Commerce Reverses Past Determination in Response to Fraud

Today, the Federal Register published yet another Commerce redetermination of a past administrative proceeding related to Ocean Duke and its affiliated Chinese shrimp supplier.  The Notice published today is the final results of the reconsideration of a changed circumstances review requested by Ocean Duke in 2007 that resulted in Hilltop International being recognized as Yelin Enterprise Co. Hong Kong’s successor-in-interest and, as such, entitled to Yelin’s antidumping duty rate.


The Department’s reconsideration reverses that decision and finds that Hilltop International is not Yelin’s successor-in-interest.  The reconsideration has no practical effect on Hilltop’s cash deposit rate, currently set at 112.81%.


Nevertheless, Commerce’s public decision memorandum accompanying its determination includes a number of findings that further demonstrate the agency’s concern regarding fraud in its administrative proceedings.  To begin, Commerce made clear that it had “inherent” authority to “cleanse” past proceedings of fraud:


“The Department has the inherent authority to cleanse its proceedings of potential fraud.  Where new evidence indicating possible fraud or misrepresentations comes to light after the completion of a proceeding, the Department may consider whether that information affected its determination.  In this case, new evidence came to light during the subsequent sixth administrative review (‘AR6’) indicating that Hilltop made misrepresentations to the Department during this CCR.  Based on this newly-discovered evidence, the Department finds it appropriate to reconsider the final results of this CCR.”  (p.4)


Commerce did not mince words in describing the fraud perpetrated on the agency:


“Those verification reports are now on the record of this CCR and demonstrate that Hilltop and Ocean Duke boldly presented false information regarding its corporate structure to Department officials at two verifications to the extent that the Department’s verification reports now contain material misrepresentations.” (p.14).


Commerce also provided a detailed discussion of the significance of the details of Ocean Duke’s Cambodian shrimp sourcing that subsequently came to light after completion of the administrative proceeding:


“As we have explained, the record of this proceeding contains absolutely no explanation as to how Ocean Duke was able to import more than 6.8 million kilograms (‘kgs’) of shrimp from Cambodia between May 2004 and July 2005 when that country produced less than 185,000 kgs of shrimp in all of 2004 and 2005.  The record also demonstrates that Ocean Duke had 144 entries from Ocean King from October 20, 2005, through December 23, 2005.  A review of the import data on the record reveals that over a seven-day period from October 20, 2005, through October 27, 2005, Ocean Duke had 16 entries totaling 292,450 kgs of shrimp from Ocean King declared as Cambodian country-of-origin, exceeding the total production of Cambodia for the entirety of the years 2004 and 2005 by almost two-thirds.  Each of those 16 entries was reported containing 18 to 19 thousand kgs of shrimp.  Conservatively assuming a volume of 18,000 kgs and extending that volume across the 144 entries Ocean Duke sourced from Ocean King over a two-month period results in an estimated volume of 2,592,000 kgs.  Ocean Duke continued to make entries of shrimp sourced from Ocean King into the POR covering AR2, beginning in February 2006.  Thus, the only conclusion that the Department is able to reach, absent any viable, alternative explanation or factual information from Hilltop, is that the vast majority of shrimp entered by Ocean Duke during this time frame, and declared and certified as Cambodian country-of-origin by a known affiliate of Hilltop, was extremely unlikely, if not impossible, to have been of Cambodian origin.” (pp. 7-8).


Commerce also responded to arguments made by the Chinese supplier that allegations regarding Ocean Duke’s Cambodian sourcing were based on speculation and lacked any support:


“. . . Hilltop continues to claim that that the allegations have no merit and are based on speculation.  If the allegations have no merit as Hilltop claims, it is incumbent upon Hilltop to provide a full account of its past activities and to substantively address the country-of-origin of the shrimp imported by Ocean Duke from Ocean King, which it has yet to offer in any segment of this proceeding.” (p.12).


Thus far, all of Commerce’s reconsiderations of part proceedings involving Ocean Duke and its affiliated Chinese supplier have been appealed to the Court of International Trade.  In spite of these challenges, Commerce has maintained its commitment to addressing fraud and cleansing past determinations of its inequitable results.  The agency has elected to do so under enormous resource restraints and staffing pressures, reflecting the importance of maintaining the integrity of its administrative processes.


Read the Federal Register Notice (December 16, 2013) announcing the final results of the reconsideration:


Read the Issues and Decision Memorandum accompanying the final results of the reconsideration:


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