Contracts Awarded Despite Companies' Ties To Iran

An investigative piece published by The New York Times shows more than $100 billion of taxpayers' money have gone to U.S. companies whose foreign subsidiaries do business with Iran. As much as $15 billion may have gone to companies that were defying U.S. sanctions. Steve Inskeep talks to the Time's Jo Becker, who co-authored the report with colleague Ron Nixon.

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STEVE INSKEEP, host:

Even as it tries to stabilize Iraq, the United States wants to isolate Iran, and this next story emphasizes just how hard that can be. The U.S. has imposed economic sanctions on Iran for years and may tighten them in the face of Iran's nuclear program, yet The New York Times found many companies doing business with Iran. And many of those same companies do billions of dollars in business with the U.S. government.

Jo Becker of The New York Times coauthored of the story. She's on the line. Welcome to the program.

Ms. JO BECKER (Investigative Reporter, The New York Times): Thanks for having me.

INSKEEP: What kinds of companies are doing business with Iran, here?

Ms. BECKER: Well, the United States has a broad trade embargo against American companies doing most kinds of business in Iran. However, foreign companies aren't bound by that embargo, and the foreign subsidiaries of American companies aren't bound by that embargo, either. And so you have situations like Honeywell, a top federal contractor, doing business in Iran through a British subsidiary.

INSKEEP: Well, let's stay with that example for a moment. Honeywell, major U.S. government contractor, what is its British subsidiary doing in Iran?

Ms. BECKER: Well, its British subsidiary entered into a contract to do a major expansion of an oil refinery there, called the Iraq refinery. And in January, the State Department approached them and they agreed not to enter into any new business. However, they're going to finish this refinery project, and it's going to triple gasoline production at that refinery.

And, of course, we now, at the moment, have Congress saying we ought to actually ratchet down on gasoline imports, and Iran is heavily dependent on imports because its refineries are antiquated. So you have Honeywell, through a subsidiary working to help Iran be able to refine its own gasoline at the same time that the U.S. Congress is hoping to use gasoline as a possible pressure point.

INSKEEP: Oil and gas must be the major industry where this is happening.

Ms. BECKER: There is no ready-list of companies that do business in Iran. Other - there actually used to be something that was somewhat helpful. The SEC had a pilot project where they were identifying companies and making it easy for investors to try to figure out if a company was doing business in Iran. That actually sort of got halted amid major business opposition to it, and so you sort of have to piece this whole thing together.

But we found more than $107 billion in contract payments, grants, loans and loan guarantees to companies doing business in Iran, and more than two-thirds of that to the energy sector to companies doing business in the energy sector that the U.S. is most concerned about.

INSKEEP: You know, I'm reminded of former Vice President Dick Cheney, who, as a Halliburton executive, thought the U.S. should trade more freely with Iran. But then as vice president, of course, joined an administration that tried to isolate Iran. I wonder if Americans, many of them, are of two minds about this.

Ms. BECKER: Well, the Iran Sanctions Act is a complex act, and then-CEO of Halliburton Dick Cheney lobbied against it, actually, lobbied against those kind of sanctions. And what the business community will say is that A: If American companies or the American subsidiaries to these companies pull out, someone else will just replace them. They also argue that these kinds of sanctions haven't been affective.

And the other thing is that multiple administrations have found that the Iran Sanction Act would prohibit certain kinds of very large investments in the oil and gas sector to develop those resources for Iran are very difficult to enforce because our allies see that as sort of an extraterritorial application of U.S. law. In other words, we're trying to tell other countries what their companies should do, and they don't like that. I think that's why at the moment the Obama administration is focused very much on trying to get multilateral sanctions through the United Nations, because those apply across borders.

INSKEEP: And right now, the system just doesn't work. Foreign government aren't going to collaborate, and even American businesspeople would really rather make the money.

Ms. BECKER: Well, certainly, a number of American business people through their subsidiaries see no problem in making money. We interviewed somebody from Schlumberger, an oil-gas giant just across the board. There are a lot of companies that don't really see this as a problem but certainly would say, hey. If you close this loop hole that allows our foreign subsidiaries to do business, we would certainly abide by new U.S. sanctions. But at the moment, what we're doing is legal.

INSKEEP: Tough question here: Are American executives betraying their own country's national security interests?

Ms. BECKER: Well, certainly, some of the reader comments on our story have suggested that. I think what you can say is that the business that they are doing conflicts with our security goals, particularly this business in the energy sector.

INSKEEP: Jo Becker of the New York Times, coauthor of an investigation of companies doing business in Iran. Thanks very much.

Ms. BECKER: Thanks for having me.

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INSKEEP: This is NPR News.

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