- The Washington Times - Thursday, February 19, 2004

The Senate Finance Committee yesterday said American companies may be using loopholes in U.S. law to conduct business with nations that sponsor terrorism, and asked the Treasury Department whether U.S. law is adequate to prevent corporate money from ending up in terrorists’ hands.

In a letter yesterday to Treasury Secretary John W. Snow, Sen. Charles E. Grassley, Iowa Republican, and Sen. Max Baucus, Montana Democrat, singled out Halliburton, General Electric and ConocoPhillips for conducting business with Iran or Syria — countries under U.S. sanctions.

New York City Comptroller William C. Thompson Jr., who oversees city pension fund investments in the three companies, last year asked for a review of potential ties to terrorist-linked countries through offshore subsidiaries. Subsequent news stories spurred the Senate Finance Committee investigation and yesterday’s letter to the Treasury Department.

“We’re asking whether the Treasury Department is taking enforcement steps toward foreign subsidiaries that appear to be ‘foreign’ and a ‘subsidiary’ in name only,” Mr. Grassley said in a statement.

The senators also asked the Treasury Department whether current law is adequate to address subsidiaries that exist “only on paper with nothing more than a P.O. box in the Caribbean.”

In letters to the Treasury Department and the three companies, the senators outlined and asked for further explanation of the ties.

A subsidiary of Houston energy firm ConocoPhillips was tied to Iran and Syria, and subsidiaries of Fairfield, Conn.-based General Electric and Houston energy, engineering and construction firm Halliburton were tied to Iran, the letters said.

Both countries are considered by the U.S. government to be state sponsors of terrorism.

The specific examples may be indicative of a more widespread problem, the senators’ letter to the Treasury Department said.

“If these companies are going through the back door to invest in terrorist nations, Congress must take action to immediately close, lock and seal those doors,” Mr. Baucus said.

A Treasury Department spokeswoman said the agency is committed to stopping the spread of terrorism “by waging an aggressive war against those who support it.”

“We look forward to working with the committee as we continue to crack down on terrorist financiers and will work to provide this information about our efforts,” she said.

Halliburton spokeswoman Wendy Hall said that the company’s business in Iran is staffed and managed by non-U.S. personnel, and permissible under U.S. laws and regulations.

“Halliburton is trying to conduct business in a reasonable and honest way,” she said.

GE spokesman Gary Sheffer said the company strictly complies with U.S. laws.

“These sales are conducted by long-established foreign subsidiaries that have been selling products for decades around the world. The transactions are allowed by U.S. statute and regulatory provisions. If Congress decides to change the provisions, GE will comply,” he said.

The company sells hydroelectric-power equipment, medical equipment and natural gas and oil services through Canadian and European subsidiaries.

Last year Mr. Thompson, on behalf of New York City Police and Fire Department pension funds, asked for a committee to review the corporations’ operations with reference to “potential financial and reputational risks.”

“Senators Grassley and Baucus are taking important and necessary steps to ensure that U.S. corporations stop doing business with nations that support terrorism. From both a moral perspective and an investor’s viewpoint, this cynical exploitation of the law must stop,” he said.

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