Not Guilty

A Lucky Escape for Deutsche Forfait

It's all your fault.
  • Why it matters

    Why it matters

    Being added to a U.S. government sanctions list can quickly bring an international business to its knees. One company got lucky.

  • Facts


    • Deutsche Forfait was accused of undertaking oil dealings in Iran earlier this year.
    • As a result, it has lost €8.4 million ($10.74 million) in the past nine months.
    • The company received a loan of €30 million from bondholders last year.
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With a business model based on export trade financing in the developing world, Deutsche Forfait is used to risk. But when a U.S. sanctions-monitoring agency targeted the German firm earlier this year, it looked like the company may have taken one risk too many.

Deutsche Forfait, which has been trading receivables since 2000, stood accused of breaking sanctions against Iran by supporting the business dealings of the National Iranian Oil Company (NIOC), which is thought to have links to the Iranian Revolutionary Guard. As a result, it was added to the U.S. government sanctions list in February. The company said it has been “paralyzed” ever since.

Suddenly the company found its fate in the hands of the U.S. Office of Foreign Asset Control, or OFAC, and that’s not an easy position to be in. The office, which is part of the U.S. Treasury,  takes 850 days on average to settle challenges to its listings. That would have been too long: cash reserves were due to run out at the end of the year; a restructuring was already put in jeopardy; and the listing was threatening its bondholders.

Just as suddenly, on Friday, Deutsche Forfait said it was handed a lifeline. OFAC had removed it from the sanctions list. All U.S.-dollar operations that are critical to its business can now be restarted. The company can now begin the long journey back to profitability.

“We are very relieved,” Frank Hock, chief financial officer, said in a statement. “What counts now is making the business’ dealings operational again as quickly as possible.”

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