Penalty settlements over U.S. embargo violations spike in April

U.S. Treasury steps up enforcement efforts to protect foreign policy

MIAMI – With the strengthening of the U.S. foreign policy toward Cuba, European companies with worldwide subsidiaries are navigating a high-risk environment and some are having to pay big for their employees' mistakes.

As of Monday, the U.S. Department of Treasury reported there were more than $1.2 billion in settlement agreements over civil penalties just in April, when the U.S. Treasury's total in 2018 was about $71.5 million.

In one of the cases, Acteon Group Ltd., a specialist subsea services company based out of England, is accused of providing services for oil drilling projects in Cuban waters. Investigators said there is evidence a former executive instructed an administrative employee "to replace the words 'Cuba' or 'Cuban' with 'Central America' or 'Central American' in a company report. 

Other companies with settlements over apparent violations of the U.S. embargo against Cuba are UniCredit Bank, a German financial institution, Standard Chartered Bank, a United Kingdom financial institution, and AppliChem GmbH, a German pharmaceutical company.

In the case of Acteon, the company could have faced about $2 million in penalties, but records show it was able to settle two cases for about $440,000. The U.S. Treasury detailed the penalties April 11 in a case that also mentioned the state-owned oil companies of Venezuela and Russia.

U.S. investigators pinned its U.S. subsidiary 2H Offshore Engineering Ltd., which has an office in Houston, its Malaysian affiliate, 2H KL, and its U.S. investor-parent company, KKR & Co. Inc., an entity organized under the laws of Delaware. 

KKR's three subsidiaries in Texas, the United Kingdom and Singapore, known as Seatronics, faced accusations over alleged business in Cuba and Iran. Investigators said "Seatronics’ senior management had actual knowledge of the business activity involving Cuba ... should have known about the Iran-related risks" and its conduct "harmed U.S. foreign policy objectives."

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