ESCO Corporation, an Oregon company, settled allegations that it violated Cuban sanctions regulations between November 2007 and June 2011 when its subsidiary purchased products with nickel of Cuban origin.
The total amount of the transactions was $6,188,149 and the base penalty for the voluntarily self-disclosed, non-egregious violations was $3,048,208.
And here's why the penalty was reduced by less than 1/3 – according to the OFAC enforcement information:
OFAC considered the following to be aggravating factors:
- ESCO actedwith reckless disregard for Cuba sanctions program by failing to identify, despite the presence ofcontemporaneous “red flags” in the public domain, that the nickel briquettes were made orderived from Cuban-origin nickel;
- ESCO caused significant harm to the Cuba sanctions programand its policy objectives by conducting large-volume and high-value transactions in productsmade or derived from Cuban-origin nickel, which were ultimately sourced from SpeciallyDesignated Nationals; and
- ESCO is a commercially sophisticated company with internationaloperations.
OFAC considered the following to be mitigating factors:
- ESCO has not received apenalty notice or Finding of Violation from OFAC in the five years preceding the date of the firsttransaction giving rise to the apparent violations;
- ESCO has enhanced its OFAC compliance planand conducted a thorough look-back; and
- ESCO cooperated with OFAC’s investigation,including by executing and extending a statute of limitations tolling agreement.
So, even though the violations were non-agregious, they did “significant harm” to Cuban sanctions enforcement, and the firm's commercial sophistication means they should have spotted the red flags. Thus, not much of a discount beyond the 25% “first timer” one.