The Dubai subsidiary of a Swedish manufacturer will pay $415,695 to settle charges it violated U.S. sanctions when it shipped storage tank cleaning units to an Iranian company.
According to the Department of the Treasury’s Office of Foreign Assets Control (OFAC), Alfa Laval Middle East, a subsidiary of Alfa Laval AB, sold $18,585 worth of Gamajet-brand storage tank cleaning units to an Iranian company in March 2016.
Another subsidiary, U.S.-based Alfa Laval Inc., will pay $16,875 as part of a settlement for its role in the scheme.
OFAC alleged the violations were part of a conspiracy to circumvent U.S. sanctions. The scheme involved making the order for the storage tank cleaning units look like the end user was located in Dubai, when, in fact, it was a company located in Iran.
Neither Alfa Laval Middle East nor Alfa Laval Tank Equipment, a U.S.-based facility in Exton, Penn., voluntarily disclosed the violations, OFAC said in a settlement agreement released Monday.
Alfa Laval Middle East’s violations were considered egregious, while the actions by Alfa Tank were non-egregious, OFAC determined.
Alfa Laval manufactures heat transfer, separation, and fluid handling equipment for the energy, environment, food, and marine industries, according to its Website. The company did not respond to a request for comment.
The alleged conspiracy
In 2015, the CEO of Iran-based Alborz Pakhsh Parnia emailed Alfa Tank to inquire about purchasing Gamajet-brand storage tank cleaning units. An Alfa Tank portfolio manager emailed a quote back to the CEO, who asked, “‘[I]s there the possibility of delivery to our country [Iran]? Please explain about condition of delivery.’”
The Alfa Tank employee forwarded the request to a subsidiary in Denmark, which forwarded it to Alfa Laval Middle East. Alfa Laval Middle East then began handling the sale through its previously established relationship with Alborz, even sending a sales manager to Iran to discuss it further. All the time, the equipment being considered for sale would be manufactured in the United States.
Alborz then suggested a plan where the units would be shipped to a company in Dubai, which would then distribute them to Iran. In January 2016, two months before the sale was completed, Alfa Laval’s general counsel emailed a memo to all employees stating, “[A]ny transactions involving U.S. persons, USD, or U.S. origin/content products are still prohibited under the remaining U.S. sanctions on Iran.”
Despite the warning, the Alfa Laval employees in the United States and Dubai still followed through on the sale in March 2016, OFAC said in the settlement.
In April 2016, the U.S. Commerce Department’s Bureau of Industry and Security interceded, launching a verification inquiry that would eventually result in the settlement with OFAC.
As part of the settlement, Alfa Laval Middle East agreed to implement sanctions compliance measures for five years and provide annual certification to OFAC that the measures have been implemented. Those measures include:
Management commitment to its sanctions compliance program;
Conducting regular risk assessments meant to identify potential violations and systemic deficiencies;
Establishing written policies and procedures outlining its sanctions compliance program;
Appointing compliance personnel to integrate the sanctions compliance program into the firm’s daily operations;
Making the testing and audit function accountable to senior management; and
Training employees and other stakeholders about how to comply with the company’s sanctions compliance program.
“Non-U.S. companies should be aware of how their activities might trigger compliance issues with U.S. sanctions, including when they place orders with U.S. affiliates or subsidiaries,” OFAC stated. “… Because maintaining such links can give rise to an increased risk of violating U.S. sanctions, foreign companies should also implement appropriate measures to mitigate their risks.”
Source » complianceweek