By: Danielle McClellan
PanAmerican Seed Company (PanAm) of West Chicago, Illinois, a division of Ball Horticultural Company has agreed to pay $4,320,000 to settle potential civil liability for alleged violations of the Iranian Transactions and Sanctions Regulations (31 C.F.R. part 560 ITSR). Its alleged that the company exported seeds, primarily of flowers, to two Iranian distributors on 48 different occasions between May 2009 and March 2012.
PanAm and Ball Horticultural employees (including several mid-level managers) were aware of the US economic sanctions involving Iran and the requirement to apply for licenses to export the seeds to Iran. PanAm concealed the shipments by shipping the seeds to consignees based in two third countries located in Europe or the Middle East, and then the Iranian customers arranged for the re-exportation of the seeds to Iran.
The maximum penalty for the violations would be $12 million, OFAC considered the following when applying the $4 million penalty:
OFAC considered the following to be aggravating factors:
- PanAm Seed willfully violated U.S. sanctions on Iran by engaging in, and systematically obfuscating, conduct it knew to be prohibited;
- 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;
- Multiple PanAm Seed and Ball Horticultural employees, including mid-level managers, had contemporaneous knowledge of the transactions giving rise to the Alleged Violations. They were aware 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;
- PanAm Seed engaged in this pattern of conduct over a period of years, providing over $770,000 in economic benefit to Iran;
- PanAm Seed did not initially cooperate with OFAC’s investigation, providing some information that was inaccurate, misleading, or incomplete; and
- PanAm Seed is a division of Ball Horticultural, a commercially sophisticated, international corporation.
OFAC considered the following to be mitigating factors:
- 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;
- The exports at issue were likely eligible for an OFAC license under the Trade Sanctions Reform and Export Enhancement Act of 2000;
- PanAm Seed took remedial steps to ensure future compliance with OFAC sanctions, including stopping all exports to Iran, implementing a compliance program, and training gat least some of its employees on OFAC sanctions; and
- PanAm Seed cooperated with OFAC by agreeing to toll the statute of limitations for a total of 882 days.