Two Montreal men are charged with illegally exporting American-made railway equipment to Iran, violating Canada's Export and Import Permit Act and Customs Act, RCMP say.

Michael Allen, 67, and Hugo Dreckmann, 75, are scheduled to appear in Quebec Court Wednesday to face charges of exporting without a permit and misrepresentation.

The two are directors of Romic Marc Rail Inc., a company based in St-Lazare that sells locomotives and train parts.

RCMP spokeswoman Camille Habel said the company was selling rail equipment manufactured in the United States directly to Iran, but passing it off as being manufactured in Canada. That's a violation of the Export and Import Permits Act, because it's a way of skirting strict economic sanctions imposed by the U.S. against Iran.

'Serious offences'

"What that company's been doing is either lying about the origin of the pieces and the material, or they've been going through different countries to eventually get the parts to Iran," Habel said.

The RCMP alleges Romic Marc Rail Inc. illegally exported everything from bolts to locomotive engines made in the US to Iran. (Romic Marc Rail Inc. )

"They're considered serious offences, because they violate Canada's international commitments."

Foreign Affairs, Trade and Development Canada confirmed to CBC that it is illegal to export rail equipment to Iran.

"Sanctions under the Special Economic Measures (Iran) Regulations prohibit all imports and exports to Iran subject to certain exemptions. Exemptions include specified food, medicine, medical equipment, humanitarian goods, and certain pre-existing contracts. There is no exemption for rail equipment," said Rachna Mishra, a spokeswoman for the department.

Seizure in 2010

RCMP launched an investigation after a seizure by the Canada Border Services Agency in 2010. Habel said the Mounties believes the two men illegally exported nearly $10 million worth of railway parts between 2007 and 2012.

She said there is a demand for such equipment in Iran, in part because of the U.S. sanctions.

"There's a market for it, so the two accused have figured out a way to get what's needed over there," Habel said.

She said both charges the men are facing are indictable offences. Under the Customs Act, Allen and Dreckmann could face up to five years in prison and fines of up to $500,000, and under the Export and Import Permits Act they could face a larger fine and up to 10 years in prison.