Companies Disclose Potential Trade, FCPA Violations
Five companies said they may have violated U.S. sanctions, export controls or anti-corruption laws, according to their February Securities and Exchange Commission filings. The potential violations involved illegal exports, providing services to sanctioned territories and gift cards sent to the Chinese government.
Exodus, a U.S. cryptocurrency software provider, said the Office of Foreign Assets Control is investigating it for potentially violating U.S. sanctions against Iran. The company's Feb. 26 filing said it received a subpoena from OFAC in 2018 seeking information about transactions with “individuals” in Iran. After being contacted by OFAC, Exodus said it conducted a “comprehensive review” of its operations relating to countries subject to OFAC restrictions and found that it may also have violated other U.S. sanctions. The company said it may have “inadvertently” allowed its software to be downloaded by people or entities in Cuba, Crimea and Syria.
Exodus said it submitted a voluntary self-disclosure to OFAC and “took remedial action designed to prevent similar activity from occurring in the future,” including new sanctions compliance procedures, compliance training to employees and implementing technology to block parties associated with embargoed countries. “The controls we have implemented may not be fully effective and there is no guarantee that we will not inadvertently provide software or services to sanctioned parties in the future,” the company said. It said it is cooperating with OFAC, which is still reviewing the disclosure. A company spokesperson didn’t comment.
Baker Hughes, an American oil services company, said its involvement in certain “projects” may have violated U.S. sanctions. The company in its Feb. 25 filing said the SEC is investigating into its book-keeping and internal controls “regarding sales of its products and services in projects impacted” by U.S. sanctions. Baker Hughes said it is cooperating with the SEC’s investigation and has begun its own internal review into the potential violations. The company said it “cannot anticipate the timing, outcome or possible impact of the investigation or review, financial or otherwise.” A Baker Hughes spokesperson declined to comment.
Pactiv Evergreen, a North American food and beverage packaging company, said it submitted a voluntary self-disclosure to the Justice Department and the SEC in September after discovering potential violations of the Foreign Corrupt Practices Act. The company's Evergreen Packaging Shanghai business gave gift cards “representing relatively minor monetary values” to government regulators and employees of Chinese state-owned companies, Pactiv said in its Feb. 25 filing. Pactiv said the cards were given over the course of “several years.” The company said the “amounts involved are immaterial” and were given during Chinese holidays for “generalized goodwill purposes only.”
The company said it “initiated procedures” to stop giving out the gift cards and found other “gift, travel and entertainment practices that do not comply with company policy and expectations.” Pactiv said it may improve controls and employee training to address the potential violations and is cooperating with the Justice Department and the SEC. A Pactiv spokesperson didn't comment.
Repligen, a U.S. producer of materials used to manufacture biological drugs, said it may have violated U.S. export control laws. “We and our subsidiaries” may have exported products without the required licenses from the Bureau of Industry and Security, which could lead to “substantial fines and penalties for us and for the individuals working for us,” Repligen said in its Feb. 24 filing. It said it submitted “various” voluntary self-disclosures to BIS and warned that it could face “reputational harm” or “loss of access to certain markets.” A Repligen spokesperson didn’t comment.
U.S.-based Flir Systems Inc., a producer of thermal imaging cameras, said it extended its tolling agreements with two U.S. agencies as they continue to investigate the company’s potential export violations. The company previously extended agreements with BIS through Dec. 1 and with the Justice Department through Dec. 15 (see 2011040041), but extended both to March 1 and March 15, respectively, according to its Feb. 25 filing. A Flir Systems spokesperson said “these matters have been ongoing for several years.” but declined to comment further.