STATEMENT OF RUSSELL MOKHIBER, EDITOR, CORPORATE CRIME REPORTER, APRIL 14, 2003, NATIONAL PRESS CLUB, WASHINGTON, D.C.

Good morning.

My name is Russell Mokhiber.

I'm the editor of Corporate Crime Reporter.

Corporate Crime Reporter is a legal publication. It is published 48 times a year and is based here in Washington, D.C.

Our subscribers are primarily prosecutors, corporations, white collar criminal defense law firms, legislators, media outlets, and law school libraries.

Joining me today is Michael Tankersley. Michael is a staff attorney with Public Citizen's Litigation Group here in Washington, D.C.

I will give an overview of the information released by OFAC within the past two weeks.

Michael will then give a history of the litigation concerning this case. And then we'll open it up for questions.

In your press packets, you have a copy of the press release, the charts detailing the 59 companies caught trading with the enemies of the United States, a copy of my statement, and a copy of Michael's statement.

The Treasury Department's Office of Foreign Assets Control -- also known as OFAC -- enforces economic and trade sanctions against targeted foreign countries.

Among its duties, OFAC enforces the Trading With The Enemy Act and the International Emergency Economic Powers Act.

The Trading with the Enemy Act imposes sanctions against Cuba and North Korea.

The International Emergency Economic Powers Act, targets, among others, Iran, Iraq, Libya, and Sudan.

The idea is to try and shut down economic access and isolate those countries that are either considered "enemies" of the United States or those against whom we want to impose economic sanctions.

OFAC has the authority to impose civil penalties for violations under the Trading with the Enemy Act of up to $55,000 per violation. Civil penalties under the International Emergency Economic Powers Act range up to $11,000.

While there is an ongoing public policy debate about who exactly is an "enemy of the United States" and whether or not these sanctions laws actually work in achieving their desired ends, there is little debate that when the government enforces the law against major American corporations, the results should be made public.

Adverse publicity is one of the greatest deterrents against corporate crime and wrongdoing.

Law enforcement generally understands this principle.

When the Justice Department brings criminal prosecutions against major American corporations, the results are made public within a couple of days on its web site. Press releases are faxed to major news outlets. And in cases of major wrongdoing by large American companies, the Attorney General and his chief law enforcement officials will hold a press conference to announce the plea agreement or the indictment.

Same for the state attorneys general, district attorneys, U.S. Attorneys, and various regulatory agencies.

And yet, for years, the Treasury Department's Office of Foreign Assets Control would enforce the laws against major American corporations for trading with enemies of the United States and not make the results public.

I first learned about this in April 2000 when I was interviewing a white collar crime defense attorney who specialized in this area.

She told me that the Treasury Department was secretly settling scores of enforcement actions every year against large financial institutions and other corporations for violating laws that prohibit trading with countries like Iraq, Iran and Sudan.

She told me that OFAC at the time had about 1,000 open investigations.

She told me that they would settle many cases every year, with the company paying often tens of thousands of dollars.

And these settlements were rarely made public.

She later told me that defense attorneys were generally pleased with the lack of publicity.

This is what she said:

"None of our clients want any publicity in this area. It is not a badge that any financial institution or others who are tagged by OFAC wear proudly. These are very serious statutes. Violations are generally inadvertent. No bank or other financial institution likes to have any publicity or press on an enforcement action. So the defense bar is generally very pleased when our clients don't get press in this area."

After interviewing this defense attorney, I called over to the Treasury Department's press office and asked to speak with someone about all of these companies being charged with trading with enemies of the United States.

Why weren't the results being made public? I asked.

No one ever returned my calls.

So I filed a Freedom of Information Act request, which was ignored for more than a year, until I found Michael Tankersley of Public Citizen Litigation Group, who filed a lawsuit against the Treasury to pry these enforcement documents loose.

As a result of that litigation, last year OFAC released enforcement memos on more than 300 cases.

