Foreign Affairs

Doing Business with the Devil

In a segment last week on FOX News Channel’s “The O’Reilly Factor,” host Bill O’Reilly continued hammering away at General Electric over its ongoing business dealings with Iran.

According to O’Reilly:

“GE has about $50 million on the table in business dealings with Iran. Doing the math, that means $250 million could have been derived since Iran began killing Americans in Iraq about five years ago.”

Amazing that a home-grown American company like GE would even consider doing business with terrorists or state sponsors of terrorism — much less be permitted to do so – but it’s apparently true. The relationship between GE and the Iranian mullahs has existed for years. GE agreed to pull out of Iran in early 2005. It is now 2008, and GE is still there.

Russell Wilkerson, GE’s director of financial communications, tells HUMAN EVENTS, “We are down to a couple contracts with global oil and gas companies only, and they end at the end of June.”

We’ll see. For now GE is in Iran and conducting business, which means products continue to be delivered, money continues to change hands, and this will continue for at least another month. Even more disturbing are the variety of products sold to customers in Iran and the diversity of the Iranian customer base.

For instance, in the summer of 2006 — during the height of the war between Israel and Hizballah (Iran’s proxy terrorist-army in Lebanon) and as Iran and Hizballah were training and equipping Shia extremists to kill and maim American troops in Iraq — GE disclosed that it was doing business not only with private Iranian companies, but directly with the Iranian government. The disclosure was in response to a query from the U.S. Securities and Exchange Commission’s Office of Global Security Risk.

“In addition to diagnostic, monitoring and life science medical products, our products and services that are sold or otherwise distributed include power generation systems and parts, oil & gas equipment, power control/supply and lighting products in Iran,” wrote Michael McAlevey, GE’s chief corporate and securities counsel, in a letter to the SEC dated July 14, 2006. “Each of [the products and services] sold or distributed [are] pursuant to legal obligations entered into prior to February 2005.”

Christopher Holton, a vice president with the Center for Security Policy, tells HUMAN EVENTS that what GE is doing “may not be violating the letter of the law, but it’s certainly violating the spirit of the law.”

McAlevey continued: “We sell our products and services directly and through distributors located in Iran and elsewhere. Our customers include private companies, government-owned electrical utilities and refineries, the Ministry of Oil, public/private hospitals and universities. To the best of our knowledge, none of the products or services we provide has been, or could be, employed in any military application or used by the armed forces of Iran for strategic, tactical or training purposes.”

That may be to the best of GE’s knowledge. But the fact is, any such products could easily have military application, and even more easily be used by people or entities supporting military operations.

The problems are not only with publicly-disclosed business operations, but the extent to which dark business deals are being made beyond public scrutiny. This is not to say there is any criminal intent on the part of GE. But companies have to realize that if they deal with the devil – or with other companies that deal with the devil — someone is liable to get burned. And it may be American soldiers.

Case in point: Draeger, a German-based technology firm, has recently come under fire for delivering special oil-pipeline surveillance software to Iran. The software — designed by GE subsidiary, VisioWave, for civilian purposes — has been determined to have military application. What makes it worse is the fishiness of the delivery: According to reports, Draeger hired Iranian-born Sasan Azodi, a mediator between Iran and European companies, to receive the GE software in the U.S. and deliver it to Draeger in Germany. But for some reason that no one is able to explain, the software ended up in the hands of Iran’s Ministry of Oil.

“That is considered ‘sensitive software,’” says Holton. “That GE subsidiary was supposed to make sure they knew where that software was going before they sold it. So now if American special operations forces ever find themselves on a mission to seize an Iranian pipeline or even a nuclear plant, they will also have to deal with a sophisticated security system made in America.”

Holton tells me a lot of American companies are able to skirt U.S. sanctions against state sponsors of terrorism by working their business through “cutouts,” essentially foreign-based subsidiaries. There also are myriad foreign companies, doing business both in Iran and in the U.S., increasing the complexity of the web.

“The loopholes in U.S. sanctions policy allowing this to go on is insane, and companies that use those loopholes to chase profits are clearly unpatriotic,” Holton says.

Barbara Ledeen, a senior advisor with The Israel Project, agrees. She and husband Michael, a national security expert, have two sons in the U.S. Marine Corps: One, a captain, has just returned from Iraq. The other is in officer candidate school. “I have skin in this game,” she tells HUMAN EVENTS. “So the idea that companies like GE are looking for ways and excuses to continue doing business with Iran doesn’t wash with me. No American company would have dreamed of doing anything like this during World War II. So why are they doing it today?”
GE is the largest U.S. company currently operating in Iran. Haliburton and ConocoPhillips, which were in Iran, have pulled up stakes and moved on. Others still in Iran (or who have recently conducted business in that country) according to the American Enterprise Institute, include: Chicago Bridge & Iron, Foster Wheeler, Coca Cola, and PepsiCo.

According to Holton, “Even Goodyear is selling tires in Iran through a foreign company,” and tires and other rubber products certainly have military application.

Though Coke and Pepsi have no military application beyond refreshing the parched throats of Iranian soldiers, Georgetown University adjunct law professor Clif Burns muses at the ExportLawBlog: “Coke products in Iran might provide just the caffeine boost that its nuclear scientists need to build the bomb. Word is, however, that the average Iranian nuclear scientist prefers Austria’s Red Bull energy drink to Coca-Cola.”

And it’s not just Iran. There is Iran’s close ally, Syria where — believe it or not — General Motors, Coca Cola, and, yes, GE, continue their business operations. Keep in mind, Syria — a state sponsor of terrorism — provides operational and other support to Hizballah in Lebanon as well as insurgents operating against U.S. forces in Iraq. And Syria and Iran have just signed a mutual defense pact.

According to the Office of Global Security Risk’s website, “as we learn of new or possible threats of terrorist activity around the world” the SEC must strive “to enhance the investing public’s access to the information it needs about any public company to make an informed investment decision.” True. But potential investors are not the only ones who need to know. All Americans have “skin” in this game.

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