Take a look at your stock portfolio. Are you supporting, at least indirectly, terrorist activities like the failed car-bomb attacks in London and Glasgow this summer?
The idea may not be so far-fetched.
The U.S. State Department says terrorist groups such as al-Qaida, Hamas and Hezbollah, as well as insurgent groups fighting U.S. troops in Iraq, get financial assistance and other kinds of support from governments and private groups in Iran, Syria and Sudan. This support is so crucial for these groups that the U.S. government discourages companies, especially in key wealth-generating industries like energy and strategic sectors like defense, from doing business in these countries.
Yet, surprisingly, dozens of U.S. companies -- and many foreign companies that are household names here -- do business in these countries every day. By contributing to economic growth and the development of the infrastructure and the financial sectors in Iran, Syria and Sudan, these companies indirectly play at least a minor supporting role in terrorist attacks, critics argue, as well as the attacks by insurgents on U.S. troops in Iraq.
A look through corporate filings shows the following U.S. companies regularly do business in Iran, Syria or Sudan, all countries the State Department calls "state sponsors of terrorism": ConocoPhillips (COP, news, msgs), MasterCard (MA, news, msgs), Western Union (WU, news, msgs), energy equipment and services companies Schlumberger (SLB, news, msgs) and Natco Group (NTG, news, msgs), and Overseas Shipholding Group (OSG, news, msgs).
Foreign companies listed on U.S. exchanges doing business in these countries include: BP PLC (BP, news, msgs), Royal Dutch Shell (RDS.A, news, msgs), Total (TOT, news, msgs), Eni (E, news, msgs), Petro-Canada (PCZ, news, msgs), Siemens (SI, news, msgs), Nokia (NOK, news, msgs) and Deutsche Bank (DB, news, msgs).
"To those companies I would say, 'Shame on you,'" says Debra Burlingame, whose brother, Charles Burlingame, was the pilot of hijacked American Airlines Flight 77 on Sept. 11, 2001, when it crashed into the Pentagon. "They don't want to give up their turf. It is flat-out corporate greed. I think it is pretty outrageous."
Burlingame is co-founder of 9/11 Families for a Safe and Strong America.
Hard-wiring Iran
Burlingame and other critics find Siemens' work in Iran particularly galling. The German electronics and electrical engineering giant trades in the United States as an American Depositary Receipt (ADR). It gets about 19% of its revenue from business in the U.S., including work for the Defense, State and Homeland Security departments and the National Aeronautics and Space Administration.But Siemens also provides know-how and equipment to support power plant construction, power generation and distribution, rail transport and telecommunications in Iran. Rather than back away from Iran because of that country's support for terrorist groups, Siemens boasts on its Web site that the goal of its subdivision there is "to intensify business relations with Iran and to further strengthen the company's position in the country."
Siemens' work in telecommunications is especially troubling for critics of companies that do business in countries with links to terrorist groups. "That's inherently dual use," says Christopher Holton, director of the Center for Security Policy's Divest Terror Initiative. Holton's group describes itself as a nonprofit, nonpartisan organization that promotes "peace through strength."
By this he means that the telecom system being refined by Siemens may one day be used by Iran's military in a conflict with the United States or its allies. "Siemens is helping Iran with their military command and communications. I have a real problem with that," says Holton. "We may have to fight those people, and Siemens is on the wrong side in that war. That's just outrageous to me. It makes me sick to my stomach."
- Video: Is Iran a threat?
Says Burlingame, "It is really shocking to me to think that you could have insurgents calling in communications on Siemens products to blow up our troops in Iraq with remote-control IEDs."
Siemens declined to comment, but its corporate filings say the company generated only 1% of its sales in the last fiscal year from Iran, Sudan, Syria, Cuba and North Korea, countries the State Department considers state sponsors of terrorism. "Any amount is too much," says Holton. "You don't trade with the enemy. The fact is, Iran is the foremost sponsor of terrorism. Our State Department has been saying that for years."
Siemens says in filings that it has decided not to accept new orders in Sudan "in light of current humanitarian conditions."
And what about Nokia? The Finnish company sells cell phones in Syria, Iran and Sudan. It also sold networking gear to a customer in Iran last year. Nokia responds that it sells phones in emerging markets around the globe because part of its mission is to bring "affordable, high-quality, easy-to-use phones within the reach of lower-income and first-time users." In corporate filings, it says it only got about 1% of its sales from customers in Iran, Libya, Sudan and Syria last year.
Two other companies that have recently sold products that support economic and infrastructure development in Iran include Zarlink Semiconductor (ZL, news, msgs), a Canadian company that sells chips used in high-speed Internet communications equipment, and Celanese (CE, news, msgs), a Dallas company that has sold polymer products to customers in Iran, Sudan and Syria. Celanese says in filings that about $5 million in sales were made to countries that support terrorist groups. A subsidiary in Turkey sold polymer products to customers in Iran and Syria.
Creating energy wealth
Given the vast oil and natural-gas reserves in countries like Iran, Syria and Sudan, it's no surprise that energy companies come up high on the lists of businesses with operations there. Here's a list of U.S. energy companies that do this:- Houston's ConocoPhillips owns 20% of the Russian energy company Lukoil (LUKOY, news, msgs), which has energy projects in Iran.
