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American Spectator: Blocking Terrorists Funds

The following American Spectator article is well worth a read:

It was treated as big news on Tuesday when Manhattan District Attorney Robert Morgenthau indicted Chinese executive Li Fang Wei and his company for using New York banks to finance the sale of tons of restricted, weapons-related material to Iran. But the truth is that some of these same banks and other major financial institutions, including those bailed out by American taxpayers, for years have deliberately been supporting “Shariah-compliant” financial policies that almost assuredly end up being used to support illicit Middle Eastern, terrorist interests with close ties to Iran.

That’s all the more reason why more and more American states are wisely divesting from companies that do business in Iran, Sudan, and perhaps Syria and other nations or entities that support terrorism. To date, 13 states, either legislatively or administratively, have divested pension funds, investment funds, or other holdings from businesses dealing with Iran or other terror-related nations. Any day now — perhaps even today — Indiana will become the 14th, with its “divest terror” measure already having passed both the House and a Senate committee unanimously. At least five other states are considering similar moves.”

Read the complete article, here.

U.S. companies can unwittingly get snared in divestment-focused efforts.  The reports prepared by the groups mentioned in this article, and others in the global divestiture movement, can form the bases for investigations by U.S. Government agencies.

A robust compliance program that, among other things, screens company products and services for export controls, customers, and financial transactions is key.  Then there is the secondary decision of whether it is worth doing business in a state sponsor of terror or a country with a poor human rights record.  

Even if the transactions in sanctioned countries are done pursuant to a license granted by the U.S. government, divestiture reports can generate a great deal of negative publicity.  Companies need to assess whether the cost of doing business in sanctioned countries, or countries of concern, is worth the long-term reputational risk.

In addition, various Members of the U.S. Congress, from both political parties, are paying closer attention to these matters.  Congressional scrutiny can lead to a whole new set of complex political and legal issues that companies will need to contend with (in addition to complying with U.S. laws and regulations on these matters).  This could, in turn, lead to further reviews of business practices by various federal agencies.

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