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DHL to Pay $9.4M Fine to Settle Dispute

WASHINGTON - International shipper DHL has agreed to pay $9.4 million to settle allegations the company violated U.S. sanctions with shipments to Iran, Sudan and Syria, one of the largest such penalties ever levied.

"That's a huge fine," said Hal Eren, a former U.S. Treasury Department lawyer who now represents companies in sanctions cases. "They are aggressively enforcing the prohibitions of the sanctions."

The Treasury Department alleged that the company, part of Germany-based Deutsche Post DHL, made 309 shipments from the United States to Iran and Sudan from 2002 to 2007 in violation of U.S. embargoes with those countries. The department also alleged that the company failed to keep required records on 9,000 shipments to Iran from 2002 to 2006, although it acknowledged that 90 percent of those shipments "may have been for informational materials" not prohibited by sanctions.

The Commerce Department, also part of the investigation, said the company violated export restrictions in eight instances when it made shipments to Syria between June and September 2004. In 90 other instances, the company failed to keep proper records, the government alleged.

"DHL may have conferred a significant economic benefit to sanctioned countries that potentially created extraordinarily adverse harm," the Treasury Department said in its analysis of the case, included in the settlement agreement. The document accused DHL of engaging in "a large pattern of misconduct over an extended period of time," but it noted that the company cooperated with the investigation.

Treasury Department spokeswoman Marti Adams said the penalty was "among the largest" meted out in a civil trade embargo case. In 2008, Treasury levied a total of $3.5 million in penalties in 99 cases, according to its Web site.

DHL's shipments to Iran included computer software, condoms, Tiffany jewelry and an automobile radar detector, according to the settlement agreement.

Sanctions "enforcement overall throughout the U.S. government has been stepped up over the last year or so," said Michael Jacobson, a former senior adviser in Treasury's Office of Terrorism and Financial Intelligence.

DHL neither admitted nor denied the charges. In a statement, DHL Express, based in Florida, said, "The incidents cited represent significantly less than 1 percent of the total volume of DHL Express USA export transactions and involved shipments of correspondence, personal items, or consumer goods. The U.S. government has not alleged that DHL transported shipments of strategic sensitivity to these countries."

The case was investigated by the Commerce Department's Bureau of Industry and Security and the Treasury Department's Office of Foreign Assets Control (OFAC).

OFAC, headed by Stuart Levy, a holdover from the Bush administration, has made an impact by stepping up action against financial institutions that do business with Iran and North Korea, said George Lopez, a sanctions expert with the University of Notre Dame. "I think most experts would agree those measures have been pretty effective and biting," he said.

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