A federal judge Thursday refused to approve a settlement of sanctions violations by a subsidiary of Dutch aerospace firm Fokker Technologies Holding.
Federal judge Richard J. Leon of the District of Columbia said the proposed $21 million penalty was “grossly disproportionate to the gravity of Fokker Sercvices’ conduct in a post-911 world.”
Fokker Services admitted in a plea deal last year that it made more than 1,100 illegal shipments worth $21 million to Iran, Sudan, and Burma. The company agreed to forfeit $10.5 million and pay a civil fine of $10.5 million.
In June last year, the U.S. Attorney for the District of Columbia, Ronald C. Machen Jr., said the plea deal sent “a clear message that there will be consequences for those who seek to profit from violating and circumventing U.S. trade laws.”
The settlement included an 18-month deferred prosecution agreement. And Fokker Services promised to enhance its trade sanctions compliance.
In his February 5, 2015 opinion, Judge Leon said: “In my judgment, it would undermine the public’s confidence in the administration of justice and promote disrespect for the law for it to see a defendant prosecuted so anemically for engaging in such egregious conduct for such a sustained period of time and for the benefit of one of our country’s worst enemies.”
From 2005 until 2010, Fokker Services violated U.S. laws by exporting aircraft parts, technology, and services to customers in U.S.-sanctioned countries — Iran, Sudan, and Burma, the DOJ said last year.
“Throughout this period,” the DOJ said, “Fokker Services knowingly and willfully engaged in this criminal conduct, fully aware of the application of U.S. export laws, an issue which was repeatedly raised internally with the company’s management.”
Fokker Services self disclosed the potential violations in mid 2010 to the Commerce Department’s Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control.
Among the 1,100 illegal transactions, 99 involved Iran Air. The DOJ said there was a “special order from the U.S. Department of Commerce prohibiting Fokker or any third party from exporting U.S.-origin commodities to Iran Air or providing services to Iran Air.”
U.S. Attorney Machen said last June: “For years, Fokker Services treated U.S. export laws as inconveniences to be ‘worked around’ through deceit and trickery.”
Judge Leon Thursday also questioned why the deferred prosecution agreement had a term of only 18 months.
“As such, the court is being left to rely solely on the self-reporting of Fokker Services,” he said. “One can only imagine how a company with such a long track record of deceit and illegal behavior ever convinced the Department of Justice to agree to that!”
Judge Leon said he “remains open” to approving a modified plea agreement if the DOJ and Fokker Services agree on different terms.
Judge Richard Leon’s February 5, 2015 memorandum opinion in U.S. v. Fokker Services BV is here (pdf).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.