OFAC Announces Two Settlements for Violations of Cuban, Iran Sanctions

The Treasury’s Office of Foreign Assets Control announced two settlements worth almost a combined $500,000 involving a United Kingdom-based oil and gas service provider, its subsidiaries and a New York-based global investment firm for violations of U.S.-imposed sanctions on Cuba and Iran.

In its first settlement, OFAC announced a $227,500 payment from the U.K.-based company, Acteon Group, its subsidiary 2H Offshore Engineering and its two Malaysian affiliates after the agency said all were involved in “engineering design” analysis for oil well drilling projects in Cuba, including for Petroleos de Venezuela in Cuba, according to an April 11 notice. In the second settlement, OFAC announced a $213,866 payment from KKR & Co. Inc., Acteon, and several Acteon subsidiaries known as Seatronics. OFAC said KKR, a New York City investment firm, is Acteon’s parent company and was liable for Acteon’s and Seatronics’ violations of U.S.-imposed sanctions on Iran. Acteon and Seatronics committed 13 violations of the Cuban Assets Control Regulations, OFAC said.

OFAC said the global director of 2H Offshore sought to circumvent U.S.-imposed sanctions on Cuba to fulfill an oil well drilling project. The project began in 2010 and involved work for PdVSA Cuba, OFAC said. Engineers for 2H Offshore also traveled to Cuba to present at a “workshop,” according to the notice. The company’s director told employees to replace the words “Cuba” or “Cuban” with “Central America” in all expense reports, OFAC said. The director also sent an email asking another company employee to make sure that PdVSA would know that they are working “under cover.”

OFAC said Acteon voluntarily disclosed the violations, and said aggravating factors included the director “willfully” violating U.S. sanctions, the company acting with “reckless disregard” and failing to “exercise a minimal degree of caution or care,” managers purposefully hiding their dealings with Cuba, and the ineffectiveness of their compliance program. OFAC said mitigating factors included Acteon’s voluntary disclosure, the company taking disciplinary actions against employees and “implementing a new sanctions compliance program.” Acteon also implemented several other measures, including a new “automated project proposal management process that includes customer screening” and a new compliance audit program.

In its second settlement, OFAC said Acteon committed 13 violations of the Cuban Assets Control Regulations. Acteon’s parent company, U.S.-based KKR, was responsible for three violations of U.S.-imposed sanctions on Iran, the notice said. OFAC said three subsidiaries of Acteon were also involved in the violations: U.K.-based Seatronics Ltd., Texas-based Seatronics, Inc., and Singapore-based Seatronics Pte. Ltd. Although OFAC said KKR did “not appear to have been directly involved” in the Iran sanctions violations, the company did incur civil liability.

Between August 2010 and March 2012, Seatronics violated U.S.-imposed sanctions on Cuba when it rented, sold or received commission for “referring shipments of equipment for projects” in Cuban waters, according to the notice. OFAC said Seatronics rented or sold equipment to at least two companies -- Modus Seabed Intervention and Impresub Marine & Diving Contractors -- and sent its engineers to Cuba to “reach the vessel on which the equipment was embarked.” In addition, Seatronics allegedly rented or sold marine equipment to two United Arab Emirates customers in 2014 that “operated in Iranian territorial waters.” Before the violations, OFAC said, Acteon had issued “sanctions compliance guidance to all of its Seatronics locations” that instructed employees not to do business with Cuba or Iran.

Acteon self-disclosed the violations, according to the notice. OFAC said aggravating factors included Seatronics’ “reckless disregard for U.S. sanctions laws,” its pattern of sanctions violations over several years, the fact that its senior management had “actual knowledge of the business activity involving Cuba and should have known about the Iran-related risks,” and the fact that its compliance program was “ineffective.” OFAC said mitigating factors included Acteon’s voluntary disclosure and its responsiveness to follow-up questions, its disciplinary actions of Seatronics managers and the fact that Acteon, Seatronics and KKR had not received a penalty in the previous five years. Acteon also committed to conducting sanctions and export compliance training for the Seatronics offices, and introduced a new customer screening procedures and compliance audit program.