Cameron settles OFAC case for $ 1.4 million for violation of sanctions between Ukraine and Russia (part I of II) | Michael volkov


In a pair of running actions, here and here, OFAC settled two separate actions involving subsidiaries of Schlumberger Limited – the first involving Cameron International Corporation and the second, Schlumberger Rod Lift, Inc., a former subsidiary, which was acquired by Lufkin Rod Lift, Inc.

Cameron has agreed to pay $ 1.423 million to pay OFAC’s fees for providing services to the Gazprom-Neft shelf for an offshore oil project in the Arctic. Cameron provided ‘services’ when senior US executives approved five contracts for its foreign subsidiary, Cameron Romania SRL (Cameron Romania) to supply goods to Gazprom-Neft’s Prirazlomnaya offshore oil production and exploration platform Shelf in the Russian Arctic. Cameron did not voluntarily disclose the conduct.

Between July 2015 and November 2016, Cameron violated Directive 4 of the Ukraine-Russia Sanctions Regulations. Directive 4, issued on September 12, 2014, prohibited a United States person from engaging in the supply, export or re-export, directly or indirectly, of goods, services (except financial services). ) or technologies in support of exploration or production for deepwater, arctic or shale sea projects that have the potential to produce oil in the Russian Federation, or in a maritime area claimed by the Russian Federation and extending from its territory, and which involve any person determined to be subject to the Directive, their property or their interests in property.

The five contracts in question, which were approved by senior Cameron executives (US Persons), concerned the delivery of prohibited products to a wholly-owned subsidiary of OJSC Gazprom Neft, which is subject to Directive 4. Since July 2015 , Cameron Romania staff sent an email to senior US executives requesting approval of Cameron Romania’s contracts with Gazprom-Neft Shelf. Cameron’s contract approval process required the review and approval of certain US managers for contracts above certain monetary thresholds, as well as contracts that deviated from Cameron’s terms and conditions.

In response to requests, senior US officials reviewed and approved the contracts and pre-purchase forms, which directly led Cameron Romania to provide services to Gazzprom-Neft on the Arctic Shelf. At the time of the approvals, Cameron’s senior executives had reason to know that the services provided were intended to support the offshore oil production projects in the Arctic by Gazprom-Neft Shelf. The documentation specifically referred to the supply of oil production or exploration goods to Gazprom-Neft Shelf’s Prirazlomnaya platform and indicated that the Russian Arctic was the destination for oil-related goods.

Cameron had established compliance policies and procedures to ensure compliance with OFAC Directive 4. However, Cameron’s compliance procedures did not address the involvement of U.S. persons in the activities of supplying prohibited goods or services by Cmeron’s foreign affiliates. In total, four senior US executives at Cameron – namely a division president, two vice presidents of finance and a senior executive – approved the contracts and pre-purchase forms. In total, Cameron made 111 shipments of petroleum production or exploration products to Gazprom-Neft Shelf for use on its Arctic offshore platform.

Schlumberger acquired Cameron in April 2016, before which two of the offending contracts had been approved. As part of Cameron’s post-acquisition compliance review and integration, and after approval of the three remaining contracts, Schlumberger discovered the Directive 4 violations.

In June 2017, Cameron informed OFAC of the violations and submitted an additional report in December 2017. OFAC, however, determined that Cameron’s submissions did not constitute voluntary self-disclosure.

OFAC cited as aggravating factors the involvement of senior US executives at Cameron who knew or should have known that contracts for the supply of goods violated Directive 4. As a mitigating factor, OFAC noted the following corrective actions: ( i) identify all employees who should recuse themselves from Russia-related activities and integrate these employees into a recusal recognition system to ensure that US nationals do not participate in contracts related to Russia; (ii) assign a senior compliance officer to manage the integration of Cameron’s operations into Schlumberger’s compliance program; (iii) the implementation of an automatic block on all orders with a Russian reference “bill to”, “ship to” or end user – these transactions must then be subject to further review by Schlumberger before being approved; and (iv) implementing a software enhancement that requires end users to be identified for all transactions, adding a layer of control to help review Russia-related transactions.

OFAC cited Cameron’s cooperation during the investigation in submitting detailed documentation, responding to OFAC requests and entering into toll deals.

OFAC explained that this enforcement measure underscores the importance of large US companies with global operations in assessing the risks of compliance with sanctions. Further, OFAC noted that “the provision of services by a U.S. person in approving a contract for the export or re-export of goods in support of specified petroleum exploration or production projects with an entity added to OFAC’s SSI list is a prohibited service covered by directive 4 ”. In addition, “entities with international operations involving activities carried out by United States persons may be exposed to sanctions risks even if the goods or services to a sanctioned entity are supplied by entities of non-United States persons or if the United States person is not physically present in the United States. The approval of a contract, deal, sale, or transaction by a U.S. official between a foreign affiliate and a sanctioned entity may also result in a violation, thus highlighting why all aspects of a commercial commitment must be evaluated.


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