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Wednesday, May 18, 2022

Two Sue Over Dismissal After Discovery of Parts Sale to Iran

Two Sue Over Dismissal After Discovery of Parts Sale to Iran


Staff Reporter

Two former employees of a local Crane Co. division have sued the company for breach of contract and defamation in the wake of their dismissal over allegations they brokered an illegal sale to an Iranian company.

The two were fired in June, their suit says, after an internal audit tied them to the sale of valves that were funneled to Iran through an Australian affiliate.

In the suit, filed last month in Los Angeles Superior Court, Andrew Freyer and Zachary White do not deny the sales, but do claim they were unaware of the goods’ final destination.

The pair managed the sale and service of industrial valves for the Long Beach-based Pacific Valves division of the Crane Valve Group, part of Crane Co., according to the suit. The parent company, with revenues of $1.5 billion last year, sells valves to various industries, including power generation, chemical processing, mechanical construction and oil refining.

Freyer and White also allege in court filings that senior management instructed them to work on another bid in 2001 for a project “involving embargoed countries,” which was revealed by the internal audit, initiated earlier this year.

President Reagan ordered a halt to Iranian imports in 1987. An embargo was later extended to bar the sale of all non-humanitarian goods and services. The embargo was extended in 1995 by President Clinton, who signed an executive order banning firms from involvement in petroleum development in Iran, which the U.S. has identified as a sponsor of terrorism.

Corporate penalties for violating the sanctions can range up to $500,000, with individual penalties of up to $250,000 and 10 years in jail.

Citing longstanding policy, officials with the Federal Bureau of Investigation and the U.S. Attorney’s Office declined to address whether they were conducting any investigations into the transaction.

Augustus DuPont, general counsel of Stamford, Conn.-based Crane, would neither confirm nor deny any criminal investigation into the sale.

Freyer and White sued Crane for breach of contract and for defamation, claiming the company and its officials “have made unprivileged communications to third parties that plaintiffs engaged in illegal transactions with Iran and other embargoed countries and then sought to cover up their involvement in prohibited transactions,” the suit says. The third parties include other Crane employees and government agencies, the suit says.

Their attorney, Robert Feldhake, a partner at Feldhake August & Roquemore LLP in Irvine, did not return calls.

“In our view, the case has no merit,” DuPont said. “They were terminated by the company because we believe they did not meet the standards we expect of our employees. We operate our business with a very high emphasis on ethics and integrity, and we work very hard to comply with laws in all jurisdictions where we do business.”

He said the company expects to file a detailed reply to the suit in the next several weeks but declined to be more specific.

Freyer was serving as director of sales for Asia Pacific in Hong Kong for the past year, the suit says. White, who joined the company in 1993, was product manager in Long Beach.

Freyer and White also sued Kevin McKown, president of Pacific Valves in Long Beach, and Nancy Scanlon, the division’s human resources manager at the time. Neither returned phone calls seeking comment. Scanlon has since “left the company,” said DuPont, who declined to be more specific.

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