Trying to export a low-tech rubber ring with a high-tech use in nuclear energy has earned an oilfield equipment company a $90,000 fine for violating federal sanctions against Iran.Provincial court Judge Allan Fradsham imposed the fine against Lee Specialties Ltd., after the company pleaded guilty Monday to breaking the federal Special Economic Measures Act (SEMA), which restricts imports and exports to certain countries.
The case began in 2011, when Canada Border Services Agency officers at Calgary International Airport inspected a shipment destined for Iran.
Among the goods, officers found 50 O-rings made of a synthetic rubber called Viton, which can withstand high temperatures and exposure to chemicals.
The O-rings worth only $15 can be used in oilfield applications, but their potential use in nuclear energy production prompted the federal government to forbid their export to Iran, which is suspected of trying to develop a nuclear weapons program.
We want to try to prevent these things from getting into the hands of places that shouldnt have them, said Const. Ben Simon of the RCMPs federal policing section, which investigated the case with border agency.
Fradsham made a similar point while imposing the fine, saying the rings low monetary value wasnt the most relevant factor in imposing the sentence.
Being a regulatory charge, were more concerned with what might have occurred than what actually occurred, the judge said.
According to an agreed statement of facts entered as an exhibit, the company acknowledges that having shipped (the order) containing Viton O-rings to Iran without a Ministerial permit authorizing it to carry out such prohibited export, it is responsible under SEMA for these acts.
Court heard it was the first prosecution of its kind in Canada under regulations that took effect in July 2010. The rules have been amended and broadened on five occasions and ban imports from Iran and exports to Iran, subject to certain exemptions.
Theyre always changing and evolving its something you have to keep up-to-date with, Simon said outside court.
Lee Specialties lawyer Kristine Robidoux and Crown prosecutor Kent Brown made a joint sentencing submission after the company pleaded guilty to violating the Special Economic Measures Act. The Crown withdrew charges under the Customs Act and the United Nations Act, which gives the federal government authority to enforce sanctions imposed by the UN Security Council.
Robidoux said outside court that Lee, which has customers in a number of Middle East countries, has a significant community profile in Red Deer and takes its reputation very seriously.
The shipment was destined for a company with offices in the United Arab Emirates and Iran. Court heard the goods were mistakenly sent to Iran instead of the UAE.
When an event like this happens, in large part due to human error and processing shipment documents, that really hurts, Robidoux said.
It has taken it seriously and its compliance program now, Id say, is second to none gold standard.
Robidoux said the regulations are very complex and companies must do their due diligence to ensure their customer is not a prohibited entity.
Anytime you are the first company to plead guilty under any legislative regime, there is temptation to think you are being made an example of. But I still think in all of the circumstances, both the Crown and company think this is an appropriate resolution, Robidoux said.
By Calgary Herald
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