Dissident Voice

July 21, 2003

Transcript of Democracy Now! radio program, July 16, 2003.

Guests: Michael Scherer, Washington correspondent for Mother Jones. His article Sidestepping Sanctions appears in the July/August issue of Mother Jones. Roger Robinson, CEO and President of Conflict Securities Advisory Group, Inc. He is the former chairman of the William Casey Institute and served as the Senior Director of International Economic Affairs at the National Security Council under President Reagan.

AMY GOODMAN: As the crackdown continues in Iran on dissidents, on students, on journalists, Iran has also announced that the discovery of one of the largest oil fields in the world, has been made there. Some 38 billion barrels of oil are believed to be in the oil field found in southern Iran making it one of the most lucrative oil finds in years. Iran says they're looking for foreign companies to invest in that field. It will be attempting deal even for U.S. companies that are barred from dealing with Iran. Recent news reports indicate the subsidiaries of several U.S. companies have been quietly trading with Iran for years. They include Halliburton, G.E. and Conoco. According to Money Magazine, in 1997 when Vice President Dick Cheney was Halliburton's C.E.O., the company paid a $15,000 fine for improperly shipping oil field equipment to Iran. Cheney also lobbied both as head of Halliburton and as vice president of the United States, to lift sanctions against Iran and Libya.

According to a new article in Mother Jones, Halliburton currently has at least two major projects in Iran. Along the Iraqi border, a subsidiary of Halliburton is helping to build one of the world’s largest fertilizer plants. Another subsidiary is providing a $226 million drilling rig to the Iranian National Oil Company. Meanwhile General Electric is also doing work in Iran. A Canadian subsidiary has provided Iran with four hydro electric generators to expand a dam along the Kuran River. An Italian subsidiary of G.E. is supplying pipeline equipment and gas turbines for Iran's oil industry. This all comes despite the fact that Iran is one of the seven nations listed by the State Department as a state sponsor of terror. The other nations are Iraq, Syria, Sudan, Libya, North Korea and Cuba. Until recently, the dealings of Halliburton and G.E. in countries like Iran got little attention. But a new financial company has begun tracking which companies have investments in nations on the state department list. The company is Conflict Securities Advisory Group. It’s created a massive database that lists which countries deal with all the countries on the state department list except Cuba. The group has found that 35 major U.S. companies that have operations in these countries. Overall some 375 publicly traded companies around the world are operating in these countries. Let's start with MICHAEL SHERER, Washington correspondent for Mother Jones. His article is called Side Stepping Sanctions. Welcome to Democracy Now! Michael.

MICHAEL SHERER: Thanks for having me.

AMY GOODMAN: Talk about these companies in Iran.

MICHAEL SHERER: Well, the way they do it is, they’re actually not technically breaking the law. They're clearly going against congressional intent. Both Iran and Libya have strict sanctions, unilateral American sanctions against them, that bar any U.S. company or any U.S. citizen from doing any business in these countries. With very few agricultural exceptions here and there.

What companies like Halliburton and General Electric—the examples you mentioned at the beginning—do, is they use foreign subsidiaries that are staffed with foreign nationals.

And even though the profits and ownership ends up being traced back to the American parent company and the American shareholders, they're able to get around the law because they claim that these companies working in Italy, in the Cayman islands, working in other countries in Europe are not American companies and therefore not beholden to U.S. law.

AMY GOODMAN: So, these companies, name them, how they're doing it.

MICHAEL SHERER: Well, you mentioned General Electric, they have a subsidiary called G.E. Hydro in Canada. They also have a subsidiary in Italy called Nuevo Pignone, that they use to provide pipeline compressors and gas turbines to Iran's oil industry. Halliburton has a couple -- they have dozens of subsidiaries around the country. Cayman subsidiaries of Halliburton has been operating in Iran. They also have business in Iran through a Swedish subsidiary that has been working there. It's a trick that has been in place for decades. What is different is that in the past, past presidents including Ronald Reagan and even President Clinton in the mid 1990's, have put pressure on Americans companies that are doing this, to pull out anyway. Reagan was successful in the 1980's when Libya first had sanctions put in place against it, to put pressure on Conoco and Marathon, two oil companies, to leave Libya even though they were operating through foreign subsidiaries. Then again in 1995, Clinton put pressure on Conoco to get out of an oil deal with Iran that had been arranged through a European subsidiary.

