OFAC Settles With US Manufacturer, Chinese Subsidiary Over Iran Sanctions Violations
The Treasury’s Office of Foreign Assets Control announced a $1.9 million settlement with a Connecticut-based industrial tool manufacturer and its China-based subsidiary after OFAC said the companies violated U.S.-imposed sanctions on Iran, according to a March 27 notice. The U.S. company -- Stanley Black & Decker -- and the Chinese subsidiary -- Jiangsu Guoqiang Tools Co. (GQ) -- attempted to export 23 “shipments of power tools and spare parts” worth more than $3 million to Iran from mid-2013 to the end of 2014, OFAC said.
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As part of the settlement, the companies are required to bolster their compliance programs, ensure that senior management promotes a “culture of compliance,” demonstrate “recognition of the seriousness of apparent violations” and will not employ the managers responsible for the violations. The companies must also maintain a “risk assessment” program that adequately accounts for “potential risks” with “frequency,” and agreed to several other broad conditions, including an increase in “internal controls” and compliance testing, audits and training.
Stanley Black & Decker first began “acquisition negotiations” with GQ in 2011 and found that GQ exported products to Iran, according to an OFAC report. As part of the terms of the acquisition, OFAC said GQ agreed to stop all sales to Iran. Stanley Black & Decker also trained GQ employees on OFAC sanctions programs and compliance with the Foreign Corrupt Practices Act, the report said. However, the Connecticut-based company “did not implement procedures to monitor or audit GQ’s operations to ensure that its Iran-related sales had in fact ceased,” OFAC said.
As a result, GQ continued to export goods to Iran in 2013 and 2014, OFAC said, concealing shipments by using six external “trading companies as conduits for these sales” and creating fake bills of lading with falsified “ports of discharge and places of delivery.” GQ management also told employees not to write “Iran” on any documents, according to the report. Stanley Black & Decker became aware of the violations and began an internal investigation into its Chinese subsidiary, OFAC said. Stanley Black & Decker voluntarily disclosed the violations in 2015.