PetroChina International America Inc. (PCIA), the U.S.-based arm of one of the world's largest oil and gas companies, has agreed to a hefty settlement following a U.S. export law violation. According to the Justice Department, the company will cough up $14.5 million in fines and forfeiture. This comes after an investigation into false reporting in the Automated Export System (AES), which revealed PCIA inaccurately classified more than $32 million worth of ultra-low-sulfur diesel fuel as mineral oil mix on exports to Mexico during 2019 and 2020.
U.S. Attorney Alamdar S. Hamdani, along with Homeland Security Investigations and Department of Commerce officials, announced the action, noting Houston's status as a commerce hub and the necessity for companies to abide by trading regulations. Hamdani stated, “The potentially false or misleading valuations PetroChina International America input into a government database gave it an unfair competitive advantage while also harming the integrity of global trade with nations like Mexico. The $14.5 million forfeiture and fine assessed against PCIA should send a message to all those companies still not playing by the rules – The Southern District of Texas will hold you to account.” Reflecting on the broader impact of such violations, authorities expressed that the fine should deter companies from similar misconduct.
The seeds of the investigation were sown in late 2019 when Mexican officials spotted discrepancies in import documentation. After U.S. trade officials were called in to assist, an extensive analysis of past PCIA-export data uncovered additional misclassifications and undervalued exports. Special Agent in Charge Mark Dawson stressed the gravity of the transgressions, “These actions helped facilitate illegal activity abroad and damaged America’s reputation as a leader in global trade. The entry of false or misleading information into export systems is a serious law violation. Working in conjunction with our domestic and international partners, we were able to uncover these violations of U.S. export law and levy a fine and forfeiture totaling $14.5 million to level the playing field for competitors and deter similar unlawful conduct in the future.” according to a statement obtained by the Justice Department.
Special Agent in Charge Trey McClish praised the collaboration across different agencies that led to the uncovering of PCIA's actions. BIS and HSI worked in conjunction “BIS will continue to identify and disrupt those who attempt to profit from and circumvent U.S. export controls and regulations.” As part of the settlement, PCIA has been cooperative and has committed to bolster its compliance program to prevent future violations. Furthermore, it has agreed to provide yearly reports on its compliance efforts for the next three years to the U.S. Attorney's Office.
The case has been handled by Assistant U.S. Attorney Suzanne Elmilady with support from HSI's embedded counsel. HSI Houston continues to encourage companies to submit voluntary self-disclosures if they suspect they may have breached export law and urges reporting any alleged third-party export law violations to ensure fairness in international trade.
