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In the interests of accuracy, the summaries of cases referred to under each Red Flag are based wherever possible on the available court documents or other public legal sources.

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6. Trading goods in violation of international sanctions

A company may be held liable for buying, selling or transporting products, commodities or assets originating from or going to a country, group or individual under international sanctions. The most common embargo is on arms, but increasingly sanctions are imposed on specific commodities, such as diamonds, timber, and on financial assets.

Article 41 of the United Nations Charter authorizes the Security Council to impose measures to maintain or restore international peace and security and may require Members States of the U.N. to “apply” such measures including targeted sanctions. Pursuant to Article 25 of the Charter, Member States agree to accept and carry out Security Council decisions. Violations of UN sanctions could therefore be subject to domestic enforcement, potentially in the state of the nationality of the offender or states where the violations occur.

Sanctions Due Diligence

Case 6.1 The Netherlands v van Kouwenhoven

In 2006, a Dutch court convicted a Dutch businessman Guus van Kouwenhoven of violating UN sanctions. This conviction was overturned on appeal in March 2008.

The case was based on the defendant’s time as Director of Operations of the Oriental Timber Company (OTC) and of the Royal Timber Company (RTC) in Liberia, the biggest timber operations in Liberia. It was alleged that while serving in these positions van Kouwenhoven had close ties with Charles Taylor and facilitated the import of arms for Taylor in contravention of UN Security Council resolutions. The United Nations Security Council had issued an order in 2001 banning van Kouwenhoven from traveling, qualifying him as “an arms trafficker in breach of Resolution 1343 of the Security Council” in addition to being “someone who supported the efforts of ex-President Taylor in destabilizing Sierra Leone to gain illegal access to its diamonds”. He was placed on the international ‘freeze list’ requiring banks to block his assets. Van Kouwenhoven was arrested in the Netherlands on March 18, 2005.

According to the prosecution “the militias hired by the former timber companies belonging to this Dutchman, are accused of participating in the massacre of civilians...Guus van Kouwenhoven is accused of having supplied the arms to the militias to enable them to carry out these crimes” (translation from Dutch).

The defendant was charged with the following offences:
Complicity in War Crimes: “The charges refer to a number of actions that have been penalized under the Criminal Law in Wartime Act (of the Netherlands) …(and )...articles 47 (complicity) and 57 of the Penal Code;”

Sanctions violations: Economic Offenses Act…articles 1, opening lines and under 2° (old), 1, opening lines and under 1°, 2 and 6 of the; articles 2 (old), 2, 3 (old), 3 and 13 of the Sanctions Act 1977;

Sanctions violations: Article 2 of the Liberian Sanctions Regulations 2001 of The Netherlands;

Sanctions violations: Article 2 of the Liberian Sanctions Regulations 2002 of the Netherlands;

Arms trafficking: ML1 and ML2 of the Schedule to the Import and Export Decree on Strategic Goods.

On June 7, 2006, the Dutch court acquitted van Kouwenhoven of the charges of war crimes. However, he was sentenced to an 8-year prison term, for having violated the UN arms embargo on Liberia. Both prosecution and defense appealed and on March 19, 2007, van Kouwenhoven was conditionally released pending his appeal. The appeal restuled in his acquittal in March 2008.

Sources for this summary

Trial decision “Court Document LJN: AY5160, Rechtbank-Gravenhage , 09/750001-05 English translation”

Trail Watch : Guus van Kouwenhoven

Victor Bout Extradited to U.S.
Victor Bout has been extradited to the U.S. to face charges of allegedly selling weapons to an organization on a U.S. anti-terrorism list. Bout spent two years in a maximum security prison while Russia and the U.S. fought a legal and diplomatic the tug of war in a Thai courtroom. For background see this report the BBC's "From Our Own Correspondent". For more detailed background info see this collection of documents from The Hague Justice Portal. See also this report from August 2010 by Al Jazeera English .
Conflict Minerals Law Passed in U.S.
A new U.S. law requires publicly traded companies to disclose to the SEC whether their products contain gold, tin, tungsten or tantalum from Congo or adjacent countries. If so, they have to describe what measures they are taking to trace the minerals' origin. The State and Treasury departments are examining the possibility of future sanctions against U.S. companies that use "conflict minerals."
US Military Paying Protection Money in Afghanistan
Private companies sub-contracted to the Pentagon are allegedly "paying millions of dollars in protection money to Afghan warlords, and potentially to the Taliban, to secure convoys carrying supplies to U.S. troops in Afghanistan", congressional investigators said in a report.
Governments Must Remove Barriers to Corporate Accountability says new report
A report out this week from Fafo, Amnesty International, and the Norwegian Peacebuilding Centre identifies obstacles to judicial remedies for business involvement in human rights abuses and sets out a series of reforms. The report argues governments need to take urgent action.
Dutch Supreme Court orders van Kouwenhoven re-trial
The Dutch Supreme Court has ruled that appeals judges erred when they threw out the case against the former head of the Oriental Timber Company, Guus van Kouwenhoven. The Supreme Court ruled that the appeals court should have allowed the prosecution's request to hear the evidence of two new witnesses in the case which involves arms deals in connection with Charles Taylor's regime in Liberia.
Former Blackwater President Charged in the U.S.
The former president of the US private security firm, Blackwater Worldwide, and four other former workers have been indicted under U.S. federal weapons laws that prohibit trading and stockpiling in small arms.
Rogue Aircraft Ferrying Cocaine and Guns Between Latin America and Africa
A U.S. Homeland Security report obtained by Reuters claims that a a growing fleet of "rogue jet aircraft" has been regularly crisscrossing the Atlantic Ocean carrying cocaine and guns between areas in the Andes controlled by the leftist Revolutionary Armed Forces of Colombia to some of West Africa's most unstable countries. The report alleges a connection to Al Qaida in Africa.
Wood Products Multinational in Court over allegations of Funding Liberia's War
Campaigning organizations have lodged a complaint in France against leading international timber company Dalhoff, Larsen and Horneman (DLH) alleging that "during the civil war in Liberia from 2000-2003, DLH brought timber from Liberian companies that provided support to Charles Taylor's brutal regime."
Victor Bout in Extradition Battle
Arms and transport broker Victor Bout is at the centre of a Russia-U.S. tug of war, with U.S. lawmakers demanding his extradition and Russia protesting strongly.
EU adds Companies to Zimbabwe Sanctions List
"More than 60 individuals and firms with links to Mr Mugabe have been added to a list of those banned from travelling to the EU or doing business there. Those on the sanctions list are suspected of having links to human rights abuses in Zimbabwe." The BBC reports

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