Legal questions swirl over imports from Serbia
Joseph Madrigrano’s voice was full of emotion when he addressed a July 8 hearing of the Small Business Administration’s Regulatory Fairness Board.
Madrigrano, president of Triangle Wholesale Beer Co., a Racine-based distributor of beer, wine and liquor, had reason to be upset. Madrigrano had been forbidden for more than a year from selling the contents of $160,000 in shipments of imported plum brandy – also known as slivovitz — that had entered the country between 1998 and 2000.
On July 21, 2001, a division of the U.S. Treasury Department — the Office of Foreign Assets Control (OFAC) — embargoed the shipments.
The brandy now languishes in Madrigrano’s warehouse, its fate in the hands of OFAC, an agency currently burdened with enforcing many of the import security measures resulting from the terrorist attacks of Sept. 11.
To date, Madrigrano is out $50,000 in profits — not counting interest on the value of the 950 cases of Manastirka and Zuta Osa brandy.
"We are going to lose the agency for these brands," Madrigrano said. "These people in Yugoslavia don’t like any trouble."
An official of the U.S. Customs Service was at the hearing, which was intended to allow small businesspeople to air grievances about excessive regulatory interference, and promised to look into the matter. He did call Madrigrano back a week after the proceedings, promising answers, but to date, Madrigrano has not received any.
The answers might be hard to come by, as, according to OFAC officials, there is an open investigation into the brandy’s country of origin.
Musical sanctions
Zuta Osa and Manastirka are manufactured by companies located in what is now the Federated Republic of Yugoslavia. Zuta Osa is located in Serbia, while Prokupac, manufacturer of the Manastirka brand brandy, has facilities in both Serbia and Montenegro.
According to a public affairs liaison with the Chicago office of the U.S. Customs Service, OFAC has an open investigation into whether the brandy was intentionally mislabeled to avoid sanctions that had been in place against Serbia.
However, Madrigrano and the brandy’s Yugoslavian manufacturer insist the shipments in question originated in Montenegro, and therefore did not violate any sanctions.
U.S. Rep. Paul Ryan’s office has struck out in its efforts to sort through the red tape of the issue. A Ryan staffer said OFAC expressed concern over the fact that the shipment came through customs in New York rather than in the customs ports of Chicago, Racine, Kenosha or Milwaukee.
Cherice Miles of the Chicago U.S. Customs Service office stressed that the problem stemmed from the fact that the brandy did not come from where the label said it did.
"According to our Office of Investigations, the investigation under way involved false labeling to suit the sanctions," Miles said. "Serbian Brandy is widely known as a good brandy. There was an issue with the brandy in that it was labeled as being from Montenegro. Then it changed back to Serbia when the sanctions changed."
Miles could not say whether it was the Manastirka brandy or the Zota Osa brandy, or both, that were in violation. Nor could she explain what sanctions were being violated, since, according the U.S. Treasury Department documentation, trade with both Serbia and Montenegro had been allowed for several months.
"This particular shipment was in violation of the sanctions at the time, and at that point was given over to foreign assets control," Miles said. "It was labeled as made in Montenegro, while it was made in Serbia."
Tasia Scolinos of OFAC reiterated that there was a question as to where the brandy was manufactured, but said she could not discuss the matter any further.
Madrigrano admits that the brandy that was embargoed was labeled as having been made in Montenegro.
"Production shifted to accommodate the sanctions," Madrigrano said. "They (OFAC) have a letter from the manufacturer saying the product was made in Montenegro."
When told OFAC may have intelligence to the effect that the brandy was in fact made in Serbia, Madrigrano was indignant.
"I have no idea, and I don’t really care," Madrigrano said. "We have nothing to do with that. If they say you can’t bring it in, you can’t bring it in. When they inspect it and OK it, that’s as far as we go."
Whether the product was made in Serbia or Montenegro, and whether its import violated customs regulations or not, are not at issue, as far as Madrigrano is concerned. He just wants a federal decision on the fate of his product.
"I am at the point where I think I will have to sue them," Madrigrano said. "All we do is send them the product and the label. Then we order it. Anybody doing business doesn’t know foreign assets or whatever it is."
U.S. Customs and OFAC officials would not comment on Madrigrano’s level of exposure to civil penalties in the case, as the product was labeled specifically for his company. The bottom of each label reads "Imported by: Triangle Wholesale. Inc.- Racine, WI 53404."
Sidebar –
WHY – the $160,000 question
WHO:Joe Madrigrano, Traingle Wholesale Beer Co. Inc., Racine
WHAT:950 cases of liquor – the contents of an embargoed shipment of Zuta Osa and Manastirka plum brandy from The Federal Republic of Yugoslavia
WHEN:The product was embargoed in 2001 well after it came through customs.
WHY:The Office of Foreign Assets Control is not saying why the shipments are embargoed, but discussions with U.S. Customs officials suggest the product was mislabeled to avoid U.S. Sanctions against Serbia. The fact that the product was labeled specifically for Madrigrano’s company to reflect his distributorship may be a complicating factor.
Aug. 16, 2002 Small Business Times, Milwaukee
