and his U.S. advocates after those inquires were made, they were unwilling to admit that a mistake had been made without pounds of paper being submitted.

Finally, after 10 days of local and long-distance phone calls and faxed communications at no small expense from Dallas and Houston to Washington and Saudi Arabia, personal visits, filling out forms and meeting demands for additional data, a Customs supervisor said that if only one more letter was written, the funds would be released back to the Saudi businessman. The letter was prepared, faxed and hand-delivered to the Customs department supervisor. After 24 hours, the Customs department supervisor said that he had made a mistake. All forfeitures in excess of $100,000 had to be sent to Washington, D.C. for approval prior to being returned to the party from whom the funds had been seized. One might wonder if the Customs Department supervisor had ever read the Policy & Procedures Manual of the Customs Department!

The Washington Maze ..

Four days after the packet was sent to the Penalties, Fines and Forfeitures office of Customs in Washington, no one could find the actual packet. Attempts to determine the status found that the office where the packet was sent is located 10 blocks from the PF&F office and it often takes weeks to just log the material in before being distributed to PF&F. If, and when, PF&F gets the data, someone might be assigned to the case and if lucky, another two weeks could be spent before a finding might be determined by a lawyer in PF&F. Seems as if they have hundreds, if not thousands, of these cases and the amount of money seized in the Saudi's case is just not material. Seems government loses billions per day, so they only work(?) a 40 hour week including breaks.

The PF&F spokesperson's attitude seemed to be . . . "Take a number and call back in a couple of weeks and we will see if someone has found the packet." . . . And don't call after 4:30 p.m.

A Week Later

After several phone calls over a period of a week, a lawyer was finally located in the PF&F section at Customs who stated that he had been assigned the file but was going out of the country the following week and could not get on the case until he returned. However, he was persuaded to have the case reassigned.

Several days later, another lawyer in PF&F was found who had been assigned the case and stated that he would try to get a decision shortly.

Bad Advice from the Saudi Bank to their client!

The Saudi had contacted his bank in Riyadh immediately after being released to inform the bank of the confiscation of his $125,000 in travelers checks. A bank officer told him to call the Visa office in London and provided him the number and carefully coached him on what to say. According to the bank officer, Visa should be informed that the checks had been stolen by a cab driver. Barclays would then replace the travelers checks.

As the Saudi's English was very limited, an American friend representing the Saudi actually made the call to London and told the Visa people the story provided by the Saudi bank. The American friend did so on the basis that travelers checks are not currency. Unfortunately, this action could have caused the Saudi to be arrested for bank fraud if and when Customs decided to return the checks. According to the small print in the travelers check contract, they become negotiable if a government seizes them and notifies the issuing bank.

When this was pointed out to the Saudi, the Saudi did not fill out the forms to officially notify Barclays of the loss as suggested by his banker.

The decision of PF&F

The PF&F lawyer and the Acting Chief of the Penalties Branch finally rendered a decision:

"The evidence of record indicates that the petitioner did not declare the subject monetary instruments, i.e., $125,000 in traveler's checks and $2,900 in currency. The record indicates that the petitioner declared that he was carrying $125. We further find that the following two aggravating factors are present. First, the record indicates that the petitioner has experience in travel or business which would necessarily result in exposure to monetary instruments reporting requirements; in this regard, the record includes a letter from the Royal Embassy of Saudi Arabia in Washington, D.C. stating that the petitioner is very well-known as a businessman to officials at that embassy. Second, the record indicates an extreme lack of cooperation on the part of petitioner. This lack of cooperation includes the fact that the petitioner informed the company which issued the traveler's checks that the checks had been stolen from him. The petitioner was prepared to sign an affidavit attesting to this claim in order to receive a refund in the amount of the seized traveler's checks.
Based upon these findings, and pursuant to the applicable mitigation guidelines, we determine that the seizure is remitted upon the payment of $35,812, which is 28 percent of the amount seized."

The Hold Harmless Agreement

The above agreement was transmitted to the District Director in Dallas who then informed the Saudi of the fine. He could receive his money back less the $35,812 by signing a Hold Harmless agreement preventing him from trying to get the fine back. Or he could continue the appeal process and possibly wait years.

The Saudi's decision

After twenty four hours, the Saudi decided to pay the fine of $35,812 and get on the first plane back to Riyadh vowing never to return to the US nor to purchase any more vehicles from his Dallas sources!

The result of the $35,812 fine.

Customs added $35,812 to its collection coffers. However, the Dallas and U.S. economy has lost over $2,000,000 a year in exports from just this one businessman. How much more when he returns home to tell the story, we'll never know!

How not to promote International Business and Tourism . . . and Forget about Trade Missions!

The bad publicity which this episode will garner and the adverse impact upon our balance of payments will surely outweigh any amount the government gains by forfeiting the Saudi's funds. Imagine how many times this story will be told throughout the Middle East as an example of our hospitality to first time visitors. Just come to the US and the government will seize all your money! Great for business, don't you think!

We can send trade missions all over the world to try to increase exports. We can negotiate GATT agreements, NAFTA treaties, etc., to end trade barriers and improve trade with foreign governments, firms and individuals. But in the final analysis, what really counts is how you treat people in business!

Ask yourself this question . . . if you were treated like this by the Immigration and Customs agents of a foreign country, would you want to continue to trade with them?

You are right . . . and neither would I!

But then - - 'Tis Only My Opinion!

Fred Richards
July 1993

This issue of 'Tis Only My Opinion was copyrighted by Adrich Corporation in July 1993.

It is intended to provoke thinking, then dialogue among its readers. Quotation with attribution is encouraged.

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Last updated - July 3, 2008