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Shipping To Rogue States – For Dummies

In which a $15 sale becomes a $90,000 fine

Aug 20, 2014

by Alberta Venture Staff

They say it’s the little things that count. But for one Alberta company, a little thing counted for a whole lot. Lee Specialties, a Red Deer company that sells pressure control equipment and other things relevant to companies making detailed records of the geological formations being penetrated by a borehole, was fined $90,000 in April for trying to export 50 Viton O-rings, valued at 30 cents each, to a company that had affiliates in Dubai and Iran. The latter, of course, is subject to economic sanctions because of its nuclear program, and Canada’s Special Economic Measures Act prohibits the export of certain materials, like the O-rings, because their resistance to heat and radiation, although they’re more commonly used in various oilfield parts and machines. Still, the export of those rings to Iran has been prohibited since 2010, and Lee Specialties tried to ship them there in 2012. Oops.

Lisa White, the communications officer for the prairie region for the Canada Border Services Agency, says her outfit is the “first face and final eyes” for anybody in the business of exporting goods and services abroad. If people are unsure of whether they’re permitted to export a product, they ought to approach the CBSA, she says. Given the fact that an attempt to sell something for $15 ended up costing Lee Specialties $90,000 (actually $90,015, since the rings were confiscated by the CBSA at the border), it’s probably a worthwhile call to make.

But the people at Lee Specialties should take heart. After all, theirs isn’t anywhere near the most expensive mistake, in relative terms, in business history.

Lee Specialties
Sale Price $15
Fine $90,000
Return on Error (ROE) 6,000%
Excite misses on Google

In the late 1990s, the then-dominant search engine had the opportunity to buy upstart Google for $1 million. It passed. Today, Excite is limping along while Google is, well, Google.

Sale Price $1 million (potential)
Google’s value today $340 billion
ROE 339,900%
Everyone’s a winner

In 2007, a car dealership in Roswell, New Mexico, decided it would jump-start sales by mailing out 50,000 scratch tickets with a promised jackpot of $1,000. But instead of there being only one winner, the ­Atlanta-based company that printed the tickets mistakenly made them all winners of the jackpot. The company ended up offering $5 gift cards from Walmart in lieu of the jackpot it couldn’t afford to pay out.

Planned cost $1,000
Real cost $50 million (had it paid out all tickets)
ROE 49,999%

 

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