The Office of Foreign Assets Control (“OFAC”) announced today that a $21 million fine had been extracted from the Dutch company Fokker Services BV in connection with its export of U.S. origin spare aircraft parts from the Netherlands to Iran and Sudan. The re-exports to Iran and Sudan by a Dutch company were prohibited under section 560.205 of the Iran regulations and section 538.507(b) of the Sudan regulations because the aircraft parts were presumably ECCN 9A991, although this fact is not expressly stated.
Half of the $21 million dollars is being paid in connection with a deferred prosecution agreement with the U.S. Attorney for the District of Columbia. This is disturbing because the OFAC announcement makes clear that the exports were voluntarily disclosed by Fokker to OFAC. One of the major incentives for a voluntary disclosure is to avoid criminal prosecution. After the Fokker case, people are certainly going to think twice about making a voluntary disclosure.
Nothing in OFAC’s description of the reasons for the penalty justify turning a voluntary disclosure into a criminal prosecution. OFAC describes the violation as “wilful and reckless” because Fokker knew that these were U.S. origin parts. Note that there is no claim that Fokker knew that its export of these parts from the Netherlands to the embargoed countries was a violation of U.S. law, only that it knew that the parts were U.S. origin. Foreign persons might well not understand that exports of U.S. origin parts from their own country and in compliance with their own laws would be illegal, so OFAC is making an unjustifiable leap from knowledge of the parts’ origin to a “wilful and reckless” violation of law. Another aggravating factor was the absence of a U.S. sanctions compliance program at the Dutch company, again hardly a sound reason for turning a voluntary disclosure into a criminal prosecution.