A North Carolina manufacturer that traces its origins back to the Wright brothers may have violated sanctions by doing business with two longtime customers purchased by a blacklisted Russian company.

Curtiss-Wright Corp. disclosed the potential violation in an Aug. 19 filing with the Securities and Exchange Commission (SEC). The company indicated in the filing that earlier this year it had voluntarily disclosed the potential violation to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

According the company’s SEC filing, sometime in 2019 and unbeknownst to Curtiss-Wright, two of its longtime customers were purchased by a Russian company that had been blacklisted under the Obama administration. The company, whose name is not mentioned, was blacklisted as part of sanctions levied by the United States in retaliation for Russia’s annexation of the Crimea region of the Ukraine.

The sanctions prohibited credit terms over 30 days, and Curtiss-Wright had credit terms with the two companies for longer than 30 days, the company said. A contracts administrator, “believing he needed to modify the existing invoices for product already shipped, changed the terms to 30 days so banks would allow payments,” according to the company’s SEC filing.

Curtiss-Wright said the administrator acted individually and without knowledge of management and was fired “upon discovery of the actions,” the company wrote in the filing.

The company said the violation may result in a fine. Although the disclosure to the SEC also included information regarding $300 million in borrowing, the company said it expected to use the money for general corporate purposes and that the sanctions violation is immaterial to the corporation.

“We do not believe this will result in a material adverse effect,” the company stated.

The Russia sanctions were established in 2014 under President Barack Obama against companies that benefitted financially from the annexation of Crimea, as well as against numerous Russian officials. The sanctions also prohibit U.S. companies from investing in Crimea or doing business with any companies located in the region.

Exxon Corp., which was deemed to have violated sanctions on Russian companies in 2017 by OFAC, convinced a federal court judge in January to overturn a $2 million OFAC fine.

Curtiss-Wright, a publicly traded engineering company founded in 1929 by the Wright brothers and Glenn Curtiss, has approximately 9,000 employees worldwide, according to its website. The company provides products, systems, and services to the commercial, industrial, defense, and power markets, with $2.5 billion in annual sales.

Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.

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