US financial watchdogs have demanded dozens of big-name Western firms open the lid on their business with Iran, Sudan and Syria -- countries deemed by Washington to be "state sponsors of terrorism."
Documents recently released show the Securities and Exchange Commission in a tug-of-war with household names like Sony, Caterpillar, Xerox, AIG and Siemens to provide a comprehensive account of their trade with the three nations, as well as Cuba.
The correspondence -- which is released with a delay of at least 45 days and dates back to the beginning of this year -- shows many firms staying within the letter of the law, while continuing business despite high-profile sanctions.
While many firms appear to be tidying up the remnants of legacy investments in Tehran, Khartoum and Damascus, others have pursued legal action against the use of their brand after ties have been severed.
But the documents also point to the repeated use of a loophole that allows Western -- and in particular US firms -- to do business in Iran, Syria and Sudan via non-US subsidiaries.
Correspondence from heavy equipment manufacturer Caterpillar Inc. detail how its equipment continues to be sold in Syria and Sudan via dealers and distributors, netting the Illinois-based company tens of millions of dollars each year.
In the first quarter of 2011 sales to Syria totaled $600,000 and sales to Sudan totaled $19.5 million.
"Several of Caterpillar's non-US subsidiaries have sold and continue to sell products to Syria and Sudan as permitted under US economic sanctions and export controls," the company told the SEC.
The firm acknowledged that some of its products may have reached the Syrian government via these intermediaries.
And despite a broad three-decade-old US embargo on Iran, Caterpillar reported sales to the Islamic Republic worth $23.7 million in 2010.
Caterpillar later ordered non-US subsidiaries to sever ties with the country and that figure is down to zero this year.
That step has not yet been taken in Syria or Sudan.
While the US firms' trade with Syria, Iran and Sudan represented a fraction of their overall business, trade did cut across sectors.
In the tech sphere Cisco reported "very limited operations in Syria" with sales worth "approximately $2 million or less in each of fiscal years 2008, 2009 and 2010."
Government-rescued insurance giant AIG reported that since 2008 it had identified five investments totaling $233.0 million which related to Iran, Sudan or Syria.
While the US government has recently warned companies that they risk reputational damage in doing business with the three countries, more proscriptive measures may be on the way.
The disclosures come as Congress weighs yet tougher sanctions on Iran over its nuclear program and a plot to kill the Saudi Arabian ambassador in Washington.
Congress is also considering legislation that would prohibit American companies from exporting hardware or software that could be used for online surveillance or censorship to nations that restrict the Internet.
It would also require Internet companies listed on US stock exchanges to disclose to American regulators their practices in collecting and sharing personally identifiable information.
In the absence of broad multilateral sanctions against doing business with the likes of Iran, the US authorities appear keen to make their leverage felt in other ways.
The SEC also wrote to non-US firms with stock listings in the United States asking them to outline their dealings in the four countries.
The responses paint a telling picture of how non US-firms keep Iran at arms length while continuing to do business there.
Sony reported revenues of $325.6 million in its trade with Iran in the fiscal year ending in March 2011, mostly through "Iran-based distributors and in part through traders based in Dubai."
"If Sony believed such sales, or any other transactions or activities, would hurt its reputation, it would evaluate the situation and take appropriate action in the circumstance," the company said.
German conglomerate Siemens reported it had made nearly $1.0 billion in revenue from trade with Iran in fiscal 2010, while acknowledging that some of its products may have been siphoned off to Iran's nuclear program.
Lawyers for the company said Siemens "did not knowingly provide such software to or for any nuclear power plants or nuclear enrichment facilities in Iran.
"Nonetheless, Siemens has no control over re-sales or transfers of its software products via indirect channels."
by Andrew Beatty
(c) 2011 AFP
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