National Oilwell Varco, Inc. OFAC Settlement: $5.98M

Between October 2002 and April 2005, National Oilwell Varco, Inc. approved at least four Dreco commission payments to a U.K.-based entity that related to the sale and exportation of goods, directly or indirectly, from Dreco to Iran, in apparent violation of §§ 560.206 and 560.208 of the ITSR (combined value $2,630,091). Senior-level finance executives within NOV approved the payments; NOV appears to have willfully blinded itself to the consequences of its approval by acquiescing to Dreco's deliberate non-identification of Iran in its communications with NOV; and NOV ignored several warning signs over the course of three years that approving the commission payments was prohibited conduct.

Between September 2006 and January 2008, National Oilwell Varco, Inc. engaged in two transactions totaling $13,596,980 involving the direct or indirect sale and exportation of goods to Iran, and/or facilitated those transactions, in apparent violation of §§ 560.206 and 560.208 of the ITSR. Between at least 2003 and 2007, Dreco knowingly indirectly exported goods from the United States for the specific purpose of filling at least seven orders from Iranian customers, in apparent violation of § 560.204 of the ITSR (total value $526,480).

Between 2007 and 2009, Dreco engaged in 45 transactions totaling $1,707,964 involving the sale of goods to Cuba, in apparent violation of § 515.201 of the CACR. Between 2007 and 2008, Elmar engaged in two transactions totaling $103,119 involving the sale of goods or services to Cuba, in apparent violation of § 515.201 of the CACR. Between 2005 and 2006, NOV engaged in one $20,928 transaction involving the direct or indirect exportation of goods from the United States to Sudan, in apparent violation of § 538.205 of the SSR.

NOV did not voluntarily self-disclose the Apparent Violations. OFAC determined that the four apparent violations involving the Dreco commission payments were egregious; the remaining apparent violations were non-egregious.

The statutory maximum civil monetary penalty amount for the Apparent Violations was $37,766,212. The base penalty amount was $8,537,183. NOV's $5,976,028 settlement with OFAC will be deemed satisfied by its payment of $25,000,000 as specifically set forth in the Non-Prosecution Agreement with the U.S. Attorney's Office for the Southern District of Texas arising out of the same pattern of conduct.

NOV's OFAC settlement is concurrent with a settlement agreement between NOV and the Department of Commerce's Bureau of Industry and Security, and a Non-Prosecution Agreement (NPA) executed by NOV with the U.S. Attorney's Office for the Southern District of Texas. Under the NPA, NOV paid $25,000,000 arising out of the same pattern of conduct, and NOV's $5,976,028 OFAC settlement amount was deemed satisfied by that payment.

OFAC's egregious determination for the commission payment violations centered on willful blindness: senior-level finance executives approved the payments while NOV acquiesced to Dreco's deliberate non-identification of Iran in its communications, and NOV ignored several warning signs over the course of three years that approving the commission payments was prohibited conduct. OFAC found that NOV had reason to know the commission payments involved Iran.

The case also reflects OFAC's finding that NOV's compliance program at the time of the Apparent Violations was wholly inadequate, listed as a separate aggravating factor. NOV's subsequent remediation of its compliance program and cooperation with the investigation, including agreeing to toll the statute of limitations for more than 2,600 days, were considered mitigating factors.

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