The Office of Foreign Assets Control of the US Department of the Treasury has entered into a settlement with Whitford Worldwide Company, LLC, resolving potential civil liability of the Pennsylvania cookware coating manufacturer for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 CFR part 560.
According to the settlement, Whitford and its Italian and Turkish subsidiaries regularly sold the company’s products to Iran prior to publication of new sanctions provisions in 2012 that prohibited US-owned or controlled foreign entities from knowingly engaging in transactions with Iran. As indicated by OFAC, following implementation of the 2012 prohibitions in Executive Order 13628, the subsidiaries continued to sell their products to Iran, in apparent violation of Section 4(a) of that Executive Order. In 2013 when the Whitford became aware that these sales might be problematic, the company’s regulatory affairs manager erroneously advised the company that the transactions were legal so long as the subsidiaries had no direct contact with Iran. Pursuant to this advice, Whitford’s Managing Director for Europe helped develop a plan whereby sales to Iran would continue through third-party distributors, and Iran would not be named in the supporting documentation. In 2016, when Whitford personnel understood that this conduct potentially violated US sanctions, the company conducted an internal investigation with the assistance of outside counsel, and submitted a disclosure to OFAC.
In determining the settlement amount, OFAC viewed as aggravating factors the company’s lengthy history of foreign subsidiary sales to Iran, its reckless failure to implement adequate compliance policies, and the company’s actual knowledge of the apparently non-compliant conduct. However, OFAC also identified mitigating factors such as the company’s cooperation with the investigation, and its clean record during the five years preceding the current investigation. Moreover, Whitford undertook remedial measures including:
- Making changes to top leadership;
- Establishing annual and quarterly sanctions compliance reporting requirements, including certifications by managing directors at each of the company’s subsidiaries;
- Appointing an independent external compliance monitor;
- Engaging outside counsel to investigate and provide sanctions advice;
- Adopting a global code of conduct and sanctions and export controls compliance policies, and;
- Providing sanctions compliance training to employees.
In consideration of these factors, the company will pay $824,314 to settle its potential civil liability for these apparent violations, although the statutory maximum civil monetary penalty applicable to the matter is close to $20 million.