Cameron International OFAC Settlement: $1.4M (2021)

Between approximately July 29, 2015 and November 28, 2016, Cameron appears to have violated Directive 4 issued pursuant to Executive Order 13662, as implemented pursuant to § 589.201 of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589. Four U.S.-person senior managers at Cameron (a Division President, two Vice Presidents of Finance, and one Senior Manager) approved five contracts for Cameron Romania S.R.L. ("Cameron Romania"), Cameron's foreign subsidiary, to supply goods to Gazprom-Neft Shelf for use at its Prirazlomnaya Arctic offshore oil production and exploration platform. Gazprom-Neft Shelf is a wholly owned subsidiary of OJSC Gazprom Neft ("Gazprom"), which was added to OFAC's Sectoral Sanctions Identification List ("SSI List") on September 12, 2014 pursuant to E.O. 13662, subjecting it to Directive 4 restrictions; as a wholly owned subsidiary of Gazprom, Gazprom-Neft Shelf is also subject to those restrictions. Cameron's approval of the contracts thus constituted the prohibited provision of services involving a person determined to be subject to Directive 4, its property, or its interests in property.

Beginning in late July 2015, Cameron Romania personnel emailed Cameron's U.S.-person senior managers requesting contract approvals. Cameron's contract approval process required review and approval by certain U.S. persons for contracts above specific monetary thresholds and contracts departing from standard terms and conditions. The managers approved the contracts and also approved two Pre-Purchase Forms for one of the contracts, allowing Cameron Romania to begin work prior to final execution. At the time of their approvals, the Cameron managers had reason to know the services they were providing were in support of Arctic offshore oil-producing projects by Gazprom-Neft Shelf; requests from Cameron Romania variously referenced the provision of oil production or exploration goods to the Prirazlomnaya platform and stated that the Russian Arctic was the destination of the goods. In total, Cameron Romania made 111 shipments of oil production or exploration goods to Gazprom-Neft Shelf for use at its Arctic offshore platform.

Although Cameron had procedures in place to review prospective transactions with Russian firms, the compliance form did not indicate that U.S.-person involvement in the activities of Cameron's foreign subsidiaries could have fallen within the applicable prohibitions. Schlumberger acquired Cameron on April 1, 2016, at which point two of the contracts had already been approved. Schlumberger discovered the apparent violations during post-acquisition compliance review and integration efforts after the three remaining contracts were approved. Cameron submitted a notification of an apparent violation to OFAC in June 2017, followed by an additional report in December 2017; OFAC assessed, however, that these submissions did not constitute a voluntary self-disclosure.

The statutory maximum civil monetary penalty applicable in this matter is $22,373,785.98. OFAC determined that Cameron did not voluntarily self-disclose the apparent violations and that the apparent violations constitute a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, the base civil monetary penalty amount applicable in this matter is $1,423,766. The settlement amount of $1,423,766 reflects no further mitigation from the base penalty.

This enforcement action highlights the importance of large U.S. firms with international operations evaluating the totality of their business processes for risk exposure. Even large, sophisticated companies with OFAC compliance programs face sanctions risks if they do not develop internal controls that account for their day-to-day operations and procedures and consider how a variety of different types of conduct can implicate applicable prohibitions.

As this action makes clear, a U.S. person's provision of services in approving a contract for the export or reexport of goods in support of specified oil exploration or production projects with an entity added to OFAC's SSI List is a prohibited service covered by Directive 4. Further, entities with international operations involving activities by U.S. persons may face sanctions risks even if the goods or services to a sanctioned entity are provided by non-U.S. person entities or if the U.S. person is not physically present in the United States. The approval of a contract, agreement, sale, or transaction by a U.S.-person manager between a foreign subsidiary and sanctioned entity may also give rise to a violation, thus underscoring why all aspects of a business engagement should be evaluated.

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