- Schlumberger, the Houston oil-field-services company, says it does business in Iran, Syria, Sudan and Cuba, but it does not say how much.
- Houston's Natco Group sells oil and gas production equipment to customers in Iran, Sudan, and Syria, through subsidiaries in Great Britain, Japan and Canada.
- Overseas Shipholding ships oil from Iran, and its large crude-oil tankers are used to store Iranian crude off its coast from time to time. The company says U.S. sanctions and embargoes do not cover these activities.
But critics of companies with links to terrorist states say it doesn't matter. "It's wrong. Morally and ethically an American company shouldn't be involved," says Rep. Frank Wolf, R-Va. "Iran supports Hezbollah, which is a terrorist group that has been involved in kidnapping and killing."
Foreign companies have an even bigger presence in energy and natural resources in states that support terror groups. The French company Total not only has significant energy operations in Iran, but it may have bribed Iranian officials to win them, according to investigators in France. It also has investments in Syria and Sudan.
Like Total, Royal Dutch Shell and the Italian energy company Eni have a stake in Iran's rich South Pars natural-gas fields in the Persian Gulf, as well as other operations. Eni responds that it operates in more than 70 countries, "always in full respect of both international and local rules." Royal Dutch Shell is also in Syria and Sudan. BP has conducted technical studies, marketing and trading in Iran with National Iranian Oil Co. (NIOC) and affiliated companies. It also operates two oil fields outside Iran in which NIOC and a sister company have an interest. BP responds that it complies with U.S. sanctions on trade with Iran.
- Video: Is Iran a threat?
Petro-Canada, based in Calgary, spent $54 million to purchase a 90% stake in two natural-gas fields in central Syria last year, a move it appears to have no intentions of reversing. "The changes made in Syria in 2006 align with Petro-Canada's strategy to increase the proportion of long-life and operated assets within its portfolio," the company says in filings.
A division of the Dutch company Arcelor Mittal (MT, news, msgs) supplies steel products and technical support in Iran for drilling platforms, bridges, sports facilities, airports, electric power plants and skyscrapers. It counts Iran as one of its "main markets." The French company Technip (TKP, news, msgs) provided $185.6 million worth of engineering and services to the oil, gas and petrochemical industries in Iran last year.
Lundin Mining (LMC, news, msgs), based in Vancouver, Canada, has a 19.9% interest in an Australian mining company called Union Resources Limited whose main asset is a 38% interest in a large zinc, lead and silver deposit in Iran called Mehdiabad.
Continued: High and low finance
High and low finance
A large Iranian government-owned bank called Bank Saderat has been so involved in lining up financial transactions for terrorist groups, says the Department of Treasury, that it is cut off from the U.S. banking system. But several European and American financial institutions still operate in the country. They include Germany's Deutsche Bank, which finances the sale of equipment and services used in the energy and chemical industries in Iran. Deutsche Bank says it does not do any new business with clients in Iran and Syria and "will wind down existing business in compliance with all legal regulations." It says loans in Iran represent less than 0.1% of its assets.Dutch bank ABN Amro (ABN, news, msgs) also reports that it has loans outstanding in Iran, but it does not say to whom or how much. Affiliates of MasterCard last year were licensed to issue credit cards in Iran, Syria, Sudan, North Korea and Cuba. Western Union provides "very limited services" to Cuba, Syria and Sudan. Western Union says it is legally allowed to do business in these countries and does so because "a genuine humanitarian need exists for certain people in these countries to receive funds, which are used for daily subsistence -- food, housing, health care and education."
MasterCard responds that it has taken away the operating licenses of banks in those countries but that occasionally "in full consultation with the U.S. government, we have allowed the usage of cards to support migrants and travelers who need access to electronic payments." This is a "minuscule portion" of MasterCard's overall business, the company says.
'If we don't, they will'
Despite U.S. restrictions on trading with countries that sponsor terror groups -- foreign companies can be fined or barred from access to U.S. banks -- some companies still do so freely because of exceptions. Total, for example, freely admits it invests more than $20 million a year, the cap set by the United States. But it got a waiver from the U.S. government in 1998 to do so.Some companies do business in these countries but aren’t impacted by the rules because the amount of business they do is below cutoff limits. "But if their exposure is that minimal, why don't they just pull out?" asks Holton. "I don't care how small it is, it's still trading with the enemy."
Many experts in international business, such as Fariborz Ghadar, a professor at Pennsylvania State University, say sanctions are counterproductive in a global economy. To them, it makes more sense to try to influence countries by staying engaged economically. "If we don't do it somebody else will step in," says Ghadar. He points to Sudan, where Chinese companies picked up the slack in the energy sector after Western companies pulled out.
- Video: Is Iran a threat?
But the critics of companies doing business in states that support terrorist groups disagree. "The argument that we can change them if we do business with them that doesn't wash with jihadists," responds Holton. "There's no amount of business that we can do with Iran that can keep them from spreading the Islamic revolution."
For more detail on the activities of companies doing business in states that support terrorist groups, click here.
At the time of publication, Michael Brush did not own or control shares of companies mentioned in this column.
