By: Danielle Hatch
Stanley Black & Decker, Inc. (Stanley Black & Decker), located in Connecticut, began the acquisition process with Jiangsu Guoqiang Tools Co., Ltd. (GQ), located in China, in 2011. Stanley Black & Decker is a global provider of hand tools, power tools and other mechanical tools and related services. GQ also manufactures and sells power tools. During purchase negotiations, Stanley Black & Decker found that GQ had been actively exporting to Iran and other Office of Foreign Assets Controls (OFAC)-sanctioned countries. Stanley Black & Decker required GQ to stop all sales to OFAC-sanctioned countries as a pre-requisite condition of closing the deal, GQ’s representatives agreed and the sale went through without a hitch.
After the acquisition, Stanley Black & Decker provided OFAC training to all GQ employees, specifically making note that there were restrictions on sales to certain countries, including Iran. GQ’s senior management also signed written agreements that they would not engage in any transactions with Iran. Stanley Black & Decker did not monitor or audit GQ’s operations after the acquisition.
In 2015 Stanley Black & Decker submitted a voluntary self-disclosure to OFAC on behalf of GQ. The company started an internal investigation into GQ and hired a third-party independent company to do additional audits after they became aware of potential violations (the settlement agreement does not state what tipped off Stanley Black & Decker to the violations). The external auditors found that between 2013 and 2014 GQ exported (or attempted to) 23 shipments of power tools and spare parts to Iran valued at over $3 million.
The back story: Eight days after Stanley Black & Decker purchased GQ, the company made a sale to Iran. GQ board members and senior management were all involved in the Iran transactions and were aware that they violated its parent company’s policies and US laws. GQ used six different trading companies (4 in the UAE and 2 in China) as middle men in order to conceal the orders and shipments. Employees created fake bills of lading with incorrect ports of discharge and places of delivery and instructed customers to never write “Iran” on any business documents. Emails and documents from GQ’s Chairman confirmed the company’s active role in hiding the deliberate violations.
Stanley Black & Decker has agreed to pay a penalty of $1,869,144 as well as a long list of compliance commitments, internal controls, audits, and training programs.
Full Settlement Agreement: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20190327_decker_settlement.pdf