In July of 2010, two dozen members of the Congressional Tea Party Caucus led by Michele Bachmann co-sponsored a resolution announcing support for Israel "to use all means necessary to confront and eliminate nuclear threats posed by the Islamic Republic of Iran, including the use of military force." So, Tea Partiers must have been shocked - shocked! - to learn that Charles and David Koch, the billionaire brothers underwriting their "movement," were also in business with Iran. As it turns out, the Kochs are merely following Dick Cheney and Mitt Romney among the Republican luminaries caught up in dirty deals with Tehran.
Twenty four years after Ronald Reagan sent a Bible, a cake and U.S. weapons to the mullahs in Tehran, Bloomberg News reported that, in the words of a former employee, the Koch brothers in likely violation of the American sanctions used "every single chance they had to do business with Iran, or anyone else."
A Bloomberg Markets investigation has found that Koch Industries -- in addition to being involved in improper payments to win business in Africa, India and the Middle East -- has sold millions of dollars of petrochemical equipment to Iran, a country the U.S. identifies as a sponsor of global terrorism...
Internal company records show that Koch Industries used its foreign subsidiary to sidestep a U.S. trade ban barring American companies from selling materials to Iran. Koch-Glitsch offices in Germany and Italy continued selling to Iran until as recently as 2007, the records show.
The company's products helped build a methanol plant for Zagros Petrochemical Co., a unit of Iran's state-owned National Iranian Petrochemical Co., the documents show. The facility, in the coastal city of Bandar Assaluyeh, is now the largest methanol plant in the world, according to IHS Inc., an Englewood, Colorado-based provider of chemicals, energy and economic data.
In response to the allegations, Koch spokesperson Melissa Cohlmia said, "During the relevant time frame covered in your article, U.S. law allowed foreign subsidiaries of U.S. multinational companies to engage in trade involving countries subject to U.S. trade sanctions, including Iran, under certain conditions," adding that Koch has since stopped all of its units from trading with Iran.
If this story sounds familiar, it should. Just change the company to Halliburton and the CEO's name to Dick Cheney.
As the New York Times explained in March 2010, even as the Obama administration was seeking tougher UN sanctions to press Tehran into curbing its nuclear program, "of the 74 companies The Times identified as doing business with both the United States government and Iran, 49 continue to do business there with no announced plans to leave."
The federal government has awarded more than $107 billion in contract payments, grants and other benefits over the past decade to foreign and multinational American companies while they were doing business in Iran, despite Washington's efforts to discourage investment there, records show.
That includes nearly $15 billion paid to companies that defied American sanctions law by making large investments that helped Iran develop its vast oil and gas reserves.
Among the U.S. contractors also profiting from Iran was Halliburton, which pocketed $27.1 billion from American taxpayers between 2000 and 2009:
Halliburton, former Vice President Cheney's old company, provided oil and gas drilling services to Iran through foreign subsidies. After a political furor erupted over the work, the company announced it would do no new business in Iran, and it exited the country altogether in 2007. While still operating in Iran, Halliburton won huge contacts from the federal government, including a no-bid contract to restore Iraq's oil sector, as did its subsidiary at the time, Kellogg Brown & Root.
As Perrspectives detailed four years ago, Halliburton had side-stepped the U.S. sanctions regime in place against Iran since the 1990's by using a Cayman Islands subsidiary. And what should come as a surprise to no one, CEO Dick Cheney opposed those very sanctions until, of course, he became George W. Bush's Vice President.
In 2004, the CBS newsmagazine 60 Minutes detailed the Iranian business dealings of Cheney's former company, Halliburton. Despite the prohibitions signed into law by President Clinton with his 1995 executive order and the Iran and Libya Sanctions Act of 1996, Halliburton continued to reap the profits of business with Iran through its non-U.S. subsidiaries. While U.S. law bans virtually all commerce with the rogue nations, Halliburton was able to jump through its major loophole: the rules do not apply to any foreign or offshore subsidiary so long as it is run by non-Americans. As CBS documented:
That subsidiary, Halliburton Products and Services, Ltd., is wholly owned by the U.S.-based Halliburton and is registered in a building in the capital of the Cayman Islands -- a building owned by the local Calidonian Bank. Halliburton and other companies set up in this Caribbean Island, because of tax and secrecy laws that are corporate friendly.
Halliburton is the company that Vice President Dick Cheney used to run. He was CEO from 1995 to 2000, during which time Halliburton Products and Services set up shop in Iran. Today, it sells about $40 million a year worth of oil field services to the Iranian government.
