CORPORATE CRIME REPORTER
Halliburton
Hit Over Iran Trade
21 Corporate Crime Reporter 19, April 30, 2007
Three Democratic Senators executed a ninety minute flogging of Halliburton Company
today.
The Senators – Byron Dorgan (North Dakota), Frank Lautenberg (New Jersey), and Sherrod Brown (Ohio).
The platform – a hearing by Senate Commerce Committee’s Subcommittee on Interstate Commerce, Trade and Tourism.
And it wasn’t about tourism.
Carried live on C-Span, the flogging came more than two years after Halliburton announced that it was leaving Iran.
A federal law – the Iran Sanctions Act – makes it illegal for U.S. based corporations to do business directly with Iran.
But a loophole allows foreign subsidiaries of U.S. companies to do business with Iran, so long as the subsidiary operates independently.
In 2004, 60 Minutes ran a segment exposing the loophole.
The 60 Minutes report focused on Halliburton, which had a subsidiary in the Cayman Islands, with headquarters in Dubai.
The subsidiary is Halliburton Products and Services Limited (HPSL).
The subsidiary did hundreds of millions of dollars worth of business with Iran.
The Cayman Islands office was little more than a mail drop.
The Dubai office was supposedly run independently of the Houston-based company, but the 60 Minutes investigation found that the Dubai subsidiary shared office space, phone, and fax lines with a division of the Houston company.
Dorgan, Lautenberg and Brown all ripped into Iran as a state sponsor of terrorism – as if the three Senators were the backup line for Bush’s neo-con bomb Iran chorus.
Lautenberg sought to link Halliburton to the death of a young American in Israel.
“I want to tell everyone about Sara Duker from Teaneck, New Jersey,” Lautenberg said. “She graduated summa cum laude from Barnard College – and she died with her fiancee when their bus blew up in Jerusalem in 1996. She was twenty-two.”
“Her bus was bombed by Hamas. Hamas receives funding and support from the Iranian government.”
“Without Iranian financial support, Hamas and other terror groups would not be able to carry out their attacks.”
“So it's stunning to me that some American companies – like Halliburton – have conducted business with terrorist states like Iran, in defiance of laws against it,” Lautenberg said.
“Iran sponsors terrorism,” Lautenberg said. “Their terrorism has killed hundreds of Americans, including Sara Duker of my state. Companies that help terror states generate revenue are helping fund terrorist operations. It's that simple.”
All three Senators said that it should be illegal for subsidiaries of U.S. companies to do business with Iran through a U.S. subsidiary.
Lautenberg has introduced legislation to close this loophole.
Brown and Dorgan have introduced legislation that would prohibit U.S. companies that do business with Iran through U.S. subsidiaries from getting federal contracts.
The floggee at the hearing: Sherry Williams, VP and Corporate Secretary at Halliburton.
Williams told the Senators that at the time of implementation of Iranian sanctions and executive orders in l995, “three highly qualified major law firms” advised Halliburton that “independent foreign subsidiaries, such as HPSL, were not within the bar of the sanctions to the extent that they were independent of U.S. parents in the undertaking and the execution of such business.”
“The law firms also determined that the sanctions did not apply to wholly owned subsidiaries, such as HPSL, that are of foreign incorporation and subject to decision-making by non-U.S. citizens,” Williams said.
Nonetheless, with public criticism of Halliburton mounting, the company announced in January 2005 that it would take no new contracts in Iran.
The Comptroller of the City of New York, William Thompson, also testified at the hearing.
Thompson’s office has been the driving force seeking reform of the Iran sanctions law.
Thompson said that Halliburton was not alone in exploiting the Iran sanctions law loophole.
General Electric and Conoco-Phillips were also doing it.
In November 2002, the comptroller submitted a shareholder resolution calling on Halliburton to review the potential financial and reputational risks of the operations of its subsidiary in Iran.
Similar resolutions were filed at the time with General Electric and Conoco-Phillips.
The 60 Minutes segment, which ran in January 2004, “raised the public awareness of this issue dramatically,” Thompson said.
The attention from the 60 Minutes show led Conoco-Phillips to announce within a month that they would cease any new business in Iran through their foreign subsidiaries.
In December 2004, Thompson’s office filed shareholder resolutions with two additional companies – Cooper Cameron and Aon – to likewise cease their backdoor dealings with Iran.
“We also applied pressure to another US-based company, Foster Wheeler, that is incorporated in Bermuda and not subject to U.S. sanctions,” he said.
In February 2005, GE announced that they would cease any new business in Iran through their foreign subsidiaries.
The
next month, Cooper Cameron announced that its subsidiary would divest of its
interest in an Iranian joint venture.
Within weeks, Halliburton likewise committed to cease any new initiatives in
Iran and will be completely out of the country by the end of 2007.
In December of 2005, Foster-Wheeler made a similar commitment.
In January of 2006, the last firm targeted by the comptroller, Aon, announced that it would cease its backdoor operations in Iran.
Lautenberg said that “Halliburton is not getting out of Iran because they are suddenly a good corporate citizen.”
“They are not getting out of Iran because it is the right thing to do,” Lautenberg said. “Halliburton is getting out of Iran because they don't like the bad publicity they are getting, but they plan to come back when things cool down. In fact, Halliburton's CEO, Dave Lesar, told the press, and I quote: ‘If... more of our customers go [to Iran], we will return to this market.’”
Lautenberg
said legislation is needed to close the loophole because “left to their
own devices, companies like Halliburton will follow the money, not morals.”
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