German Petrochemical Supplier Aiotec Settles for $14.5 Million Over Sanctions Violation

Aiotec, a German supplier of petrochemical parts, has agreed to pay $14.5 million to settle allegations that it participated in a four-year conspiracy to dismantle and ship a plastics manufacturing plant, owned by a U.S. company, to Iran in violation of U.S. sanctions. The settlement, announced on Tuesday, was signed on November 7 by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

Under the terms of the agreement, nearly $10 million of the settlement will be allocated to strengthening Aiotec’s sanctions compliance program over the next seven years. This includes hiring a sanctions compliance officer and implementing a comprehensive compliance framework. The company is also required to submit an annual, itemized compliance program budget to OFAC and undergo annual audits conducted by an independent third party.

OFAC deemed the violation as “egregious” and emphasized that it was not voluntarily disclosed by Aiotec. The agency did not disclose the identity of the U.S. company involved in the case. Aiotec declined to comment on the settlement.

In a public notice, OFAC detailed the U.S. company’s efforts to ensure compliance with sanctions, describing its actions as thorough and proactive. The company’s sanctions compliance team “took multiple steps to confirm the true destination of the plant” and to verify the identity of the end user. According to OFAC, the company incorporated explicit sanctions requirements into the sale agreement, repeatedly demanded shipping documents, and investigated the authenticity of documents when it suspected they might be fraudulent.

When initial inquiries raised concerns, the U.S. company pursued further verification measures, including a site visit to Turkey and an interview with the managing director of the Turkish company that was purportedly buying and reassembling the plant.

“Despite these best efforts, Aiotec and its apparent co-conspirators were able to deceive the U.S. company by falsifying documents and making repeated false statements,” OFAC stated.

The case highlights the serious consequences of circumventing U.S. sanctions, as well as the challenges faced by companies in safeguarding compliance when dealing with complex international transactions.

By fLEXI tEAM