Audio company Harman settles with OFAC for alleged Iran sanctions violations
Audio electronics company Harman International Industries has agreed to pay $1.45 million to settle allegations that British employees of its US subsidiary facilitated sales to Iran using code words like ‘North Dubai’ and ‘up north’ to disguise the prohibited transactions, the Treasury Department announced Tuesday.
The Connecticut-based multinational company’s settlement with the Office of Foreign Assets Control (“OFAC”) covers 11 apparent violations of Iran sanctions between May 2018 and October 2020, when 13 overseas British employees enabled product diversions from a UAE distributor to Iranian customers.
OFAC said the British sales team, including middle-level managers such as sales directors and regional directors, ‘understood the Distributor’s practice of channeling Harman goods it received in Denmark to Iran’ and used deceptive language to obscure the transactions in internal communications.
‘Seeking to obscure references to Iran in internal emails and sales presentations… members of the British Sales Team used deceptive terms such as ‘the northern region,’ ‘North Dubai,’ and ‘up north’ in an apparent reference to Iran’s geographical location directly north of the UAE,’ according to the enforcement release.
The scheme involved Harman Professional shipping goods to its longtime UAE distributor on an ‘ex works’ basis, with the distributor collecting products from Harman’s Danish distribution centre before shipping them onward to Iran. At least one end user was identified as the Iranian government.
‘Harman had no formal system for monitoring or auditing sanctions-related risks,’ OFAC stated, noting that the legal department ‘usually relied on business units to identify potential issues’ and that in-house attorneys ‘did not have the training, time, or resources to develop adequate expertise on OFAC sanctions and export controls.’
The $1.45 million settlement reflects OFAC’s determination that the violations were ‘egregious’ but also that Harman voluntarily self-disclosed the conduct and implemented remedial measures. The company agreed to invest $400,000 of the settlement amount in additional sanctions compliance controls.
