Fokker Services B.V. agreed to a $21 million civil forfeiture to OFAC and the Department of Commerce’s Bureau of Industry and Security for trade sanction violations for 1,112 alleged violations of the Iranian Transactions and Sanctions Regulations and 41 alleged violations of the Sudanese Sanctions Regulations with a U.S. nexus from 2005 through 2010. This illustrates that any company, foreign or domestic, doing or planning to do business with entities or countries subject to U.S. trade sanctions – such as the Russian Federation – should seek guidance regarding compliance from counsel such as Marks & Sokolov.
Fokker Services used a number of schemes to evade U.S. sanctions and export laws describing them as “work-arounds.” Examples include deliberately choosing repairs shops that would not request end-user certificates; withholding aircraft tail numbers to U.S.-based repair shops, providing false tail numbers to U.S. and U.K. companies, and stating that the parts submitted for repair by U.S.-repair shops were to be used as “stock” parts. On one occasion, Fokker Services provided a U.S. aerospace company with a work order that falsely represented that the aircraft part belonged to an airplane owned by a Portuguese airline when, in reality, the part actually belonged to an Iran Air aircraft. The U.S. aerospace company fixed the part and returned it to Fokker Services, who then shipped the part to Iran.
Fokker Services voluntarily self-disclosed this matter to OFAC which determined the alleged violations constitute an egregious case. The settlement amount reflects OFAC’s determination that Fokker Services:
- Engaged in willful and reckless alleged violations of U.S. law;
- Knew that it was shipping U.S.-origin parts to customers in Iran and Sudan;
- Caused significant harm to the objectives of OFAC’s sanctions programs given;
- Is a sophisticated and experienced aerospace services provider;
- Had no formal OFAC compliance program in place;
- Did not institute sufficient controls to stop conduct upon discovery of violations;
- Had no OFAC sanctions history in the five years preceding;
- Had adopted new and more effective internal controls since launching internal investigation;
- Provided substantial cooperation during the investigation.
Marks & Sokolov attorneys can assist with compliance by providing:
– A review of contracts, including an examination of parties and their beneficial owners;
– Determination whether the sanctions apply and prohibit contract performance;
– Advice regarding potential liability to contract parties;
– Advice regarding notification of termination of contracts and the disposition of deposits;
– Advice about possible defenses against liability such as justified non-performance due to force majeure circumstances and regulatory prohibition.
Marks & Sokolov, LLC has extensive experience representing multinational clients in the United States and Russia. For more information please contact, in the United States: Bruce Marks (marks@mslegal.com) or Thomas Sullivan (tsullivan@mslegal.com) at (215) 569-8901; or in Russia, Sergey Sokolov (ssokolov@mslegal.com) or Derek Bloom (dbloom@mslegal.com) at +7-495-626-0606.Fokker Services B.V. agreed to a $21 million civil forfeiture to OFAC and the Department of Commerce’s Bureau of Industry and Security for trade sanction violations for 1,112 alleged violations of the Iranian Transactions and Sanctions Regulations and 41 alleged violations of the Sudanese Sanctions Regulations with a U.S. nexus from 2005 through 2010. This illustrates that any company, foreign or domestic, doing or planning to do business with entities or countries subject to U.S. trade sanctions – such as the Russian Federation – should seek guidance regarding compliance from counsel such as Marks & Sokolov.
Fokker Services used a number of schemes to evade U.S. sanctions and export laws describing them as “work-arounds.” Examples include deliberately choosing repairs shops that would not request end-user certificates; withholding aircraft tail numbers to U.S.-based repair shops, providing false tail numbers to U.S. and U.K. companies, and stating that the parts submitted for repair by U.S.-repair shops were to be used as “stock” parts. On one occasion, Fokker Services provided a U.S. aerospace company with a work order that falsely represented that the aircraft part belonged to an airplane owned by a Portuguese airline when, in reality, the part actually belonged to an Iran Air aircraft. The U.S. aerospace company fixed the part and returned it to Fokker Services, who then shipped the part to Iran.
Fokker Services voluntarily self-disclosed this matter to OFAC which determined the alleged violations constitute an egregious case. The settlement amount reflects OFAC’s determination that Fokker Services:
- Engaged in willful and reckless alleged violations of U.S. law;
- Knew that it was shipping U.S.-origin parts to customers in Iran and Sudan;
- Caused significant harm to the objectives of OFAC’s sanctions programs given;
- Is a sophisticated and experienced aerospace services provider;
- Had no formal OFAC compliance program in place;
- Did not institute sufficient controls to stop conduct upon discovery of violations;
- Had no OFAC sanctions history in the five years preceding;
- Had adopted new and more effective internal controls since launching internal investigation;
- Provided substantial cooperation during the investigation.
Marks & Sokolov attorneys can assist with compliance by providing:
– A review of contracts, including an examination of parties and their beneficial owners;
– Determination whether the sanctions apply and prohibit contract performance;
– Advice regarding potential liability to contract parties;
– Advice regarding notification of termination of contracts and the disposition of deposits;
– Advice about possible defenses against liability such as justified non-performance due to force majeure circumstances and regulatory prohibition.
Marks & Sokolov, LLC has extensive experience representing multinational clients in the United States and Russia. For more information please contact, in the United States: Bruce Marks (marks@mslegal.com) or Thomas Sullivan (tsullivan@mslegal.com) at (215) 569-8901; or in Russia, Sergey Sokolov (ssokolov@mslegal.com) or Derek Bloom (dbloom@mslegal.com) at +7-495-626-0606.