Fokker Said Set for U.S. Reprieve Deal on Iran Sanctions

A unit of Dutch aerospace company Fokker Technologies Holding BV is poised to secure a reprieve from criminal charges that it violated U.S. sanctions against Iran, two people briefed on the matter said.

The Justice Department doesn’t plan to charge any executives and is prepared to offer Fokker Services a deferred-prosecution agreement for selling aviation parts and maintenance services to at least one Iranian company before 2010, said the people, who asked not to be named because the matter isn’t public.

The pending accord, which the people said would include fines, would protect other Fokker units that supply the Pentagon’s F-35 fighter program from possibly losing their eligibility to work on that project. The U.S. has struck similar agreements with banks since stepping up its pursuit of trade with countries including Iran, Sudan and Libya in 2008.

“A conviction would have collateral effects on government contracting,” said Eric Dubelier, an attorney at Reed Smith LLP who previously worked on export violation cases as a prosecutor and isn’t involved in the case. “If this company is a supplier to the U.S. military, there could be high-level pressure and discussions taking place as to the consequences of making people plead guilty.”

Fokker Services isn’t involved in the F-35 project and the infractions didn’t involve materials related to the program, the company said.

“The discussions with the U.S. authorities are continuing and the timing and terms of a final resolution are not yet known,” Fokker spokeswoman Marianne Mulder said in an e-mail.

Andrew Ames, a Justice Department spokesman, declined to comment on the matter.

Sanctions Eased

International sanctions against Iran over its nuclear research are being suspended following a Nov. 24 deal to freeze parts of the nation’s atomic program. The accord with the so-called P5+1 group -- the U.S., U.K., France, Russia, China and Germany -- marked the first breakthrough in a decade-long standoff. Iranian oil exporters, financial institutions and companies linked to Iran’s nuclear work are still sanctioned.

Two Amsterdam-based banks -- ING Bank NV and ABN AMRO Bank NV -- also secured deferred-prosecution agreements over transactions involving Iran. ABN AMRO is now owned by Royal Bank of Scotland Group Plc. At least five other banks, including HSBC Holdings Plc, Barclays Plc and Credit Suisse Group AG, have reached similar settlements for violating sanctions.

“In 2010, Fokker Services made a voluntary disclosure to the U.S. authorities regarding historic export control issues, implemented remedial actions on its own accord, and has been cooperating with the U.S. authorities on the matters disclosed since 2010,” Mulder said in the e-mailed statement.

Civil Probes

Fokker is also in talks to settle civil probes by the Commerce Department and Treasury’s Office of Foreign Assets Control, one of the two people said. Those investigations may result in fines, according to the person briefed on the matter.

Fokker, which has been a contractor with the F-35 since 2002, announced in April that it signed contracts worth 60 million euros ($81.9 million) to supply in-flight opening doors and flaps. Two months later,the company secured another contract worth 40 million euros ($54.2 million) for electrical wiring systems. Fokker’s 2012 revenue was 769 million euros ($1.04 billion), according to its most recent annual report.

The Papendrecht, Netherlands-based company said in the report that it wanted to resolve the sanctions probe by the end of 2013.

The F-35 program is a $392 billion weapons system being produced by Lockheed Martin Corp. (LMT) Laurie Tortorello, a spokeswoman for Lockheed Martin, declined to comment on the Fokker investigation.

F-35 Scrutiny

Some companies involved in the project have drawn scrutiny in recent weeks. U.S. authorities arrested a former Pratt & Whitney employee this month for allegedly trying to ship technical documents and sensitive material about the program to Iran. Honeywell International Inc. said Jan. 12 that it was cooperating with a probe of its production of electrical sensors that were made in China for F-35 fighters.

In 2012, Pratt & Whitney’s Canadian unit pleaded guilty and agreed to pay $75 million for selling military-helicopter software to China. After the plea, Senator John McCain questioned why the Defense Department didn’t suspend or halt its work with Pratt, a United Technologies Corp. subsidiary.

To contact the reporter on this story: Greg Farrell in New York at gregfarrell@bloomberg.net

To contact the editor responsible for this story: Joshua Gallu at jgallu@bloomberg.net

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