The current Bush administration right now, even though there's clear rhetoric about, you're either with us or against us--and there’s clearly heightened security about these countries--has not yet put the same type of pressure. One of the possible reasons is that within the administration, there are people who have been on the record for a number of years as being against these types of unilateral sanctions, including the vice president, Dick Cheney, because they hurt U.S. business. So there's a tension within the White House and within the conservative world between the national security interests of the country and the business interests.

AMY GOODMAN: Just to get something straight, MICHAEL SCHERER. Cheney as vice president of the United States, former C.E.O. of Halliburton is still getting money from Halliburton, is that right?

MICHAEL SHERER: Yeah. I think it's through a pension payment, that's right. And also he clearly cashed out when he left the company with quite a bit of money.

AMY GOODMAN: I wanted to turn for a minute to ROGER ROBINSON, C.E.O. and president of Conflict Securities Advisory Group. He is former chair of the William Casey Institute--that is the former Director of Central Intelligence under Reagan, William Casey--and served as the senior director of International Economic Affairs under President Reagan. Welcome to Democracy Now!

ROGER ROBINSON: Thank you very much.

AMY GOODMAN: Can you talk about these companies and how you're tracking these companies in Iran? Would you agree with the assessment that it's legal?

ROGER ROBINSON: Well, we developed, as was mentioned, a database with our partner company Investor Responsibility Research Center, that identifies and profiles about 400 publicly traded companies worldwide, that have business activities in the six State Department designated terrorist sponsoring states you mentioned. All of them except Cuba. As well as any publicly traded companies that have ever been associated or documented to be associated with the proliferation of weapons of mass destruction, or ballistic missiles. So we called this general new risk category in the markets global security risk. And we're finding that institutional investors, pension systems, mutual funds, others, are increasingly recognizing that these risks are valid and are asymmetric in nature that can affect share value and corporate reputation. We are an impartial information provider. This is the first risk assessment tool of its kind dealing with global security risk. And in the case of Iran, we found that there are over 200 publicly traded companies doing business in that country at the present time. Approximately 58 of which are doing business in the energy sector, as you mentioned, which is attractive to many foreign oil companies including our own. And as many as 41 of those may be in violation of--technically at least--of U.S. law in the form of the Iran/Libyan sanctions act.

AMY GOODMAN: Can you talk about the actions of the New York City controller as well as the Pennsylvania State Assembly, to limit investments in companies that invest in countries like Iran?

ROGER ROBINSON: Yes. New York city has been a model in trying to track these types of risks. They are -- they have gone forward with shareholder resolutions as was mentioned by Michael, directed toward General Electric, Halliburton and Conoco-Phillips in terms of the actions or activities of their subsidiaries in Iran and in the case of Conoco, both Iran and Syria. The concern they had was not so much that these companies were engaged in illegal activity, but that they might be skirting the spirit, if not the letter of U.S. law and that this could -- these activities in such higher risk countries could pose significant risks to share values and corporate reputations that have heretofore been unaccounted for. The New York City firefighters and police pension funds are taking the lead on this. We're pleased to say that we’ve have been able to make use of our global security risk monitor online service in trying to identify companies in their portfolios that have these kind of higher risk business involvements. And I believe that you're going to see more activity out of New York City this fall.

AMY GOODMAN: ROGER ROBINSON, what do you think would happen if U.S. and other multi-national corporations were forced to pull out of Iran?

ROGER ROBINSON: Well, it's hard for us in an impartial mode that we're in, to make public policy judgments. It is to say that obviously Iran is very dependent--as are the other terrorist sponsoring states--on the infrastructure support, and financing and business activity support, of publicly traded firms that are held by virtually all Americans in the market. These are the largest companies in the world. They're providing multi-billion dollar revenue flows to the Iranian government. Some have suggested that this helps them with predations like weapons of mass destruction programs and sponsorship of terrorism itself. But the point here is that if U.S. sanctions were even to be tightened under the Iran/Libyan sanctions format, these companies could be at significant risk from an investor perspective, and U.S. investors in general should be asking their mutual funds and pension systems, can they identify those companies that are doing businesses in these countries like Iran and if so, what risk mitigation strategies are they pursuing.

