Wednesday, July 21, 2010

Corporations Trading with the Enemy

April 15, 2003

When deranged American citizens are accused of working 
with terrorist groups like al-Qaida, Attorney General 
John Ashcroft holds a press conference and the FBI 
puts a new name and face on its Top 10 Most Wanted 
List, even though the allegations have not been proved 
in court. 

The suspects can languish in jail for months without 
any formal charges.

Trading with the enemy 
Commentary: U.S. companies risk only a wrist slap 
By Rex Nutting, 
Last Update: 3:14 PM ET April 15, 2003 

WASHINGTON (CBS.MW) -- When individual Americans are 
accused of helping terrorists, they're thrown in jail 
and their names are dragged through the mud. 

But when major U.S. corporations are caught trading 
with the enemy, they get just a slap on the wrist from 
the government. 

In the past two weeks, the government has revealed 
that 57 companies and organizations have been fined 
for doing business with terrorists, despots and 

However, neither the government nor the companies are 
forthcoming with the public about the details of the 
illicit trade with rogue governments like Iraq, Cuba, 
North Korea, Iran and Sudan. Read about the laws. 

The fact that the New York Yankees and ESPN have been 
caught doing business with Fidel Castro won't be on 
any highlight film. ChevronTexaco hasn't bragged about 
breaking the sanctions against Saddam Hussein's Iraq. 
Citigroup hasn't issued a press release extolling how 
it helped finance terrorist groups. 

With a few exceptions, it is against the law for U.S. 
companies and individuals to have commercial or 
financial dealings with several countries as well as 
dozens of terrorist or drug organizations. Read the 

Each year, the government investigates thousands of 
cases of U.S. individuals or companies for alleged 
violations of the Trading with the Enemy Act and other 
statutes and executive orders that restrict free 
trade. Each year, the government imposes millions of 
dollars in civil penalties and prosecutes 10 or so 
criminal cases. 

We know why the companies are silent about what 
they've done. No one wants to be associated in the 
public mind with torturers, thugs and murderers, even 
if it's profitable to be associated with them in 
private. The companies' explanations, when available, 
show that even the most enthusiastic supporter of 
sanctions can run afoul of the law through no malice 
on their part. 

But why are the government's cops so reluctant to tell 
us about the crooks they've captured? Who ever heard 
of a shy prosecutor, especially one who can show 
success in the war against terrorism? 

Double standard 

When deranged American citizens are accused of working 
with terrorist groups like al-Qaida, Attorney General 
John Ashcroft holds a press conference and the FBI 
puts a new name and face on its Top 10 Most Wanted 
List, even though the allegations have not been proved 
in court. 

The suspects can languish in jail for months without 
any formal charges. 

And when a Muslim charity is suspected of laundering 
funds for alleged terror groups, the Treasury 
Department shuts it down and freezes its assets. 

But when multinational corporations like Wal-Mart, Dow 
Chemical (DOW: news, chart), ExxonMobil and 
(AMZN: news, chart) agree with government prosecutors 
that they have violated laws that prohibit doing 
business with enemy states, the news is buried on an 
obscure government Web site. 

57 companies fined 

In the past two weeks, the Treasury's Office of 
Foreign Asset Control has revealed that 57 companies 
and organizations have been fined more than $1.35 
million for civil violations of the sanctions laws. 

For the first time, the government will provide weekly 
updates on the status of its civil cases. But the 
information provided by the government about these 
violations is paltry, and unless you've memorized the 
law, you'll never understand that "EO13121 FT" means 
an illegal funds transfer to the former Yugoslavia. 

The government has provided almost no information 
about the civil cases except what country the company 
traded with and what the penalty was. No dates, no 
details, no way of knowing if the violations were 
egregious or inadvertent. No way of knowing if the 
companies sold brass knuckles to the secret police or 
baby formula to an orphanage. 

"The Treasury is giving in to corporate pressure," 
said Russell Mokhiber, editor of the Corporate Crime 
Reporter, who sued the government under the Freedom of 
Information Act to learn the details of earlier 
violations of the trade sanctions laws. 

"To deter future corporate wrongdoing, [the Treasury] 
must stop protecting major American companies from the 
glare of adverse publicity," Mokhiber said Monday at a 
press conference. 

