The Treasury Department’s Office of Foreign Assets Control said Tuesday PanAmerican Seed Co. paid $4.32 million to settle potential civil liability for Iran sanctions violations.
OFAC settled the case without going to court.
The alleged violations involved PanAm’s exports of seeds, primarily of flowers, to two Iranian distributors.
There were 48 shipments between 2009 and 2012, OFAC said.
PanAm Seed had “knowledge or reason to know that the shipments were intended specifically for supply, transshipment, or reexportation to Iran,” OFAC said.
PanAm Seed didn’t voluntarily self-disclose the alleged violations to OFAC, the agency said.
The West Chicago, Illinois-based firm is part of Ball Horticultural Company.
PanAm shipped the seeds to consignees in two countries in Europe or the Middle East. Those consignees arranged for the re-export of the seeds to Iran.
Several mid-level managers and other employees from PanAm Seed or Ball Horticultural knew about the U.S. economic sanctions against Iran and the need for a specific license from OFAC to export the seeds.
Despite that, PanAm Seed tried to hide the Iran sales, OFAC said.
PanAm Seed is “a commercially sophisticated, international corporation” OFAC said.
Yet it continued sales to its Iranian distributors for nearly eight months after its director of finance learned of OFAC’s investigation.
“PanAm Seed engaged in this pattern of conduct over a period of years, providing over $770,000 in economic benefit to Iran,” OFAC said.
The company didn’t initially cooperate with OFAC’s investigation — “providing some information that was inaccurate, misleading, or incomplete.”
OFAC said the statutory maximum and base penalty for the alleged violations was $12 million.
But OFAC said it settled the enforcement action for $4.32 million because of “mitigating factors.”
The mitigating factors were
(1) PanAm Seed’s clean record with OFAC for the past five years, making it eligible for “first offense” mitigation of up to 25 percent.
(2) The exported seeds were likely eligible for an OFAC license under the Trade Sanctions Reform and Export Enhancement Act of 2000.
(3) PanAm Seed took remedial steps to ensure future compliance with OFAC sanctions, including stopping all exports to Iran, implementing a compliance program, and training at least some of its employees on OFAC sanctions, and
(4) PanAm Seed cooperated with OFAC by agreeing to toll the statute of limitations for a total of 882 days.
OFAC’s Enforcement Information for September 13, 2016 is here (pdf).
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Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.
1 Comment
Given the alleged aggravating circumstances, if this had been a small business entity an individual without recourse to outside counsel, OFAC and DOJ most likely would have gone for a criminal prosecution in order to plus up their body count with "low hanging fruit" (their words, not mine). If one compares the number and type of indictments for sanctions violations to civil settlements, it is quite clear that larger, more sophisticated companies are far more likely to get an opportunity to negotiate a civil settlement than are individuals who lack the sophistication to understand trade regulations. When it comes to indictments against individuals and small businesses, OFAC and DOJ routinely run roughshod over actual proof of the scienter requirement for IEEPA criminal violations.
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