AMY GOODMAN: MICHAEL SCHERER, you write Hewlett-Packard, Kodak, Proctor & Gamble, are all shipping their products to Dubai where third parties are known to re-export goods to Iran.

MICHAEL SCHERER: It's a separate -- it's a separate process where by manufacturers of consumer goods, a number of them American companies, will ship their products to resellers in a third country then those resellers will buy them and reship them across the sea to Iran. Technically it's illegal to sell anything to a third party knowing that these goods will end up in a country that is sanctioned by the U.S. government. But there is a veil of ignorance that is claimed by a lot of these companies. So you have a huge portion of Dubai's export market going to Iran and a significant portion of that is not goods that are being created in Dubai. They're goods that are being imported to Dubai. So it’s another way that these sanctions are skirted.

AMY GOODMAN: It's interesting on the one hand you have President Bush saying Iran is part of the axis of evil. On the other hand you have vice-president Cheney handsomely profiting, his former company certainly profiting from doing business in Iran. And then I'm wondering if you can comment on that and then talk--expand it a little to what Halliburton is doing in the rest of the world. Mother Jones has a very interesting two-page spread in the July-August issue by you, The World According to Halliburton, a map of the world with Halliburton investments overlaid on it.

MICHAEL SCHERER: Well, like I said before I think there is a split, an ideological split within the administration that hasn't fully been fleshed out. There's a difference between the president's public rhetoric about the dangers that these states pose to the U.S., and the White House's conduct in terms of dealing with these countries that are -- these American companies who are skirting sanctions. I spoke with a sanctions expert who said there's a power the U.S. is choosing not to use for some reason. On the second part of your question about Halliburton’s work around the world. Halliburton is the major supplier of logistical support for the U.S. military. As a result, the military has expanded greatly around the world since September 11th, and as a result Halliburton has expanded with them. What I try to do in the map you mentioned is to figure out exactly what business Halliburton has gotten from defense-related government contracts since September 11th. The number I came up with, and this is dated already because these contracts continue to expand, was at least 2.2 billion dollars they have gotten as a result of defense related business since September 11th.

They have gone into countries like Djibouti, Jordan and Turkey, Afghanistan obviously, the Republic of Georgia, and then they have continuing contracts in Bosnia and Kosovo and a number of other countries. Mostly maintaining U.S. military installations, doing laundry for troops, providing food for troops. But also planning logistical deployments in Iraq. They're working on the oil fields. They also were given task orders to build enemy prisoner of war camps for Iraqi prisoners of war. They’ve done foreign military sales work in the Republic of Georgia and military training there. So there's a wide range of different activities they're doing on behalf of the U.S. government and as the military expands overseas, that business expands as well.

AMY GOODMAN: You are doing a weekly update of how much money Halliburton is making off Iraq. What's the latest?

MICHAEL SCHERER: Well, it isn't a weekly update. We did update it two weeks ago when we put it online. And we put online basically a searchable database. You can click on different parts of this map and you can see each of the individual task orders at Motherjones.com. But the oil service contract that the Army Corps of Engineers gave Halliburton earlier, it was a controversial contract because it was awarded without a competitive bid, because the U.S. military said Halliburton was the company that had done the planning on this. And they were in the best position to do this work. Originally it was—the amount awarded under this contract which is -- can expand up to $7 billion and functions so that as the U.S. government has work it needs to do, the contract automatically expands. There's to fixed price for what the tasks are. It was something like 30 million early this spring. Last time I checked it was well over 200 million. Just this week, Halliburton was awarded another contract for what initial figure is $200 million, but it’s sure to expand, to do base support for the U.S. troops that are based in Iraq.

AMY GOODMAN: MICHAEL SCHERER thanks for joining us. Washington correspondent for Mother Jones magazine as well as ROGER ROBINSON, C.E.O. and president of the Conflict Securities Advisory Group. Former chair of the Williams Casey institute, former Reagan advisor.

Democracy Now! is an investigative news radio journal that’s a vitally important antidote to the lies and deceptions of state/corporate media. The program is hosted by Amy Goodman and Juan Gonzalez. To find out what radio stations near you air Democracy Now!, or to listen to the program on-line, visit: www.democracynow.org