Acteon & 2H Offshore OFAC Settlement: $227.5K (2019)

The seven apparent violations of the CACR arose from 2H Offshore's Malaysian affiliates, 2H Offshore Engineering Sdn Bhd and 2H Offshore Engineering (Asia Pacific) Sdn Bhd (collectively "2H KL"), producing analytical reports or sending employees to Cuba to present those reports for oil exploration projects in Cuban territorial waters between 2011 and 2012. The work pertained to projects managed by Petronas Carigali Sdn Bhd ("Petronas"), Repsol S.A. f/k/a Repsol YPF S.A. ("Repsol"), Petróleos de Venezuela, S.A. Cuba S.A. ("PdVSA Cuba"), and JSC Zarubezhneft.

The misconduct was driven by 2H Offshore's former Global Director and 2H KL's Technical Director. On November 13, 2008, the Technical Director sought guidance from the Global Director after receiving a prior email warning against doing business involving Cuba because 2H Offshore was an American-owned company. The Global Director forwarded an October 2007 Acteon memorandum that specifically prohibited work or trade in Cuba, even through third countries, but added that he did not want to turn away work from Petronas and advised finding a way around the prohibition. The Global Director also contacted Acteon's then-Group Finance Director, who later communicated that Acteon's prior U.S. person investor-parent had approved the work, subject to the conditions that the report be marked confidential and not provided to anyone else.

In 2010, 2H KL began performing services for Petronas' Cuba project. In August 2011, the Technical Director deliberately omitted the word "Cuba" from a workshop proposal. After the project concluded in or around April 2012, the Global Director instructed an employee to replace "Cuba" and "Cuban" with "Central America" and "Central American" in a post-trip expense report, and the Technical Director instructed an employee to rename the project from "Cuba Drilling Riser Analysis" to "Petronas Drilling Riser Analysis."

For the PdVSA Cuba project, 2H KL issued reports and two engineers traveled to Cuba to present at a workshop related to drilling of the Cabo de San Antonio 1X well. The Global Director directed that the work be conducted "under cover" and steered 2H KL away from contracting directly with PdVSA Cuba; reports were instead issued to PdVSA Intevep S.A., a Venezuelan affiliate. The Technical Director also removed all references to "Cuba" from PdVSA Cuba's letter of intent for the project.

For the Zarubezhneft project, 2H KL entered into a contract in September 2012 with Zarubezhneft's Operational Office in Havana, Cuba, executed by its Cuban affiliate via power of attorney. The Technical Director appears to have proceeded with this project without seeking authorization from the Global Director or Acteon.

Acteon made a voluntary self-disclosure of the Apparent Violations, and OFAC determined the Apparent Violations constitute an egregious case. The statutory maximum civil monetary penalty for the seven Apparent Violations is $455,000. The base civil monetary penalty is $227,500. OFAC settled with Acteon and 2H Offshore for $227,500, equal to the base civil monetary penalty amount.

This enforcement action highlights the importance of implementing risk-based controls, such as regular audits, to ensure subsidiaries are complying with their obligations under OFAC's sanctions regulations; performing heightened due diligence, particularly with regard to affiliates, subsidiaries, or counter-parties known to transact with OFAC-sanctioned countries or persons, or that otherwise pose high risks due to their geographic location, customers, or suppliers, or products and services they offer; and appropriately responding to derogatory information regarding the sanctions compliance efforts of persons subject to the jurisdiction of the United States.

In connection with the settlement, Acteon and 2H Offshore took the following remedial measures: Acteon's Head of Trade Compliance and outside counsel conducted sanctions and export compliance training for each 2H Offshore office; written guidelines on U.S. sanctions and export restrictions were distributed to Acteon's operating companies; 2H Offshore implemented an automated project proposal management process that includes customer screening (including customer billing location), location screening (including field development locations), and screening of new service projects before a new project can be actioned; 2H Offshore developed a compliance audit process with mechanisms for reporting audit findings and implementing corrective actions; and Acteon appointed a Head of Trade Compliance with responsibility for monitoring and ensuring 2H Offshore's ongoing compliance, and a Group General Counsel to provide ultimate oversight of the compliance monitoring function.

This page summarizes an OFAC enforcement case based on the document archived below. SanctionsLookup assumes no liability for errors, omissions, or inaccuracies in the original documents, this summary, or any changes made to the source documents at any time.

Provided for informational purposes only and does not constitute legal or compliance advice. Always consult the source document directly rather than relying on this summary.