A case where the US company did not choose the cargo. Its parent did, on its vessels.
The structure
Maersk Line, Limited (MLL) is a Delaware company with two wholly owned US subsidiaries, Farrell Lines and E-Ships. Between January 2003 and October 2007, OFAC says, it provided unlicensed shipping services for 4,714 cargoes originating in or bound for Sudan and Iran. The vessels were owned, operated or chartered by MLL, but time-chartered, or sub-time-chartered, by MLL’s parent, A.P. Moller-Maersk A/S, for at least one leg of each cargo’s journey. The parent chartered the vessels; MLL’s ships carried the cargo.
OFAC also noted MLL’s use of US-flag vessels for “intermediate relay legs” of shipments to or from the sanctioned countries, information the company volunteered. See third-country transshipment for why a sanctioned origin or destination is easy to miss on any one leg of a multi-leg journey.
The penalty
OFAC found the matter non-egregious and not voluntarily self-disclosed. The base penalty, calculated on gross freight charges from origin to destination, was $61.8 million, and OFAC settled at $3.1 million. It explained the reduction: MLL substantially cooperated with a voluminous, well-organised dataset covering five years, including port calls in Sudan, it signed two tolling agreements, and the base figure was out of proportion because the violations involved only part of each voyage. Remediation was global, “throughout MLL’s corporate family”, including updating the global booking system in which MLL participates.
Next to it in the same notice
The same OFAC notice reports a very different, small case. 3M Imtec, a seller of dental implants and equipment bought in July 2008, settled for $125,000 after due diligence for the acquisition found that, before the purchase, it had sold implants through a third country for delivery to Iran, outside the dates of its OFAC licences. The acquirer investigated and disclosed. See acquisition integration gaps. A year earlier DHL had paid $9.4 million to OFAC and the Commerce Department for shipments to Iran and Sudan between 2002 and 2007 and for failing to keep records, the carrier’s release being brief.
What the record shows
- Bookings elsewhere in the group put a US company’s ships on sanctioned routes. The US subsidiary was liable for what its affiliates booked onto its vessels, a visibility gap like the ones in the acquisition cases.
- The base penalty here is a freight figure. Calculating on gross freight charges produced a base of $61.8 million, which OFAC mitigated in light of the fact that the violations covered only part of each voyage.