To what degree should Rotax and their Canadian Parent Bombardier Recreational Products be held responsible for the “unauthorized” use of their engines in Iranian-made Russian military drones?

Posted on October 25, 2022

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“An engine designed by the Austrian company Rotax was discovered installed in one of Russia’s Iranian-made Mohajer-6 drones that went down over the Black Sea earlier this month. Rotax says it has launched an investigation into its engines powering Iranian drones.” – Rotax Engine Found In Iranian Mohajer-6 Drone Downed Over Ukraine by Emma Helfrich, The Drive (October 24th, 2022)

One of the many questions that immediately came to mind when I read the above headline was, “how deep into the supply chain should procurement’s responsibility extend?”

In what is a clear violation of European Union sanctions banning the shipment of such equipment to Iran and Russia, to what degree should the companies be held liable?

On the one hand – and this is a problem with globally extended supply chains that involve multiple stakeholders, is it reasonable to assume that the companies should have known this might happen? If yes, what should they have done to manage the risk that their product could or would end up in hostile hands? Is it a people training issue, a process issue, a technology issue – or a combination of the three?

To be sure, sanctions and violations are nothing new. According to the U.S. Department of the Treasury, sanctions date as far back as the War of 1812, when the Secretary of the Treasury Gallatin “administered sanctions imposed against Great Britain for the harassment of American sailors.”

Domestically, Congress approved a law which prohibited transactions with the Confederacy during the Civil War for which violations would result in the forfeiture of goods.

Even though global supply chains are considerably more complex today than they were in the past, our ability to track and trace products is less of a challenge because of digital technology – including AI.

Organizations must utilize these technologies to the full extent so that they are not dealing with static or outdated information that leaves them vulnerable.

In other words, organizations better be up to speed because like ignorance of the law (or sanctions) is no excuse for breaking it; ignorance of where your products ultimately end up doesn’t get you off the hook with sanctions.

Even more notable is that this high standard of visibility is not limited to large multinational corporations. Small and medium-sized firms must adhere to the same restrictions.

According to the March 26th, 2022, MSNBC article With Russian sanctions, small companies may be in for a big surprise, “most on Main Street may be unlikely to find sanctions violations on their books.” Nevertheless, the writer cautions companies are going to be held responsible and, therefore, must “enact a basic sanctions compliance policy,” which can involve “some cumbersome steps.”

Returning to my original question, to what degree should procurement take ownership of managing the steps to ensure that their supply chains practices comply with international law?