A unit of Thailand-based SCG Chemicals Plc, part of the Siam Cement Group, has agreed to pay $20 million (735 million baht) to the United States to settle potential civil liability for violations of US sanctions on Iran, according to the US Treasury Department.
SCG Plastics Co shipped high-density polyethylene (HDPE) resin but hid the product's Iranian origins, causing US financial institutions to unwittingly process $291 million in wire transfers that contravened the sanctions in 2017 and 2018, the department said in a statement released on Friday in Washington.
"As a result of these transactions, significant economic benefits were conferred to Iran's petrochemical sector, a major source of revenue generation for the Iranian regime," it said.
The HDPE was manufactured by Mehr Petrochemical Company, a joint venture established in Iran in 2005 by SCG Chemicals and the National Petrochemical Company of Iran, a state enterprise.
SCG Plastics was a trading company that purchased, marketed and sold plastic resin products manufactured by affiliates of SCG Chemicals, including Mehr. Its customers for the HDPE produced by Mehr generally were manufacturers in East Asia that purchased bulk plastic resins for the manufacture of plastic goods, US authorities said.
SCG Plastics purchased and resold 60% of Mehr’s output of Iranian-origin HDPE to its customers from 2009 to July 2018, with a year-long pause from 2013 to 2014, the settlement agreement said.
“SCG Plastics employed certain shipping and documentation practices that obfuscated the product’s Iranian origin and Iranian parties’ involvement,” it said.
“Specifically, SCG Plastics repeatedly issued shipping and payment documents that listed variants of the term ‘Middle East’ as the country of origin rather than ‘Iran’ even though the country of origin for the goods was Iran.”
In January 2022, SCG Plastics transferred all of its assets and existing liabilities to Thai Polyethylene Co Ltd, a subsidiary of SCG Chemicals. As a result, SCG Plastics is no longer an operating business.