In the wake of the January 2004 60 Minutes piece, the company moved quickly to declare that "Halliburton's business in Iran is clearly permissible under applicable laws and regulations" and cited its October 2003 disclosures to the New York City police and fire pension funds. Despite those assurances, Dick Cheney's old firm was subpoenaed by a U.S grand jury in June 2004. In early 2005, Halliburton announced that it would end its business activities there when after fulfilling its ongoing contracts, including a $35 million gas drilling project it had just won the previous month. Halliburton's exit was completed in 2007.
Though he did not benefit directly from the Iran contracts of Halliburton's foreign-based subsidiaries, Cheney continued to have financial ties to his former firm. Despite Cheney's assurances that "I've severed all my ties with the company, gotten rid of all my financial interest," a 2003 report by the Congressional Research Service found that the Vice President retained 433,000 shares of Halliburton. In addition, Cheney received $162,392 and $205,298 in deferred payments in 2001 and 2002, respectively.
Given the stakes, it's no wonder Dick Cheney had a born-again experience on Iranian sanctions when he entered the Bush administration. While Vice President, Cheney in 2002 denounced Iran as "the world's leading exporter of terror." But during his tenure as Halliburton CEO in the 1990's, Cheney strenuously argued against Clinton's sanctions regime and expanded Halliburton's business with Tehran. In 1998, he complained that U.S. firms were "cut out of the action." And back in 1996, Cheney railed against the Clinton prohibitions on Iranian trade and financial activity for American firms:
"We seem to be sanction-happy as a government. The problem is that the good Lord didn't see fit to always put oil and gas resources where there are democratic governments."
For his part, Dick Cheney never made tough but hypocritical talk about Iran sanctions part of a run for the White House. That comic fate fell to Mitt Romney.
Candidate Romney began his grandstanding on Iranian disinvestment by targeting the Democratic-controlled states of New York and Massachusetts. On February 22, 2007, Romney sent letters to New York Governor Eliot Spitzer, Senators Chuck Schumer and Hillary Clinton as well as state comptroller Thomas P. DiNapoli urging a policy of "strategic disinvestment from companies linked to the Iranian regime." Romney's theatrics continued:
"With your new responsibilities overseeing one of America's largest pension funds, you have a unique opportunity to lead an effort to isolate Iran as it pursues nuclear armament. I request that you immediately launch a policy of strategic disinvestment from companies linked to the Iranian regime. Screening pension investments and divesting from companies providing financial support to the Iranian regime or linked to Iran's weapons programs and terrorist activities could have a powerful impact. New investments should be scrutinized as long as Iran's regime continues its current, dangerous course."
Sadly for Governor Romney, as the AP detailed within 24 hours of the letter's publication, Romney's former employer and the company he founded had recent links to recent Iranian business deals:
Romney joined Boston-based Bain & Co., a management consulting firm, in 1978 and worked there until 1984. He was CEO of Bain Capital, a venture capital firm, from 1984 to 1999, despite a two-year return as Bain & Co.'s chief executive officer from 1991 to 1992.
Bain & Co. Italy, described in company literature as "the Italian branch of Bain & Co.," received a $2.3 million contract from the National Iranian Oil Co., in September 2004. Its task was to develop a master plan so NIOC -- the state oil company of Iran -- could become one of the world's top oil companies, according to Iranian and U.S. news accounts of the deal.
Bain Capital, the venture capital firm that Romney started and made him a multimillionaire, teamed up with the Haier Group, a Chinese appliance maker that has a factory in Iran, in an unsuccessful 2005 buyout effort.
In response to the revelations, Romney played dumb -- and blind. The former Massachusetts governor claimed his investments were in Boston-managed blind trust beyond his control. And more importantly, Romney feebly declared that his new-found distrust of the Ahmadinejad regime in Tehran would only apply going forward:
"This is something for now-forward. I wouldn't begin to say that people who, in the past, have been doing business with Iran, are subject to the same scrutiny as that which is going on from a prospective basis."
As the New York Times noted last year, the Iran Sanctions Act was also devised "to punish foreign companies that invest more than $20 million in a given year to develop Iran's oil and gas fields. But in the 14 years since the law was passed, the government has never enforced it, in part for fear of angering America's allies." Which, needless to say, has drawn the ire of one John Bolton. Bolton, American ambassador to the UN under George W. Bush, said:
Failing to enforce the law by punishing such companies both sent "a signal to the Iranians that we're not serious" and undercut Washington's credibility when it did threaten action.
Of course, as the Iran follies of Bolton's allies the Koch brothers, Dick Cheney and Mitt Romney all showed, credibility begins at home.
UPDATE: The National Jewish Democratic Council asked GOP presidential candidates Rick Perry and Michele Bachmann to return donations from the Koch political action committee. The PAC, NJDC noted, "gave $50,000 to Texas Governor Rick Perry and donated to Representative Michele Bachmann in the past."
(This piece also appears at Perrspectives.)