SCC Reaffirms of No Operating Impact from US $20 Million Fine with Full Provisions in FY2023

The Siam Cement Public Company Limited (SET: SCC) has announced that there will be no impact on its operating results in 2024, following the report of the company agreeing to settle a fine worth $20 million with the US Office of Foreign Assets Control (OFAC) due to the violations of the sanction measures on Iran.

In the statement, SCC wrote that SCG Plastics Co., Ltd. (or SCG Plastics) was established as a subsidiary of SCC, and responsible to conduct transactions related to the sales of polyethylene pellets (PE) that was produced by the company’s joint venture in Iran since 2005, and SCG Plastics is currently in the liquidation process. The sales transactions involved numerous globally accepted currencies, and largely depended on the client’s request, which is the norm for the industry. During this period of transactions, there did not exist any sanction measures imposed upon the petrochemicals industry in Iran.

In the month of February, 2013, following the sanction measures imposed by The United States of America against Iran, SCG Plastics ceased the sales of PE that was produced in Iran. It was only from 2014 where sales by SCG Plastics were reestablished, following the declaration by The United States of America to moderate the sanctions against Iran. However, in 2018, as a result of the uncertainty of the situation between The United States of America and Iran, SCG Plastics forever ceased the sales of PE from the Iranian JV, following the divestment of the JV. Also, the asset has been divested since 2018 in accordance with the sanctions of the United States of America.

Following the above, the United States Office of Foreign Assets Control (or OFAC) inspected SCG Plastics’ PE sales transactions between April 2017 and November 2018 for evidence of any violations of the sanction measures, to which SCG Plastics provide full cooperation to the officials of the United States of America. With the completion of the investigations by OFAC, it was found that SCG Plastics violated the sanctions against Iran, even though the sales of such products does not involve U.S. citizen which is the main focus of the U.S. sanction, by using U.S. dollars to sell Iranian-made products during the period, and also involved the participation of U.S. financial institutions in the transfer of payments. Trading in other currencies is not a violation of the sanctions against Iran.

OFAC has acknowledged that SCG Plastics has fully cooperated with OFAC in their investigations, including issuing policies to prevent such occurrences in the future. Consequently, OFAC proposed that SCG Plastics enter into a Settlement Agreement, in which SCG Plastics would pay a settlement amount of USD 20 million to the United States Treasury Department. This settlement will effectively terminate OFAC’s future consideration of the aforementioned charge. The settlement payment would not impact SCG’s operating results in the fiscal year 2024, as provisions have already been made in the financial statements for the fiscal year 2023.


The statement from SCC was made after an official statement was published by OFAC, stating that SCG Plastics has agreed to pay around $20 million to settle allegations of using the U.S. financial system to receive funds for goods from Iran, in violation of U.S. sanctions. The settlement follows increased U.S. measures against Iran amid escalating tensions in the Middle East. The U.S. prohibits American companies from dealing with Iran and extends sanctions to non-U.S. firms using U.S. dollars for transactions processed by American financial institutions.

Allegations state that since 2009, SCG Plastics purchased, marketed, and resold plastic resin products from an Iranian joint venture partially owned by its parent company and the government-linked National Petrochemical Company of Iran.

According to the U.S. Treasury, SCG Plastics instructed customers to make U.S. dollar payments to its Thai bank. U.S. correspondent banks processed $291 million in wire transfers for SCG’s sales of Iranian products between 2017 and 2018. SCG also allegedly initiated U.S. dollar wire transfers to settle the joint venture’s debts. The Treasury accused SCG of using deceptive shipping and documentation practices to conceal Iran’s involvement in the transactions.