Sony Reports Tech Sales to Iran That May Violate Sanction

Sony Corp. (6758) said it sold almost $13 million in video and medical equipment to dealers in Dubai that resold the gear in Iran. The recipients included groups under U.S. sanctions.

In a filing today, Sony said it sold broadcast equipment, security cameras and video-conferencing gear to dealers in Dubai that planned to resell or resold the products to agencies including the Information Technology Department of the Iranian Police and the Islamic Republic of Iran Broadcasting.

The law allows the U.S. to seek fines against companies that supply products used to oppress people in Iran. Sony’s dealings were outlined under requirements that businesses report transactions with Iran or others sanctioned under programs relating to terrorism or the proliferation of weapons of mass destruction, according to the filing by the Tokyo-based consumer electronics company.

“International companies that sell equipment to designated Iranian entities like IRIB run the risk of U.S. sanctions as well as the moral opprobrium from aiding the regime’s repression of the Iran people,” said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington-based group that researches international terrorism.

Sony “believes that, and maintains policies and procedures designed to ensure that, its transactions with Iran and elsewhere have been conducted in accordance with applicable economic sanctions laws and regulations,” according to the filing. Penalties or sanctions taken against the company could be material if any government disagrees, Sony said.
Some Exemptions

John Sullivan, a U.S. Treasury Department spokesman, declined to comment on specific companies and possible investigations. Companies can get a special permit to sell to Iran, he said, and some medical equipment is exempt from the U.S. sanctions.

Since Sony is based in Japan, it’s not clear the company violated any provisions of a U.S. law meant more to capture domestic businesses with overseas subsidiaries, said Danforth Newcomb, an attorney in the sanctions practice at the law firm Shearman & Sterling in New York.

“It turns on a lot of the detail and careful reading of what they did,” Newcomb said. “The U.S. has adopted extra-territorial sanctions designed to reach non-U.S. persons but those sanctions are considerably more tailored because they have significant foreign-policy ramifications.”
Subsidiary Dealer

One dealer was a subsidiary of the Islamic Republic of Iran Broadcasting, Sony said in the filing. The company also reported sales of medical instruments including printers, paper and monitors it said were intended for the Ministry of Health.

Jim Kennedy, a Sony spokesman in New York, had no comment.

Sony said it made the disclosure under the Iran Threat Reduction and Syria Human Rights Act of 2012 and related amendments to the Securities Exchange Act of 1934.

The company said it registered a profit of about $500,000 from the sales.

Sony American depositary receipts rose 1.7 percent to $21.20 at the close in New York. They have gained 89 percent this year.

Last year, ING Groep NV (INGA) agreed to pay $619 million to settle U.S. charges it falsified financial records to bypass sanctions on countries including Cuba and Iran, the unit of Amsterdam-based ING Groep and the U.S. Justice Department said. Credit Suisse AG in 2006 paid $536 million to settle similar violations.

To contact the reporter on this story: Cliff Edwards in San Francisco at [email protected]