GE to Pay $2.7 Million Over Cuba Sanctions

By Mengqi Sun

General Electric Co. has agreed to pay more than $2.7 million to settle allegations that its subsidiaries violated U.S. economic sanctions on Cuba through a former customer, the Treasury Department said Tuesday.

Three current and former subsidiaries of the conglomerate allegedly received 289 checks totaling more than $8 million directly from a Cuban entity blacklisted by the U.S., according to the settlement agreement.

The blacklisted entity is Cobalt Refinery Co., or Corefco, a joint venture between a GE customer in Canada and the Cuban government, the Treasury said. Corefco has been blacklisted since 1995, it added.

A GE spokeswoman said the Canadian customer was Sherritt International Corp. and GE has terminated the relationship.

A spokesman for Sherritt declined to comment. Corefco couldn't be reached for comment.

The Treasury said GE discovered the alleged violations during testing and auditing of its compliance program and disclosed the violations to the Office of Foreign Assets Control, which enforces U.S. economic sanctions. The agency, which is part of the Treasury Department, also credited GE for implementing remedial measures, including developing a training video for employees using the alleged violations as a case study.

The GE spokeswoman said the company sold water-treatment equipment and provided services to Sherritt from 2010 to 2014.

Sherritt said in a 2016 annual report that it owned 50% of Corefco, which is based in Alberta, Canada.

The Treasury said GE's subsidiaries failed to treat its Canadian customer as higher-risk, and maintained and renewed the relationship despite the customer's strong ties to Cuba's mining industry.

GE's subsidiaries sent all of their invoices to the Canadian customer, but allegedly received payments from Corefco that accounted for more than 65% of the total transactions from at least 2010 to 2014, according to the Treasury. GE's subsidiaries approved Corefco as a third-party payer and its sanctions-screening software didn't raise red flags, the Treasury said.

"We corrected the process years ago," the GE spokeswoman said.

Write to Mengqi Sun at mengqi.sun@wsj.com

(END) Dow Jones Newswires

October 01, 2019 18:06 ET (22:06 GMT)

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