Berkshire Hathaway to pay $4.14 million to settle Iran sanctions breaches

Warren Buffett’s company agrees to pay the sum to settle civil allegations

Berkshire Hathaway chief executive Warren Buffett. EPA

Warren Buffett's Berkshire Hathaway agreed to pay $4.14 million to settle civil allegations that a Turkish subsidiary committed egregious breaches of US sanctions against Iran, the US Treasury Department said on Tuesday.

The department’s Office of Foreign Assets Control said Iscar Turkey sold 144 shipments of cutting tools and related inserts worth $383,443 to two Turkish distributors from December 2012 to January 2016, knowing they would be shipped to a distributor in Iran for resale, including to Iran’s government.

The office said the sales occurred under the direction of some senior managers, after Iscar Turkey's general manager claimed it was inevitable that US and EU sanctions against Iran would be lifted and sought to be "well positioned" to capitalise.

It also said Iscar Turkey took steps to "obfuscate" its dealings with Iran and concealed them from Berkshire, despite warnings that the sales would breach its compliance policies.

Berkshire voluntarily reported the apparent breaches in May 2016 after receiving an anonymous tip, replaced employees who were involved and upgraded compliance procedures for its foreign subsidiaries, the office said.

Berkshire, which has its headquarters in Omaha, Nebraska, did not immediately respond to a request for comment.

Iscar Turkey, also known as Iscar Kesici Takim Ticareti ve Imalati Limited Sirket, is a unit of International Metalworking Companies, a maker of metal cutting tools.

Berkshire paid $4 billion for 80 per cent of Israel-based IMC in 2006, and $2.05bn for the remainder in 2013.

IMC remains Mr Buffett's largest acquisition of a non-US company. Berkshire also owns dozens of other companies, including BNSF Railway and insurance company Geico.

The US State Department designated Iran a state sponsor of terrorism in January 1984.