Senior U.S. government officials announced yesterday another sanctions volley against the Iranian regime’s Islamic Republic of Iran Shipping Lines (IRISL). The Justice Department announced a 317 count indictment against IRISL for violating U.S. sanctions laws, while the Treasury Department announced the addition of ten Iranian businesses and three executives as specially designated nationals or SDNs.
If a company or individual is listed as an SDN, U.S. persons are generally prohibited from dealing with them. A listing on the SDN list makes it very difficult for that person or company to transact business in the U.S., with U.S. persons, or in the global economy. IRISL has been the target of the U.S. and allies for many years because of its support of proliferation WMD-related activities and terrorism. As it has repeatedly done in the past, the regime will likely start creating additional front companies to try to keep evading U.S. sanctions. They are clever, but they will be caught, again.
“Today our office is shining a spotlight on the fraudulent activities of IRISL, which has been sanctioned by the United States, the European Union, and the United Nations for its role in the proliferation of weapons of mass destruction. IRISL and its sanctioned affiliates used a web of aliases or corporate alter egos across the globe to exploit the services of financial institutions located in Manhattan,” said Manhattan District Attorney Cyrus R. Vance, Jr. in a statement.
For U.S. exporters, and other U.S. entities such as banks, keeping tabs on SDNs is an important step in complying with U.S. sanctions laws. The penalties for violating these rules can lead to civil as well as criminal prosecution; however, even before that, a company can suffer a significant reputation hit if it is even alleged that it has been dealing with the Iranian regime, or other state sponsors of terrorism such as Cuba. Just ask GOP presidential hopeful Jon Huntsman and the recently surfaced allegations that the family business, Huntsman Corp., may have been dealing with the Iranian mullahs through one of its foreign subsidiaries.
It is not just a public relations problem, there are significant legal processes taking place behind the scenes that impact the business. Yet even the public relations can muck things up in these cases. Consider Jon Huntsman’s brother, Peter, the current CEO of the company, and the statement he made about U.S. sanctions around the time that these allegation were made public: “I don’t think that [trade] sanctions are a good diplomatic policy. … By not doing trade with Iran, are we hurting people that are reaching out for western business?”
For now, it seem as if the Huntsman matter is under control; the company has said it had done nothing illegal and, in all likelihood, the problem arose through a foreign subsidiary with minimal, if any, U.S. contacts. We will likely hear more about this though if Jon Huntsman makes a run for the GOP nomination.
Additional information on the recent USG announcement is available here.