Berkshire to pay $4m over ‘egregious’ Iran sanctions violations

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Warren Buffet’s firm agreed to pay millions to settle allegations that a Turkish subsidiary sold goods knowing they would be shipped to Iran for resale, including to the Iranian government.

Warren Buffett’s Berkshire Hathaway Inc agreed to pay $4.14m to settle civil allegations that a Turkish subsidiary committed “egregious” violations of United States sanctions against Iran, the US Treasury Department said on Tuesday.

The department’s Office of Foreign Assets Control (OFAC) said Iscar Turkey sold 144 shipments of cutting tools and related inserts worth $383,443 to two Turkish distributors from December 2012 to January 2016, knowing they would be shipped to a distributor in Iran for resale, including to Iran’s government.

OFAC said the sales occurred under the direction of some senior managers, after Iscar Turkey’s general manager concluded it was “inevitable” that US and European Union sanctions against Iran would be lifted and sought to be “well-positioned” to capitalise on this.

It also said Iscar Turkey took steps to “obfuscate” its dealings with Iran and concealed them from Berkshire, despite warnings that the sales would violate its compliance policies.

Berkshire voluntarily reported the apparent violations in May 2016 after receiving an anonymous tip. The company replaced employees who were involved, and upgraded compliance procedures for its foreign subsidiaries, OFAC said.

The Omaha, Nebraska-based conglomerate did not immediately respond to a request for comment.

Iscar Turkey, also known as Iscar Kesici Takim Ticareti ve Imalati Limited Sirket, is a unit of IMC International Metalworking Cos, a maker of metal cutting tools.

Berkshire paid $4bn for 80 percent of Israel-based IMC in 2006, and $2.05bn for the remainder in 2013.

IMC remains Buffett’s largest acquisition of a non-US company. Berkshire also owns dozens of other companies including the BNSF Railway and the Geico auto insurer.

The US Department of State designated Iran as a state sponsor of terrorism in January 1984.

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