Recently, a U.S. pharmaceutical and medical supply company was fined over $16 Million for illegal sales, exports and reexports to Iran, Sudan, and Syria—countries that are currently subject to U.S. embargoes and economic sanctions programs. Alcon Laboratories, Inc., located in Fort Worth, Texas, as well as its Swiss affiliates (Alcon Pharmaceuticals, Ltd. and Alcon Management SA), recently settled with the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) for exporting surgical and pharmaceutical products from the United States to its affiliates in Switzerland, and then reexporting the items to distributors in Iran, Sudan, and Syria to fulfill orders in those countries. The company was charged with:
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452 unlicensed sales and exports to Sudan;
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104 unlicensed sales and exports to Iran;
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45 unlicensed reexports to Syria; and,
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100 charges of acting with knowledge that a violation of the EAR would occur.
The BIS imposed a civil penalty of $8.1 million for the EAR violations, and OFAC imposed $7.6 million in civil penalties for violations of the sanctions on Iran, Sudan and Syria.
An interesting point in this case is the fact that the company could have applied for and obtained the required authorizations for the shipments to all three countries under the Trade Sanctions Reform Act (“TSRA”). Peculiarly, the company had previously obtained TSRA authorizations for exports of similar products to sanctioned countries.
OFAC concluded that there was little harm to the sanctions programs in this case because the sales and shipments in question were licensable and could have been authorized. Alcon also had no prior history of export and sanctions violations, and took remedial actions by stopping future shipments to these countries and implementing a formal export compliance program that consisted of documented policies and procedures and trade compliance training for personnel.
