In the world of beauty and wellness, Murad LLC, a renowned skincare and dietary supplements company, has captured the attention of beauty-savvy consumers worldwide. However, behind the scenes, international intrigue, hidden business dealings, and a violation of Iran sanctions, all in the name of beauty.
Today, we dive into the riveting case of Murad’s alleged conspiracy to supply products to Iran, a violation that has caught the watchful eye of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
Murad is a company based in El Segundo, California owned since 2015 by Unilever United States, itself a subsidiary of Unilever N.V./Unilever PLC, a global diversified household and personal product and packaged foods and refreshments company co-headquartered in London, United Kingdom and Rotterdam, Netherlands.
The Iran violations:
Between December 2009 and January 2018, it appears that Murad engaged in violations of the Iranian Transactions and Sanctions Regulations (ITSR). The company, in cahoots with two distributors, conspired to reexport or supply Murad’s products and services from the United States to Iran, a clear breach of regulations. The transactions involved a staggering sum of approximately $11 million, raising eyebrows within OFAC.
Murad essentially teamed up with its two distributors—one based in Iran (referred to by OFAC as “Co-Conspirator 1”) and later, in 2012, with Co-Conspirator 1’s affiliate in the United Arab Emirates (UAE) ( “Co-conspirator 2”).
In typical US authorities fashion, UAE parties were kept anonymous, but a quick google search of Murad’s distributor in the UAE will reveal it is the prestigious Al Tayer Group, which distributes over 80 well-known brands into the region, operating across various industries. (It is unclear however whether Al Tayer was indeed Murad’s distributor during the period.)
Interestingly, Murad’s international page on the other hand makes no reference to a UAE distributor.
But anyhoo, Co-Conspirator 1 and Co-Conspirator 2 shared the same CEO during the time period, referred to by OFAC as the “Co-conspirator CEO.”
Untangling the Lathered Lies:
As we dig deeper into this sudsy case, we can’t help but marvel at the sheer audacity of Murad’s tangled web of deception.
In December 18, 2009, Murad entered into a distribution agreement with Co-conspirator 1. The agreement stated that Co-conspirator 1 would have the exclusive rights to distribute Murad products in Iran. But here’s the juicy part: Murad went ahead and signed this agreement without obtaining the proper license from OFAC. They had actually applied for a license a few months before in September 2009, but were told by OFAC it was a big no-no.
They tried again in February 2010 and September 2015, but luck was not on their side. Did they let that stop them? Not quite, despite Murad’s little chat with OFAC in March 2010, where they were clearly told that exporting to Iran without a license was out of question, the mischievous minds at Murad, including some top-level folks, decided to proceed with exporting to Iran anyway.
But that’s not all, Murad also played the game of hide and seek with Unilever US, their parent company, when they were in the process of being acquired a few years later in 2015.
The Co-conspirator CEO, who seemed to have a knack for clandestine operations, continued doing business with Murad in Iran leading up to the acquisition in 2015.
To keep Unilever US in the dark, Murad pulled some sneaky moves. They signed a shiny new distribution agreement with Co-conspirator 2, their UAE distributor, just before the acquisition was finalized. And guess what? They conveniently left out any mention of Iran in this agreement, even though Co-conspirator 2 had boldly declared Iran as one of their key markets in an email to Murad senior management.
As if that wasn’t enough, during the acquisition process, Murad employees, including the higher-ups, went the extra mile to lend a helping hand to the Co-conspirator CEO. They assisted in opening an independent Murad store in Tehran, Iran, all while keeping Unilever US blissfully unaware. They even provided guidance on store design to ensure it aligned with other Murad stores.
Talk about juggling big secrets like pros!
The Suds Hit the Fan:
Fast forward to October 19, 2015. Approximately six weeks after Unilever US acquired Murad, an eagle-eyed Unilever US employee stumbled upon an interesting email from Murad.
The Co-conspirator CEO, in his infinite wisdom, requested a credit extension due to the sluggish delivery of Murad products from Los Angeles to Tehran. Sensing something fishy, Unilever US swiftly instructed Murad to put an end to the sale of their products in Iran. But here’s the kicker: when confronted about the blatant mention of Tehran and Iran in his previous email, the Co-conspirator CEO played the “confusion” card, claiming he meant Iraq instead. Unbelievable!
Did Unilever US bother to dig deeper into the matter? Nope! They gullibly relied on the false statements fed to them by Murad’s senior executives, who assured them that such transactions would cease.
But the twists and turns in this saga are far from over! So a few days after that fated email exchange, Murad claimed on October 21, 2015, that they would cease all exports and reexports to Iran, but guess what? The Murad store in Tehran magically opened its doors between December 2015 and January 2016, with full knowledge and support from Murad employees and management.
Murad didn’t stop there. They continued to assist Co-conspirator 2 with their credit extension problem and happily exported Murad products to Iran. In March 2016, a crafty Murad Vice President emailed the Chief Financial Officer about the extension request but conveniently edited out any mention of Iran. It was a clever attempt to facilitate their exports to Iran while keeping Unilever US and their new Chief Financial Officer in the dark.
Fast forward to November 13, 2017, when a Murad Vice President spilled the beans during an internal meeting. They revealed that Co-conspirator 2 was selling the majority of Murad products in Iran.
Shocked by this revelation, other Murad senior executives finally realized that U.S. sanctions prohibited their products from being exported to Iran, whether directly or indirectly. But did they come clean with Unilever US? Nope! They kept the exportation of their products to Iran a secret for another two months. As a result, Murad fulfilled eight more orders by Co-conspirator 2, with the last transaction taking place on January 24, 2018. They just couldn’t resist the temptation!
In February 2018, Unilever US caught wind of Co-conspirator 2’s ongoing sales to Iran. They immediately took action and collaborated with Murad to implement a system block, preventing any further sales to Co-conspirator 2.
Unilever US also sent a written notification to Co-conspirator 2, stating that all sales were suspended pending an internal review of the matter. Finally, on March 2, 2018, Murad officially suspended all dealings with Co-conspirator 2 under their distribution agreement. The distribution agreement was later terminated in December 2018 after completing an internal review.
It all bubbles up to the surface:
So, what’s the price of clean skin and a clear conscience? Well, in Murad’s case, it came to a whopping $3.3 million! Yep, they had to fork over that sudsy sum to the U.S. Department of the Treasury for violations that were considered egregious.
As part of the settlement, they promised to implement rigorous sanctions compliance measures for a good five years. Let’s hope they’ve learned their lesson!
In the meantime, cases like these remind us that ordinary Iranian women like millions of other women around the world, also have their fair share of beauty desires. Stylish ladies (or men) in Iran, would love nothing more than to get their hands on the latest beauty products and unleash their inner glam. Feeling fabulous should technically know no boundaries, but unfortunately Sanctions Do.