Thai plastics company to pay $20m to settle alleged Iran sanctions breaches

The US Office of Foreign Assets Control (‘OFAC’) has announced that SCG Plastics Co., Ltd., which it describes as being part of a Thai-headquartered multinational enterprise headquartered that sells plastic resins, ‘has agreed to pay $20,000,000 to settle its potential civil liability for 467 apparent violations of OFAC sanctions on Iran.’

OFAC said that from 2017 to 2018, ‘SCG Plastics caused U.S. financial institutions to process $291 million in wire transfers for sales of Iranian-origin high-density polyethylene resin (HDPE) manufactured by a joint venture in Iran owned by, among others, SCG Plastics’ parent company and the National Petrochemical Company of Iran (“NPC”), an entity that is part of the Government of Iran.’

It said that in addition to receiving wire transfer payments for Iranian-origin HDPE, ‘[the company] also initiated U.S. dollar wire transfer transactions on behalf of this Iranian-based joint venture to pay the joint venture’s outstanding debts to third-party vendors.’

According to OFAC, SCG Plastics ‘regularly issued invoices to its customers that instructed them to remit U.S. dollar-denominated payments into SCG Plastics’ bank accounts in Thailand’ and that these ‘U.S. dollar-denominated payments were processed by U.S. financial institutions acting in their capacity as correspondent banks.’

Amongst the methods the company used to ‘obfuscate the fact that the HDPE it sold was a product of Iran,’ were, it said, to repeatedly issue ‘shipping and payment documents that listed variants of the term “Middle East” as the country of origin rather than “Iran,” even though the country of origin for the goods was Iran.’

OFAC said that the $20m settlement amount ‘reflects OFAC’s determination that SCG Plastics’ apparent violations were egregious and, with the exception of certain transactions, were not voluntarily self-disclosed.’