OFAC Enforcement Action: COSL Singapore Ltd.

The settlement of $415,350 was for 55 non-egregious, non self-reported violations of Iranian sanctions:

COSL Singapore has several oil rigs in its fleet and enters into time charter agreements with third-party drilling companies to allow the third-party drilling companies to use the oil rigs for their drilling operations for a specified term and within a specified territory. COSL Singapore provides the oil rig and oil rig crews to the third-party drilling companies and is responsible for maintaining the oil rig, including by procuring equipment and spare parts for the oil rig’s operations. Procurement specialists located in Singapore or assigned to an oil rig’s base of operations are responsible for the day-to-day procurement and purchase orders associated with routine maintenance of the oil rigs, including initiating requests for quotation, obtaining quotations, and issuing purchase orders. The procurement specialists purchased at least 55 orders of supplies from vendors located in the United States on behalf of, and that were specifically intended for shipment and/or re-export to, four COSL Singapore oil rigs located and operating in Iranian territorial waters between October 2011 and February 2013. Although some of the purchase order quotations the COSL Singapore procurement specialists received from U.S. vendors included specific language warning that any such goods could not be shipped or re- exported to countries subject to U.S. economic sanctions, specifically including Iran, the company purchased the goods and shipped them to the oil rigs over a period of several years. 

The value of the 55 viollations was $524,664 and the base penalty was $923,000.

And these were the General Factors from OFAC’s Enforcement Guidelines that were considered in the determination of the final penalty amount:

OFAC considered the following to be aggravating factors:\

  1. COSL Singapore failed to exercise a minimal degree of caution when it exported or attempted to export goods from the United States and re-exported or attempted to re-export them to oil rigs located in Iranian territorial waters;
  2. COSL Singapore’s exportation or re- exportation of equipment to the four oil rigs aided in the development of Iran’s energy resources;
  3. COSL Singapore is a large, sophisticated company with 14 offshore drilling rigs doing business throughout the world; and 
  4. COSL Singapore did not have an OFAC compliance program in place at the time of the transactions despite conducting business in the United States and/or with U.S. companies in relation to the offshore drilling and petrochemical sectors.

OFAC considered the following to be mitigating factors: 

  1. COSL Singapore has no prior sanctions history with OFAC, including no receipt of a penalty notice or Finding of Violation in the five years preceding the earliest date of these transactions;
  2. COSL Singapore took remedial action by instituting an OFAC sanctions compliance program; and
  3. COSL Singapore displayed substantial cooperation throughout the course of OFAC’s investigation, including by entering into a tolling agreement with OFAC. 

Links:

OFAC Notice

OFAC Enforcement Action

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