Foreign Oil Companies in Hot Seat, May Have Violated U.S. Sanctions Law
At least three foreign-owned oil companies may, or already have been, contacted by U.S. Congressional oversight committees about oil sales to Iran during the past year. The angle? The obvious one is that they will likely be asked to choose between doing business with Uncle Sam or the Iranian mullahs.
This summer President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010. Among other things it requires that the President impose three or more of a possible nine sanctions against persons who knowingly sell or provide Iran with refined petroleum products made on or after July 1, 2010. One of the many tools in the sanctions arsenal includes barring petroleum companies who sell to Iran from also receiving U.S. government contracts.
According to a recently published report by the non-partisan Government Accountability Office (GAO) – an independent, non-partisan investigative and auditing unit of the U.S. Congress – British Petroleum (UK), Total (France), and the Emirates National Oil Company (UAE) have sold close to $3 billion in refined petroleum to the Iranian regime while also receiving close to $2.3 billion in U.S. government contracts. Relying on open sources, the report details that obligated U.S. government contracts with these companies are for things such as jet fuel, gasoline, and diesel, as well as a lease for fuel storage buildings.
Congress may have adjourned for a few weeks, but that will not stop Congressional staff from reaching out to these, and the companies listed in the report. Ideally, these and other companies with business in Iran that may be caught up in the sanctions regime should have been proactive and briefed, at least, senior staff interested in these matters. All indications are however that most have not and have been avoiding the reaching out.
For folks out there who work in this town, from a practice standpoint, I recommend that my clients be proactive in cases such as these. Especially if your company is, for all intents and purposes, being accused of violating U.S. laws. If I were still working on the Hill, these type of reports would only make one more eager to dig deeper and inquire more.
The CISADA process is looking more and more like a good case study on how future targeted sanctions legislative solutions could work. It may make sense to use it in places such as Cuba, among others, to tighten the noose on reckless oil exploration projects by a government that does not have the technical expertise to manage such an effort.