"This is the maximum information that we can make 
available consistent with legal concerns," said a 
Treasury Department spokesman who would not even 
provide his name for publication. 

Largest case 

The largest penalty levied among the 59 public cases 
was $250,000 against Zim American Israeli Shipping Co. 
of Norfolk, Va., for trade with Cuba. Zim, which is 
about half owned by the Israeli government, is one of 
the largest shipping companies in the world. 

Nobody at the Norfolk office of Zim knew anything 
concrete about the penalty. "I think it happened a 
long time ago," said one official. 

But they do know about terrorism. The company 
relocated from the 16th floor of the World Trade 
just a week before the Sept. 11 attack, 
sparking speculation in the conspiracy press that the 
Israeli Mossad had tipped off the company ahead of 

As for the Cubans, "I think they are very poor," the 
Zim official said. 

The next largest penalty was imposed on IGI Inc. (IG: 
news, chart) of Buena, N.J., which makes cosmetics and 
which recently sold its pet food and veterinary 
products units. The government said they exported 
something prohibited to Iran. The company said it 
would look into the matter and get back to us. 

Norwegian-owned shipping company Stolt-Nielsen 
Transportation Group (SNSA: news, chart) of Greenwich, 
Conn., was fined $95,000 for an illegal fund transfer 
to Sudan. 

Yankees and Cubans 

The New York Yankees were fined $75,000 for signing a 
contract in which the Cuban government had an 
interest. Newsday reported Tuesday that the contracts 
involved pitcher Orlando "El Duque" Hernandez and 
three other unnamed Cuban players. 

Hernandez has always maintained that he escaped from 
Cuba to the Bahamas in a wooden fishing boat in late 
1997 after being banned from baseball in his homeland 
following the defection of his brother, Livan, who was 
the World Series star for the Florida Marlins that 
fall. It is not clear how his subsequent signing by 
the Yankees would have involved a payment to the Cuban 

The Yankees' contract with Jose Contreras is not in 
violation of the law, Yankee president Randy Levine 
told the paper. 

Wal-Mart (WMT: news, chart) was fined $50,000 for 
dealings with Cuba. A Wal-Mart spokesman said some 
pajamas sold to its Canadian operations "might have 
originated in Cuba." The company paid the fine 
"voluntarily" after lengthy discussions with 
government lawyers and there was "never any 
determination of a violation," he said. 

Blue chips caught red handed 

The other big fines: 

ExxonMobil (XOM: news, chart) was fined $50,000 for 
exports to Sudan. 

ChevronTexaco (CVX: news, chart) was fined a total of 
$14,071.07 for deals with Cuba and Iraq. A company 
spokesman told the Corporate Crime Reporter that the 
company bought oil from Iraq under the U.N. Oil for 
Food program and that a payment was inadvertently paid 
to an Iraqi government port official. 

Axon Corp. of Raleigh, N.C., was fined $45,000 for 
exports to Iran. The company makes packaging 

Fleet Bank (FBF: news, chart) was fined $41,000 for 
financial dealings with Cuba and Iran. 

ESPN was fined $39,000 for a contract with Cuba. A 
spokesman at the sports cable network said the 
network's South American unit had paid some travel 
expenses for the Cuban team at a major international 
volleyball tournament held in Argentina in 1998 and 
televised by the ESPN Sur network. The company is 
owned by Disney (DIS: news, chart) and privately held 

Royal Crown was fined $38,000 for exports to Sudan. 
The soft-drink company is now owned by Snapple, which 
in turn is owned by Cadbury Schweppes (CSG: news, 

And a couple of minor but intriguing infractions: 

Citigroup (C: news, chart) was fined $2,925 for 
violating laws against financing terrorism. A 
spokesman for the financial services giant did not 
return a phone call seeking comment. It was the only 
penalty on the government's list for violation of the 
anti-terrorism financing law. 

The International Union of Pure and Applied Chemistry 
in Research Triangle Park, N.C., was fined $500 for 
violating laws against the proliferation of weapons of 
mass destruction. A spokesman for the group did not 
return a phone call. It was the only penalty on the 
government's list for violations of nonproliferation 

Rex Nutting is Washington bureau chief of

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