Business

Berkshire Hathaway fined for alleged Iran sanctions violations

Posted October 20, 2020 12:16 p.m. EDT

— A foreign subsidiary of Berkshire Hathaway appears to have violated US sanctions on Iran, the Treasury Department said Tuesday.

Berkshire, the conglomerate run by the legendary investor Warren Buffett, agreed to pay $4.1 million to settle its potential civil liability over the matter.

The Treasury Department said that between late 2012 and early 2016, Iscar Turkey, the Berkshire subsidiary, "knowingly engaged" in transactions with people subject to US sanctions on Iran, calling it an "egregious case."

The alleged actions would go against US sanctions that prohibited entities owned or controlled by Americans from doing business directly or indirectly with the government of Iran or people subject to the jurisdiction of the government of Iran. The sanctions were designed to pressure Iran to give up its nuclear ambitions.

Specifically, regulators said Iscar Turkey sold metal-cutting tools and related disposable inserts to two Turkish companies despite knowing that the goods would later get supplied to an Iranian distributor. From there, the goods were sent to entities later identified by Berkshire as meeting the definition of the government of Iran, according to the settlement.

Berkshire Hathaway, based in Omaha, Nebraska, appears not to have been aware of the conduct by its Turkish business, Treasury said.

"Iscar Turkey took steps to obfuscate its dealings with Iran, including concealing these activities from Berkshire," the settlement alleged. "Iscar Turkey's conduct in this matter, as further detailed below, represents particularly serious apparent violations of the law calling for a strong enforcement action."

The subsidiary "demonstrated a pattern of conduct by knowingly engaging in prohibited dealings for approximately three years," the Treasury Department alleged.

The Treasury Department gave Berkshire credit for "voluntarily" disclosing the apparent violations, cooperating with the investigation and "replacing personnel complicit" in the conduct.

The Turkish business is part of IMC International Metalworking Cos., which Berkshire acquired an 80% stake in for $4 billion in 2006. Then, in 2013, Berkshire spent more than $2 billion to buy the rest of the company.

Berkshire did not immediately respond to a request for comment.

Buffett, whose net worth Forbes pegs at nearly $80 billion, is not mentioned by name in the settlement.

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