Feds Lift Export Ban on Delfin USA


While the U.S. Department of Commerce did not renew a prohibition against Delfin Group USA from exporting its motor oil and lubricants, company President John Gordon says it will be some time before Delfin sends its products overseas, especially to the Middle East.

I made a commitment that I am NOT interested in doing business with the former presidents partners in the U.A.E., Saudi Arabia or wherever else these products might have gone, Gordon said, placing a very heavy emphasis on the word “not” in an interview with Lube Report yesterday. I couldnt understand why we were selling to the MidEast when there were people 20 miles away we could sell our product to.

Delfin USA is headquartered on a 42-acre site in North Charleston, South Carolina, which it purchased from Chevron Corp. in 2007.

Gordon was referring to federal charges filed last May against Markos Baghdasarian, former Delfin president, alleging the sale and export of aviation oils and polymer valued at $850,000 to Iran in violation of U.S. imposed sanctions over Irans nuclear program. The government alleges that Baghdasarian from June 2010 through October 2011 engage in prohibited transactions with customers in Iran, including Pars Oil, which is owned by the government of Iran.

While the legal case against Baghdasarian continues to make its way through the courts, and Delfin continues to face penalties, the Commerce Department last week reported it would not seek a renewal of a Temporary Denial Order imposed on Feb. 25. As a consequence, Delfin legal counsel Joe D. Whitley reported to Gordon, Delfin is permitted to resume normal domestic and international trade that is compliant with the Export Administration Regulations and other applicable U.S. law.

Gordon asserted, however, that for the foreseeable future, Delfin wants to do business with American companies. That means buying raw materials from American chemical companies, using Americans to blend and package our products and then selling them to people in the Southeast.

The events surrounding Baghdasarians arrest and the subsequent Commerce department denial order rocked Delfins world. When we found out that our product was being sold to Iran, we were pretty upset. We employ 60 hard-working loyal Americans, Gordon said, adding he had to lay off 11 people within a month, and eventually lost more than a quarter of his workforce. This is about families, of trying to save peoples jobs.

In addition to the lost workforce, Delfin lost its suppliers, blenders, packagers and financial backing. Everybody pretty much just cut us off, Gordon said, but were starting to turn this around. Were starting to bring people back as business picks up.

Restoring Delfins reputation involved more than a recovery, Gordon said. Recovery to me implies going back to the way things were. We arent interested in recovery, were interested in total reconstruction of the company. Ripping the whole thing down and rebuilding it from the ground up.

He said the company took a look at every aspect of its operations. Its all about best practices and document control. We brought in Dunn and Bradstreet Services to screen existing and potential customers, to do background checks.

Gordon was promoted to president on April 14 by the Delfin Group Worldwide board of directors, which sits in Riga, Latvia. Baghdasarian was placed on administrative leave in April and was terminated from the company the first week of September. Since then, the board of directors has given me its full support, he said.

One of the first things Gordon did after being promoted as president of Delfin USA was to create an export compliance procedure manual and bring in a compliance officer to make sure Delfin was following trading and export laws under provisions of the Patriot Act.

After the corporate restructuring, Delfin looked at its product line. Previously, Delfin marketed its products overseas in quart and gallon packages. We were doing 60 20-foot containers [approximately250,000 gallons] a month that were going overseas. All of a sudden, that business was gone, Gordon said. All of a sudden we had to refocus on bulk and drums.

Gordon convened a meeting of Delfins sales staff, and told them to start selling to distributors in Georgia, the Carolinas and Florida.

I told them we had to forget about the overseas business, its gone. It may or may not come back, but I dont care right now, Gordon told his sales force. The way we are going to keep this company running, to keep these people paid, is by concentrating on bulk business in the southeastern United States.

The strategy has paid off. He said that since March, Delfin had attracted 15 new customers that represented $1.5 million in income in the first 60 days. Septembers sales alone are $1.75 million, and we continue to expand our marketing reach, so were on the right track, Gordon added.

While stressing the domestic market, Gordon did not rule out going overseas at some point. He cited potential customers in Latin and South America, the Caribbean, and Canada. Beyond that, Gordon said, it would be a year or more before Delfin expands to Europe and beyond, and then only with the proper checks in place.

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