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S&P Global, a financial analytics firm, agreed to pay $78,750 to the Treasury Department's Office of Foreign Assets Control (OFAC) in a settlement announced Friday over alleged dealings with sanctioned Russian state-owned oil company Rosneft in 2016 and 2017.
The alleged violations were related to debt and equity restrictions imposed by President Barack Obama's Executive Order 13662 in March 2014 in response to Russia's annexation of Crimea and actions in Ukraine at the time. The case's details loom large in terms of the current state of sanctions against Russia, which began in February with its invasion of Ukraine.
Petroleum Industry Research Associates (PIRA), which provided research and forecasting products and services to energy and commodity customers, was acquired by S&P Global in August 2016. PIRA had unfinished contracts with Rosneft at the time, which had been sanctioned in July 2014.
According to OFAC's web notice, Rosneft received an invoice from PIRA for $82,500 in August 2015 for advisory services and market analysis as part of an ongoing subscription. After missing a payment deadline in October 2015, Rosneft attempted payment twice in May 2016, but the first attempt was blocked due to sanctions, and the second attempt required additional information, which Rosneft did not provide.
According to OFAC, talks about Rosneft paying the invoice by check have stalled due to sanctions restrictions. Following PIRA's acquisition in August 2016, now-S&P Global employees are accused of reissuing and redating the outstanding invoice and "emphasized to Rosneft the importance of timely payment" to avoid the appearance of extending credit and breaking the law. According to OFAC, Rosneft sent $55,000 via wire transfer in October 2016, and the remaining $27,500 was sent in two installments of $13,750 in December 2016 and October 2017, resulting in three more reissued and redated invoices total.
"S&P Global (and prior to its acquisition, PIRA) failed to exercise a minimal degree of caution or care when it reissued and redated four invoices to extend the payment date of invoices far beyond the authorized debt tenor, knowing or having reason to know such conduct would violate U.S. sanctions regulations," according to OFAC.
The case was deemed "non-egregious" by the regulator. S&P Global did not voluntarily self-disclose the apparent violations, but it was praised for its cooperation and improvements to its compliance program since then.
"This action … emphasizes the importance of U.S. companies conducting sanctions-related due diligence and taking active steps to extend their compliance programs, including training and monitoring, to newly incorporated businesses and their employees," according to OFAC. "After merger and acquisition transactions are complete, companies should continue to closely oversee their new business elements in addition to their existing units to identify any additional sanctions-related issues and take appropriate preventative or remedial measures.."
By fLEXI tEAM