On December 3, 2024, the U.S. Department of Treasury’s Office of Foreign Assets Control reached a settlement with Aiotec GmbH, a German-based company that sources industrial equipment for the energy sector. OFAC announced that Aiotec agreed to pay approximately $14.55 million to settle its potential civil liability for one apparent violation of the Iranian Transactions and Sanctions Regulations (“ITSR”) in connection with an alleged conspiracy to cause a U.S. Company to sell a polypropylene plant to Iran and remit payments for the plant through U.S. financial institutions. OFAC reported that the settlement amount reflects its determination that the apparent violation was not voluntarily self-disclosed and was considered to be an egregious case.
OFAC reported that, in 2015, an unnamed U.S. Company was hired by an Australia-incorporated company to broker the resale of a decommissioned polypropylene plant in Australia. As part of this deal, the U.S. Company entered into a Sale Agreement to sell the plant to Aiotec for $9.7 million. In the Sale Agreement, Aiotec stipulated that it would not sell the plant to any person subject to U.S. sanctions or embargo or in a prohibited destination under U.S. law. While one of Aiotec’s managing directors sent an email to the U.S. Company giving the impression that the plant was to operate in Türkiye as part of a joint venture with a Türkiye-based company, Aiotec was purportedly directing its Iran-organized subsidiary Aiotec Middle East Co. (“Aiotec ME”) to enter into a simultaneous sale agreement with an Iran-based petrochemical development company. According to OFAC, two days after signing the agreement with the U.S. Company, Aiotec signed a separate agreement with the Iran-based petrochemical development company to resell the plant and transport it to Iran. In 2016 and the years that followed, Aiotec dismantled the plant and transported the plant in parts to Iran, while concealing this information and misrepresenting to the U.S. Company that the end user was a Turkish Company.
In August 2018, the U.S. Company allegedly received a copy of the first page of the second sale agreement from an anonymous source, which prompted the U.S. Company (and Australian Company that they represented) to suspend Aiotec’s access to the plant. In response to this allegation, Aiotec made misrepresentations and presented falsified documents that caused the U.S. Company to restore Aiotec’s access to the plant in November 2018. After the final pieces of the plant were transported to Iran in April 2019, Aiotec provided the U.S. Company with a fraudulent house bill of lading (“B/L”) issued by the freight forwarder, rather than a master B/L from the transporting vessel as the U.S. Company requested. The fraudulent house B/L, as well as other falsified documents provided to the U.S. Company, misrepresented that the cargo was delivered to Türkiye and made no reference to Iran or the petrochemical development company. However, the accurate house B/L reflected, among other references to Iran, that the true port of discharge was in Iran and the consignee was the Iran-based petrochemical development company.
Between 2015 and 2019, Aiotec allegedly paid the U.S. Company a total of 11 installment payments, each originating in euros, that totaled approximately $9.5 million – payments that were reportedly processed through the U.S. Company’s accounts at an unnamed U.S. bank, including accounts in the bank’s London branch. OFAC concluded that Aiotec role in this conspiracy violated § 560.203(b) of the ITSR.
According to OFAC, this case highlights the risks and potential costs that can occur when non-U.S. persons engage in transactions involving a sanctioned jurisdiction and a U.S. person. While the plant’s original owner was an Australian Company and the plant purchaser, Aiotec, was based in Germany, U.S. sanctions laws were triggered by the involvement of the U.S. Company reseller. In addition, Aiotec further exposed itself to potential liability under the ITSR by sending payments to U.S. financial institutions, even though many of the payments were initiated in euros. According to OFAC, this case also demonstrates how U.S. entities can be deceived when multiple actors work in concert to evade U.S. sanctions and the lengths that companies will go to in order to avoid detection.
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