A case where the concealment is visible in the email subject lines.
How the supply chain worked
Unicat, based in Alvin, Texas, sells catalysts used in refineries and steel mills. From 2016 it bought most of them from manufacturers in China through one supplier who worked in both countries, and the supplier usually shipped directly from China to the customer. In 2018 the supplier set up a Unicat-branded company in Dalian. Orders arrived at the Texas headquarters or at a majority-owned Dutch affiliate.
Iran
OFAC says the former CEO had known since at least 2015 that US law prohibited trading with Iran. At his direction, Unicat signed distribution agreements in 2016 and again in 2020 with a regional distributor operating in the UAE and Iran to sell to end users in Iran. When a supply chain manager wrote in July 2018 that “sending from the US [sic] will not be an option”, the CEO replied that the Dutch affiliate could handle the order and the goods could ship from China. They did.
Unicat also sent technical staff to Iran three times to supervise loading catalysts into refinery reactors. Payment for those services was in cash. The distributor explained that cash would “avoid from transfering [sic] money” since “it is not possible to transfer money through US [sic] to Iran.”
The board knew by late 2018 — a December meeting agenda listed “ongoing business in Iran” — and did not stop it. In 2019 employees began writing Iran as “I” in emails, discussed who should not see shipping documents because “sanctions have been tougher now”, and in May 2019 a sales manager wrote: “I suggest you don’t put the country name on any communication, especially not on email title or subject.” Sales continued until February 2021.
Venezuela
In May 2020 Unicat sold catalysts to Orinoco Iron, then owned by the Government of Venezuela. The CEO, the China office and a person acting for Orinoco used unrelated third-party entities for the sale, and the CEO arranged to receive $517,337 of Orinoco’s $1,370,231 payment as a credit from the China office, which OFAC describes as an apparent attempt to obscure the payment.
How it ended
In April 2021 Unicat merged with a UK company whose founder became its CEO. On his first visit to the Texas headquarters in July 2021 he found the sales to sanctioned countries and stopped them. The former CEO was terminated, and Unicat filed disclosures with OFAC, the Justice Department and the Commerce Department a month later.
The penalty
Egregious but voluntarily self-disclosed, at $3.9 million against a $4.0 million base. The release lists the CEO’s knowledge, the board’s inaction, the instruction to keep Iran out of emails and the Dutch-affiliate redirect as aggravating, and credits the self-disclosure, a full internal investigation, and a new compliance programme with periodic audits and sanctions clauses in agent contracts.
What the record shows
- Routing through a majority-owned foreign affiliate does not remove US liability. The Dutch affiliate’s role is the basis for a separate facilitation violation. See third-country transshipment and the pages on the UAE, the Netherlands and China.
- Third-party entities and a credit note obscure a payer. See front companies.
- A change of owner surfaced it. Like Murad, the conduct was concealed internally and found by new management, not by a control.