US Office of Foreign Assets Control (OFAC) has issued a Finding of Violation to Aero Sky Aircraft Maintenance, Inc. (Aero Sky), a Texas company located in San Antonio, that negotiated and entered into a contract and contingent contract with Mahan Air in violation of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR).
On October 12, 2011, OFAC designated Mahan Air, an Iranian commercial airline company, pursuant to Executive Order 13224 for providing financial, material, and technological support to the Islamic Revolutionary Guard Corps-Qods Force. Accordingly, Mahan Air is identified on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”). OFAC determined that in 2016, Aero Sky violated § 594.201(a) of the GTSR by dealing in the property and interests in property of Mahan Air when Aero Sky negotiated and entered into a contract and a second contingent contract with Mahan Air (hereinafter referred to as the “Violations”).
Aero Sky subsequently entered into bankruptcy proceedings and has since dissolved. But for Aero’s Sky dissolution, OFAC believes the facts presented in this matter would have justified a strong civil monetary penalty.
On December 19, 2016, after multiple rounds of negotiations with Mahan Air representatives, Aero Sky entered into Memorandum of Understanding (MOU) with Mahan Air and two other parties. The MOU called for the parties to, among other things, make reasonable efforts to collaborate in order to provide future non-exclusive maintenance and repair services to Mahan Air and to enter into a joint venture agreement. The MOU also included an appendix that stated that the MOU was contingent, in part, upon Mahan Air being removed from OFAC’s SDN List.
Aero Sky was aware that Mahan Air was an entity identified on the SDN List. Prior to the negotiations of, and entry into, the contingent contract with Mahan Air, Aero Sky consulted legal counsel, who reviewed OFAC’s website and determined that Mahan Air was listed as a Specially Designated Global Terrorist on OFAC’s SDN List.
Nonetheless, Aero Sky mistakenly determined that its negotiation of, and entry into, a contingent contract with Mahan Air was authorized under the scope of Iran General License I (“GL I”), Authorizing Certain Transactions Related to the Negotiation of, and Entry into, Contingent Contracts for Activities Eligible for Authorization Under the Statement of Licensing Policy for Activities Related to the Export or Reexport to Iran of Commercial Passenger Aircraft and Related Parts and Services.