Amidst the public outrage and protests against Salt Bae and Nusr-Et Steakhouse, the meat slicing and salt pouring icon may have inadvertently stumbled into the world of U.S. economic sanctions, which currently target the President of Venezuela, Nicolas Maduro. While the U.S. government may investigate and enforce any applicable sanctions violations, these lamb chops also provide an interesting example of how economic sanctions work.
On Monday, Nustret Gökçe, commonly known as Salt Bae, posted a video on his Instagram account showcasing his meat slicing technique as he served President Maduro at a Nusr-Et location in Istanbul. Unbeknownst to Salt Bae, he may have also published evidence of a crime. On July 31, 2017, President Maduro was designated as a Specially Designated National (SDN) by the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) under Executive Order 13692, which had declared the rampant corruption and human rights abuses in Venezuela to be a U.S. national emergency. Maduro was designated as an SDN for a number of reasons, including holding illegitimate elections, violating the human rights of voters and protestors, and, most relevant here, allowing tens of millions of Venezuelans to go hungry by “refus[ing] to import sufficient food for the Venezuelan people . . . and reject[ing] offers of humanitarian aid.”
Designating someone as an SDN can have serious ramifications for the designee as well as their supporters. U.S. persons are prohibited from engaging in virtually all transactions or dealings with SDNs or with property in which the SDN may have any interest whatsoever. Even foreign persons can be at risk, as OFAC has the authority to designate any person who provides goods or services to SDNs. By designating someone as an SDN, the U.S. government aims to isolate that person from the global financial system. For this reason, the government enforces sanctions against companies and individuals that do business with SDNs, rather than against SDNs directly.
In this particular case, it is not clear whether Gökçe or the Istanbul Nusr-Et location would qualify as U.S. persons. Gökçe would need to either be a U.S. citizen, permanent resident, or be located in the U.S. at the time that the prohibited activity occurs. The Istanbul location of Nusr-Et Steakhouse would need to be part of a company organized in the U.S.
Assuming that either of the two are U.S. persons, then any property in their possession in which Maduro had an interest would be considered blocked – meaning that U.S. persons would be prohibited from transacting or dealing with that property. While OFAC tends to focus on money and valuable personal or real estate property, there is a potential case to be made that the lamb chops (and yes, even the salt) would be deemed blocked. After all, there is video evidence of Maduro expressing real interest in how his food is being prepared. In this case, Gökçe or his restaurant could be exposed to fines and jail time for a violation of the International Emergency Economic Powers Act (“IEEPA”), the statute that authorized President Trump to designate Maduro. Even if Gökçe and his Istanbul restaurant are not U.S. persons, the Secretary of the Treasury would be authorized to designate one or both parties as SDNs for providing goods (the food) and services (cooking and the knife show) to Maduro.
If payment was made for the services, and the funds came into possession of a U.S. person or a U.S. financial institution then the funds should have been held in a blocked account. In either case, the risk is still present even if Maduro did not pay for the dinner directly or at all (i.e., if the food and show was on the house). The sanctions prohibitions attach not just to the SDN, but to any property in which they have an interest, regardless of whether the SDN is a party to the transaction. U.S. economic sanctions are a strict liability regime, which means that the government does not need to prove or find knowledge or willfulness in order to enforce a civil violation. Put differently, as long as activity has technically violated the sanctions rules, participants can be subject to a civil violation (or designation) by OFAC. In this case, this means that Mr. Gökçe could face some exposure even if he did not know Maduro was sitting at the table. The U.S. government expects U.S. and foreign parties to conduct due diligence and make sure none of their customers are SDNs.
OFAC may pursue some form of legal action against Nusr-Et Steakhouse, Salt Bae, or their financial institutions if it wishes to make a point that even high-profile celebrities are prohibited from wining and dining (or smoking and chopping) it up with an SDN. It would not be the first time OFAC has taken action against a restaurant.