Lee Specialties Ltd. of Red Deer pleaded guilty to one charge of violating the Special Economic Measures Act in a Calgary courtroom Monday. The court withdrew two other charges under the Customs Act and the United Nations Act.
Police say an investigation began in January 2012 after the Canada Border Services Agency intercepted Viton O-rings from a cargo shipment at Calgary International Airport that was destined for Iran.
Viton is a brand of synthetic rubber that can be used in the oilfields, but also in nuclear programs.
Viton O-rings and gaskets are specifically mentioned in the Special Economic Measures Act as a prohibited item. They cannot legally be shipped or sold to any person or company in Iran.
A lawyer for the company said the rings were supposed to go to Dubai, but there was an address mix-up on the packaging.
"That's absolutely in our view what happened here. You have an accounting system that allows multiple addresses to go in," said Kristine Robidoux. "They have the same company name but two different addresses ... one in Tehran and one in Dubai and so when it should have gone to Dubai, it went to Tehran."
Lee Specialties has a head office in Red Deer where it designs and manufactures specialized oilfield equipment including pressure control equipment and production logging tools.
An RCMP official said when it comes to charges, it doesn't matter if the O-rings were to be used with oilfield equipment.
"There's a reason that these items were placed on the prohibited list and the Viton O-rings have several characteristics which means it can be used for several applications," said RCMP Const. Ben Simon.
"In this case the Viton O-rings were found in oilfield-related equipment, however, they can also be used in things such as the nuclear program."
The judge accepted a joint submission from the prosecution and defence and fined Lee Specialties Ltd. $90,000.
Robidoux said her client accepted responsibility for its mistake.
"They take their reputation very seriously and of course when an event like this happens in large part due to human error ... that really hurts and so certainly they've taken this very seriously," she said.
"Their compliance program now is second to none."
Lauren Delgaty, regional director general for Canada Border Services Agency, said officers aren't just on the lookout for illegal goods coming into Canada, but for items being unlawfully exported as well.
"This seizure prevented these items, which can be used in nuclear applications, from landing in the wrong hands," she said.
Simon said the investigation did take a significant amount of time.
"Basically it's the complexity of the investigation and the amount of time it takes to analyze the appropriate documentation," said Simon. "These kind of investigations aren't very common. It's new and there's not very many people having experience doing it."
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