Chinese oil equipment exporter gets $2.7 million fine

Jereh Group employees used an elaborate export scheme involving intermediaries to bypass U.S. Iranian Transactions and Sanctions Regulations.

   Yantai Jereh Oilfield Services Group Co. Ltd. will pay a $2.7 million fine for carrying out illicit U.S. exports to Iran. 
   According to the Treasury Department’s Office of Foreign Assets Control (OFAC), the Yantai, China-based company violated the U.S. Iranian Transactions and Sanctions Regulations on 11 occasions. 
   The violations involved the export or re-export of U.S.-origin oilfield equipment components, including coiled tubing and pump sets, via China to various end users in Iran. 
   OFAC noted that two of the 11 Jereh Group shipments were seized by Customs and Border Protection prior to leaving the United States.
   The illicit exports occurred between Oct. 2, 2014 and March 4, 2016, despite the fact that the company’s chairman in June 2011 issued a company-wide memorandum “instructing all Jereh employees to immediately cease and refrain from engaging in any business relationships with Iran or Iranian companies.” The company also updated its contract template to reflect the prohibition. 
   “Despite these steps, the Jereh Group failed to develop any procedures to audit compliance with the June 2011 directive,” OFAC said.
   On Nov. 24, 2013, the P5+1 (U.S., U.K., Germany, France, Russia and China) and Iran announced a set of initial understandings known as the Joint Plan of Action. According to OFAC, that’s around the time that two Jereh Group executives established an elaborate scheme involving intermediary companies in China and the United Arab Emirates to bypass the U.S. sanctions against Iran. 
   After the violations were uncovered, the Commerce Department’s Bureau of Industry and Security added several Jereh Group companies and related individuals to the Entity List on March 21, 2016.
   Since the violations, Jereh Group said it has fired the employees involved in the illicit export scheme; enhanced its compliance department, which now includes a U.S.-trained chief legal officer and deputy director of compliance; instituted company-wide compliance training; and issued compliance certificates to its suppliers.