Esco
Corp, a 99-year-old privately held company, operates foundries in
Portland and abroad. One of those plants, in Canada, used nickel from
Cuba in violation of a U.S. trade embargo. Federal officials are investigating Esco Corp. for using nickel obtained from Cuba in violation of a U.S. trade embargo, the Portland company confirmed Friday.
Esco lawyers expect the company to face fines of no more than $5.5 million, but acknowledge penalties could be more, according to a public filing with the U.S. Securities and Exchange Commission.
The disclosure of the violation by a Canadian subsidiary comes at a delicate moment for Esco, an old-line manufacturer whose managers have been trying to take the company public on the Nasdaq exchange. Esco announced its plans in May for a $175 million public offering that has since languished.
It's not clear whether the Cuban matter held up the offering or whether the soft market for IPOs is behind the delay.
Esco spokeswoman Kelley Egre declined to comment Friday on the IPO or its timing, citing an SEC-imposed quiet period. But she did address the Cuban disclosure, contained in a 317-page amended IPO document filed by the company and appearing on the SEC's website late Friday.
"Truly, we take compliance very seriously," Egre said, "and as soon as we found out, we immediately reported to the appropriate agencies."
For 50 years, the United States has maintained an embargo that prohibits nearly all trade, financial and aid transactions with Cuba, 90 miles from Florida. The embargo is somewhat permeable, given dealings through third countries, but U.S. officials take violations seriously.
The U.S. Treasury Department's Office of Foreign Assets Control investigates violations. That's the agency Esco managers say they alerted when they discovered the Cuban dealings in June.
"We learned that a foundry operated by one of our foreign subsidiaries had been purchasing and using material from a distributor that obtained the material from a supplier that procured the source material from Cuba," the company wrote in its SEC filing. More >>
Esco lawyers expect the company to face fines of no more than $5.5 million, but acknowledge penalties could be more, according to a public filing with the U.S. Securities and Exchange Commission.
The disclosure of the violation by a Canadian subsidiary comes at a delicate moment for Esco, an old-line manufacturer whose managers have been trying to take the company public on the Nasdaq exchange. Esco announced its plans in May for a $175 million public offering that has since languished.
It's not clear whether the Cuban matter held up the offering or whether the soft market for IPOs is behind the delay.
Esco spokeswoman Kelley Egre declined to comment Friday on the IPO or its timing, citing an SEC-imposed quiet period. But she did address the Cuban disclosure, contained in a 317-page amended IPO document filed by the company and appearing on the SEC's website late Friday.
"Truly, we take compliance very seriously," Egre said, "and as soon as we found out, we immediately reported to the appropriate agencies."
For 50 years, the United States has maintained an embargo that prohibits nearly all trade, financial and aid transactions with Cuba, 90 miles from Florida. The embargo is somewhat permeable, given dealings through third countries, but U.S. officials take violations seriously.
The U.S. Treasury Department's Office of Foreign Assets Control investigates violations. That's the agency Esco managers say they alerted when they discovered the Cuban dealings in June.
"We learned that a foundry operated by one of our foreign subsidiaries had been purchasing and using material from a distributor that obtained the material from a supplier that procured the source material from Cuba," the company wrote in its SEC filing. More >>
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