And also as a result of that litigation, OFAC agreed to release these cases on a weekly basis -- as they are settled.

Which it began to do on April 4, 2003.

On April 4, OFAC released a chart detailing 54 settlements by corporations charged with violating trading with the enemy laws including -- ChevronTexaco with Iraq, Caterpillar, Wal-Mart and ESPN with Cuba, ExxonMobil and Wells Fargo Bank with Sudan, and Union Bank of California and Fleet Bank with Iran.

Then last week, OFAC released another chart, this time detailing five such cases, including the New York Yankees trading with Cuba.

There are a number of problems with these charts.

Let's look at the chart revealing that the New York Yankees were caught trading with Cuba. What information does OFAC give us? It tells us that the Yankees violated 31 CFR 515.

31 CFR 515 governs trade with Cuba. So, apparently, the Yankees had some illegal trade with Cuba. Under description of actual or alleged violation is the letter K. According to OFAC, this means that the Yankees had a contract in which Cuba has an interest. The chart then informs us that the Yankees settled the case for $75,000. There is no indication when the violation occurred, when the settlement was reached, what was the nature of the violation -- outside of the indication that it had to do with a contract in which Cuba had an interest.

Same with the release on April 4 of information indicating that Chevron/Texaco was caught doing business with Iraq. 31 CFR 575 refers to rules governing trading with Saddam's Iraq. There is little or no information on this chart indicating what the nature of the violation is. In fact, we learned much more from ChevronTexaco about the nature of the violation than we learned from OFAC. According to the company, ChevronTexaco was buying crude oil from Iraq under the Oil for Food Program. Iraqi port agents were demanding $18,000 in port fees. The company actually paid the port fees. After finding out that it did so, it reported the case to Treasury, and paid a settlement of about $5,000.

So, here's the progression of OFAC's regime of secrecy.

First, it settles hundreds of cases with major U.S. companies for trading with the enemies of the United States, and doesn't make the cases public.

Then we sue them to release the documents.

As a result of the litigation, last year they release the enforcement memos for each case, detailing the nature of the violation, the date of the alleged violation, the date of the settlement -- even though these memos were heavily redacted.

Also as a result of this litigation, they agree to release current settled cases on a periodic basis.

But now, they are releasing only summary charts, devoting only one line per company.

In fact, the Treasury Department is reverting to its old ways. It seeks to shield from the glaring light of adverse publicity big American companies caught trading with the enemies of the United States. The companies fear the publicity. And Treasury gives in to corporate pressure, reveals little, and buries the charts in the bowels of its web site.

Our position is that OFAC should release detailed information of settlements on its web site immediately after it settles the cases. OFAC has a web site. It should use it.

So, for example, when it settles the case of ChevronTexaco trading with Iraq, it should put out a press release detailing the alleged wrongdoing, the date of the alleged wrongdoing, the amount of the settlement and other pertinent facts. One press release for each case. This is standard practice among law enforcement agencies throughout the federal government.

This is in fact the practice of Treasury's sister agency, The Commerce Department's Bureau of Industry and Security or BIS.

BIS is in charge of administering export controls on goods and technology exported from the United States and that are controlled for the reason that they could be used in either commercial or military applications.

Last year, we interviewed the former enforcement chief of the Commerce Department BIS, former known as the Bureau of Export Administration.

This is what she told us:

"We posted our enforcement actions on our web site because there is a strong policy of letting the public know what you as enforcers are doing. We felt it was certainly in the public interest to release this information. And we also felt that it provided strong deterrence for the wrongdoers. And it provided guidelines for companies trying to comply, to understand what they could do to keep out of trouble."

OFAC should follow suit. To deter future corporate wrongdoing, OFAC must stop protecting major American companies from the glare of adverse publicity.

I'll now turn over the podium to Michael Tankersley of Public Citizen's Litigation Group. After that, we'll take your questions.