Saturday, Sept. 25, 2004 | 10:54 a.m.
Nevada company fined $6.3 million for selling pumps to Iran SPARKS, Nev. - The U.S. subsidiary of a Japanese company has agreed to pay a $6.3 criminal fine for illegally shipping equipment to Iran and trying to shield the deal from regulators, Commerce Department officials said.
Ebara International Corp., based in Sparks, also will pay a $121,000 civil fine after pleading guilty to seven felony charges Thursday in U.S. District Court for the District of Columbia.
Company founder Everett Hylton, who resigned as chief executive a year ago, pleaded guilty to a separate charge of conspiracy to make false statements to investigators.
He agreed to pay a $10,000 criminal fine and a $99,000 civil fine, according to the Commerce Department.
A Dec. 7 sentencing date was set for both Hylton and the company.
It's illegal for U.S. companies to sell industrial products to Iran, a nation designated as a state sponsor of terrorism by the State Department.
"They did everything they could to evade our regulations," Julie Myers, Commerce Department assistant secretary for export enforcement, told the Reno Gazette-Journal.
"There really was a problem with the corporate culture here - a failure to take responsibility, all the way up to the CEO. They made up documents, destroyed documents and made false statements," she said.
Ebara officials said Friday that they would pay the largest fine in three annual installments of $2.1 million.
They issued a prepared statement, which they said would by their only comment on the matter.
"EIC has taken necessary steps to ensure that employees - at every level within the company - understand and are in full compliance with U.S. export laws," Ebara president Martin Perlmutter said in the statement.
"(We) fully cooperated with the U.S. government's investigation and it is evident that the company took quick and decisive action to identify the source of the problem and correct it," he said.
Ebara was accused of shipping high-technology pumps with military applications to Iran through two French companies, Cryostar and Technip.
An investigation found the cryogenic transfer pumps were resold for use in a petrochemical plant in Iran through a complex scheme arranged by Ebara, the Justice Department said.
The pumps have applications for both liquid natural gas and cooling nuclear power plants, and Commerce Department officials had feared they could be used for nuclear projects.
"It does not look like they could be used in that manner, but similar pumps could be used in that manner," Myers said. "There is concern that if similar pumps (can be used), you could export the know-how."
But Perlmutter disagreed, saying the pumps "have absolutely no application in nuclear power plants."
Iran has come under fire in recent weeks over questions about whether it is seeking to develop nuclear weapons.
Four pumps valued at $750,000 were shipped to Iran, but the probe prevented three more valued at $1.2 million from being delivered, the Justice Department said.
An investigation into the French companies' role in the case is continuing and could lead to U.S. economic sanctions against them, The Washington Times reported.
Executives from the parent company, Ebara Corp. Japan in Tokyo, were aware of the illegal pump sale, according to court documents.
Ebara makes pumps for the gas, petrochemical and shipboard industries at its Sparks facility.
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