Can you spell egregious? OFAC can…

PanAmerican Seed Company just uprooted $4,320,000 from its coffers (from a $12 million base penalty, which is also the statutory maximum) for 48 shipments of seed, through intermediaries, to Iranian distributors, from 2009 to 2012. OFAC considered this an egregious case, and the violations were not voluntarily self-disclosed.

Why was this considered egregious?

 

Personnel (including several mid-level managers) from various business units within PanAm Seed and/or Ball Horticultural were aware of U.S. economic sanctions programs involving Iran and the need to apply for and obtain a specific license from OFAC in order to export the seeds in question. Despite this knowledge, PanAm Seed engaged in a pattern or practice designed to conceal the involvement of Iran and/or obfuscated the fact that the seeds were ultimately destined for distributors located in Iran. 

Why did the numbers come out as they did?

 

OFAC considered the following to be aggravating factors: 

  1. PanAm Seed willfully violated U.S. sanctions on Iran by engaging in, and systematically obfuscating, conduct it knew to be prohibited;
  2. PanAm Seed demonstrated recklessness with respect to U.S. sanctions requirements by ignoring its OFAC compliance responsibilities, despite substantial international sales and warnings that OFAC sanctions could be implicated;
  3. multiple PanAm Seed and Ball Horticultural employees, including mid-level managers, had contemporaneous knowledge of the transactions giving rise to the Alleged Violations and that the seeds were intended for reexportation to Iran, and PanAm Seed continued sales to its Iranian distributors for nearly eight months after its Director of Finance learned of OFAC’s investigation;
  4. PanAm Seed engaged in this pattern of conduct over a period of years, providing over $770,000 in economic benefit to Iran;
  5. PanAm Seed did not initially cooperate with OFAC’s investigation, providing some information that was inaccurate, misleading, or incomplete; and
  6. PanAm Seed is a division of Ball Horticultural, a commercially sophisticated, international corporation.

OFAC considered the following to be mitigating factors: 

  1. PanAm Seed has not received a Penalty Notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the Alleged Violations, making it eligible for “first offense” mitigation of up to 25 percent;
  2. the exports at issue were likely eligible for an OFAC license under the Trade Sanctions Reform and Export Enhancement Act of 2000; 
  3. PanAm Seed took remedial steps to ensure future compliance with OFAC sanctions, including stopping all exports to Iran, implementing a compliance program, and training at least some of its employees on OFAC sanctions; and
  4. PanAm Seed cooperated with OFAC by agreeing to toll the statute of limitations for a total of 882 days. 

Personally, I’m surprised the fine wasn’t larger – between the knowledge of the violations and the delayed cooperation. Tolling the statute of limitations for over 2 years must have helped.

Link:

OFAC Enforcement Information

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