UPDATE 2-ADM says unwittingly used sanctioned Iran ship in grain trade
LONDON, March 4 (Reuters) - Archer Daniels Midland Co said it unwittingly used a vessel controlled by a sanctioned Iranian shipping firm last year to transport grain in what was an effort by Tehran to hide the ship's ownership.
The Islamic Republic of Iran Shipping Lines (IRISL) has faced Western and U.N. sanctions for years, based on accusations of transporting weapons, a charge it denies.
Illinois-based ADM, one of the world's largest grain traders, said in a U.S. regulatory filing that a majority-owned and controlled affiliate of the company hired a vessel to transport a cargo of grain in July last year.
ADM officials said on Monday they had no further comment on the issue beyond what was disclosed in the Securities and Exchange Commission (SEC) filing dated Feb. 28. IRISL could not be immediately reached for a comment.
ADM said the name of the vessel and the charterer were not on the U.S. Treasury's list of targeted individuals or entities when it made shipping arrangements and paid $481,800 directly to the charterer.
"It was later determined by the company and its bank that the vessel involved was beneficially owned by IRISL, a sanctioned party," ADM said in the filing.
"The involvement of a sanctioned party was inadvertent and unintentional and we believe the result of a concerted effort by Iran to hide its ownership of the vessel," it said.
ADM said in the filing that an 80 percent owned and controlled affiliate hired the vessel.
IRISL, Iran's biggest cargo carrier, has tried to dodge sanctions by changing its flags and setting up front companies, the U.S. Treasury and the European Union have said. Last year IRISL Managing Director Mohammad Hussein Dajmar said if pressure from Western sanctions continued, the group would face increasingly grave financial problems.
ADM said in the filing it had made a voluntary disclosure to the U.S. Treasury's Office of Foreign Assets Control (OFAC) unit, which enforces trade sanctions.
"Neither the company nor its affiliate nor other of its subsidiaries have any intention of continuing such activity with a prohibited party," the U.S. agribusiness giant said.
"There was no profit that can be attributed to this specific transportation activity."
A Treasury spokesman said he could not comment on the ADM case. However, a voluntary self-disclosure is one factor OFAC takes into account when determining the appropriate enforcement response in the case of apparent sanctions violations, he said.
If ADM can show it had due diligence in place because the underlying transaction was licensed, and that it was a one-time issue, the company would probably get a warning letter, a former U.S. Treasury official with knowledge of Iran sanctions said.
"There will be probably a six month to a year period when they are under investigation and they have to provide documents and OFAC will probably issue them a warning letter in which case we will never see it, as they are never made public," the former official said.
ADM did not disclose the name of the vessel or the charterer in the filing and it was unclear if the grain was bound for Iran or another destination.
Earlier this year, the Amina, an Iranian-flagged vessel, fled detention in Sri Lanka's waters and returned to Iran. Sri Lanka's navy had fired warning shots to prevent the vessel from leaving, acting on a court order obtained by Germany's DVB Bank in pursuit of debts it said were unpaid.
The Amina is managed by Tehran-based Rahbaran Omid Darya Ship Management, which authorities in Brussels and Washington have said is an IRISL front company.
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