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Record Criminal Fine Assessed for Trade with Embargoed Destinations

Tuesday, March 31, 2015
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a foreign-based multinational company has agreed to plead guilty and pay a $232.7 million penalty for willfully facilitating illegal transactions and engaging in trade with Iran and Sudan. This amount includes a $155.1 million criminal fine, the largest ever levied in connection with an International Emergency Economic Powers Act prosecution, and a $77.6 million criminal forfeiture of illegally obtained profits.

According to court documents, a U.S.-based business segment of the foreign company violated U.S. sanctions against Iran and Sudan by (1) approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases, (2) making and implementing business decisions specifically concerning Iran and Sudan, and (3) providing certain technical services and expertise in order to troubleshoot mechanical failures and sustain expensive drilling tools and related equipment in Iran and Sudan.

“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Ronald Machen. “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building.  … Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”

The plea agreement, which is contingent upon the court’s approval, also requires the company to submit to a three-year period of corporate probation and agree to continue to cooperate with the government and not commit any additional felony violations of U.S. federal law. Also during this three-year period the company’s parent company has agreed to (1) maintain its cessation of all operations in Iran and Sudan, (2) report on its compliance with sanctions, (3) respond to requests to disclose information and materials related to its compliance with U.S. sanctions laws when requested by U.S. authorities, and (4) hire an independent consultant to review its internal sanctions policies, procedures and company-generated sanctions audit reports.

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