Stanley Black & Decker settles for sub’s Iran sales

A near-$2m settlement agreement between the US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) and tool manufacturer Stanley Black & Decker and subsidiary Jiangsu Guoqiang Tools Co., Ltd. (‘GQ’) highlights the need to ensure diligent compliance after acquiring subsidiaries.

OFAC says that Stanley Black & Decker, of New Britain, Connecticut, ‘on behalf of itself and its subsidiary located in China, GQ, has agreed to settle its potential civil liability for 23 apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR).’

The settlement agreement explains that Stanley Black & Decker ‘began acquisition negotiations with GQ in 2011, during which the company engaged in due diligence and discovered GQ actively exported to Iran. Over the course of the ensuing negotiations, Stanley Black & Decker took steps to cease GQ’s sales to, and transactions with, Iran and other OFAC-sanctioned countries prior to the acquisition date and made ceasing such sales a pre-requisite condition of the closing.’

It says that while Stanley Black & Decker provided a series of trainings to GQ employees on the company’s policies and procedures on sanctions compliance, it did not ‘implement procedures to monitor or audit GQ’s operations to ensure that its Iran-related sales had in fact ceased or did not recur post-acquisition,’ and that some GQ board members and managers continued to participate in activities with knowledge that ‘such conduct violated its parent company’s policies and U.S. economic sanctions against Iran.’

Amongst other methods of attempting to conceal their activities, ‘GQ employees created fictitious bills of lading with incorrect ports of discharge and places of delivery and instructed their customers not to write “Iran” on business documents, such as bills of lading,’ it says.

In addition to paying a penalty of $1.87m, the company agrees to implementing a number of internal controls, and audit and training procedures.

See:
https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20190327_decker_settlement.pdf