In 2012, like many other companies within the region, Iscar Turkey believed that US and EU sanctions against Iran would soon be lifted. In order to beat the competition, their GM established a small volume commercial relationship with an Iranian distributor so that, if sanctions against Iran were eased, the company would be well-positioned to expand its sales to Iran.
Iscar Turkey completed 144 orders of cutting tools that were ultimately resold to Iran, despite Berkshire repeated communications regarding US sanctions against Iran and the application of the ITSR to Iscar Turkey’s operations.
Iscar Turkey’s GM and his employees sought to conceal the activities by utilizing private email addresses that bypassed the controls of the corporate email system; utilizing false names in internal records; providing false assurances in response to compliance inquiries; providing fraudulent evidence of a compliance training session; and, when the internal investigation was initiated, lying to interviewers and counseling others to lie.
Berkshire voluntarily self-disclosed the apparent violations on behalf of Iscar Turkey.
– A $4.2 million fine for $383,000 worth of sales, reminds us of the importance of following sanction compliance measures particularly in countries like Turkey and the UAE, which are known distribution hubs with Iran. Also important to ensure foreign subsidiaries understand their obligation to comply with all applicable OFAC sanctions. The saying “out of sight, out of mind” does not apply with OFAC.