Fokker Services B.V. Agrees to Forfeit $10.5 Million for Illegal Transactions with Iranian, Sudanese, and Burmese Entities
Company Will Pay Additional $10.5 Million in Parallel Civil Settlement
|U.S. Attorney’s Office June 05, 2014|
WASHINGTON—Fokker Services B.V., a Dutch aerospace services provider, has agreed to forfeit $10.5 million to the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by engaging in illegal transactions involving the export of aircraft parts, technologies, and services to customers in Iran, Sudan, and Burma. The company has also entered into a parallel settlement agreement with the Commerce Department’s Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC).
The announcement was made by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia (USAO-DC); Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office (FBI-WFO); and Eric L. Hirschhorn, U.S. Department of Commerce Under Secretary for Industry and Security. Today’s announcement concludes a multi-year investigation led by BIS, OFAC, FBI-WFO, ICE’s Homeland Security Investigations, the Defense Criminal Investigative Service, and the U.S. Attorney’s Office for the District of Columbia.
A criminal Information was filed today in federal court in the District of Columbia charging Fokker Services B.V. with one count of knowingly and willfully conspiring to violate the IEEPA, in violation of 18 U.S.C. § 371. Fokker Services waived the requirement of being charged by way of federal indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees. In addition, as part of the deferred prosecution agreement reached with the U.S. Attorney’s Office for the District of Columbia, Fokker Services agreed to forfeit $10.5 million within five days of the approval of the agreement by the court.
According to court documents, starting on or about late 2005 and ending on or about late 2010, Fokker Services violated U.S. laws by engaging in illegal transactions involving the export and re-export of aircraft parts, technology, and services to customers located in U.S.-sanctioned countries, specifically, Iran, Sudan, and Burma. Throughout this period, Fokker Services knowingly and willfully engaged in this criminal conduct, fully aware of the application of U.S. export laws, an issue that was repeatedly raised internally with the company’s management. In June 2010, Fokker Services made a disclosure of potential violations to BIS and OFAC in which the company acknowledged and accepted responsibility for its unlawful conduct.
Fokker Services’ criminal conduct included knowingly initiating, either directly or indirectly, 1,153 shipments of aircraft spare, repaired, or exchanged parts with a U.S. nexus to Fokker Services’ customers in Iran, Sudan, or Burma. Among those illegal transactions were 99 transactions involving Fokker Services’ customer, Iran Air, which was the subject of a special order from the U.S. Department of Commerce prohibiting Fokker or any third party from exporting U.S.-origin commodities to Iran Air or providing services to Iran Air. Fokker Services’ gross revenue for the shipments in violation of U.S. export control laws amounted to approximately $21 million.
“For years, Fokker Services treated U.S. export laws as inconveniences to be ‘worked around’ through deceit and trickery,” said U.S. Attorney Machen. “Today’s prosecution sends a clear message that there will be consequences for those who seek to profit from violating and circumventing U.S. trade laws.”
“Fokker Services violated the IEEPA by knowingly ignoring U.S. sanctions and engaging in illegal transactions which undermined the integrity of our national security. Today, the company has taken responsibility for their unlawful actions,” said Assistant Director in Charge Parlave. “Together with our partners at the Departments of Commerce, Treasury and Justice, the FBI will continue our efforts to safeguard U.S. interests and ensure that goods do not end up in the wrong hands.”
“The scope of today’s global settlement with Fokker Services highlights the egregious nature of the violations and points to the commitment of OEE to pursue and prosecute those responsible no matter where they are located,” said Under Secretary of Commerce Hirschhorn. “OEE and our partner law enforcement colleagues will continue to use all means available to ensure that U.S. technology does not fall into the wrong hands.”
According to court documents, Fokker Services used a number of schemes to evade U.S. sanctions and export laws while continuing its business with customers located in U.S.-sanctioned countries and specifically designed to continue the company’s profit earnings in the sanctioned countries’ markets. Internally, Fokker Services described these as “work-arounds.”
Some examples of the work-arounds used by Fokker Services and its employees include the following: deliberately withholding aircraft tail numbers to U.S.-based repair shops, providing false tail numbers to U.S. and U.K. companies and repair shops, and stating that the parts submitted for repair by U.S.-repair shops were to be used as “stock” parts. Fokker Services engaged in this conduct as an intentional effort to conceal the company’s affiliation with customers located in U.S. sanctioned countries. On one occasion, Fokker Services provided a U.S. aerospace company with a work order that falsely represented that the aircraft part belonged to an airplane owned by a Portuguese airline when, in reality, the part actually belonged to an Iran Air aircraft. The U.S. aerospace company fixed the part and returned it to Fokker Services, who then shipped the part to Iran.
Other work-arounds were designed by Fokker Services to further the company’s efforts of continuing to engage in transactions in violation of U.S. export laws while also avoiding detection of U.S. authorities; for example, the company constructed and constantly updated a chart it called “the black list” that tracked which U.S. companies were more vigilant about export controls and directed its business to those U.S. companies that were not on “the black list.” The company also deleted references to Iran in materials sent to its U.S. subsidiaries and U.S. repair shops. It changed an internal database that tracked parts to delete fields related to ultimate end-user information and directed employees to hide activities and documents related to Iranian transactions when inspectors from the U.S. Federal Aviation Administration audited Fokker Services’ Dutch warehouse.
According to court documents, this conduct occurred in various business units within Fokker Services and certain policies and practices in furtherance of Fokker Services’ criminal conduct were carried out with the knowledge and approval of the company’s senior corporate managers, as well as with the knowledge of the company’s Legal and Export Compliance departments.
The Justice Department’s investigation of Fokker Services arose out of the company’s disclosure of potential violations to BIS and OFAC in June 2010. In its initial disclosure, Fokker Services acknowledged and accepted responsibility for its unlawful conduct. Over the next two-and-a-half years, Fokker Services conducted a vast internal investigation through outside counsel and disclosed additional violations of U.S. export laws.
Since the submission of its 2010 disclosure to U.S. authorities, Fokker Services has taken steps to enhance and optimize its sanctions compliance programs, including stopping all new business with customers located in U.S.-sanctioned countries; launching an employee disciplinary review to investigate and address the conduct of all employees, including senior management, who were involved in the apparent violations; adopting a new Export Compliance Program; and terminating relationships with sanctioned banks and closing its Iranian representative office and branch.
Fokker Services’ forfeiture of $10.5 million to the United States will settle forfeiture claims by the Department of Justice. In light of the company’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the U.S. Attorney’s Office will recommend the dismissal of the Information in 18 months, provided Fokker Services fully cooperates with, and abides by, the terms of the deferred prosecution agreement.
In a related settlement announced today by the Commerce Department and the Treasury Department, Fokker Services has agreed to pay a $10.5 million civil penalty to settle charges by BIS and OFAC. The BIS settlement is subject to final review and approval by the Assistant Secretary of Commerce for Export Enforcement.
This investigation was conducted by the FBI’s Washington Field Office; the Boston and Miami Offices of the BIS Office of Export Enforcement; the Washington, D.C. Office of the BIS Office of Enforcement Analysis; the Boston Field Office of ICE’s Homeland Security Investigations; and the New Haven, Connecticut Office of the Defense Criminal Investigative Service.
The prosecution is being handled by Assistant U.S. Attorney Maia L. Miller of the National Security Section of the U.S. Attorney’s Office for the District of Columbia. Former Assistant U.S. Attorneys Robert Bowman and Ann Petalas, along with Assistant U.S. Attorney George Varghese of the United States Attorney’s Office for the District of Massachusetts, also worked on the matter.