Members of Congress Invest in Businesses in Terror-Sponsor States

July 7, 2008 - 7:32 PM

(CNSNews.com) - More than 30 members of Congress, or their spouses, invest in companies that do business in countries that the U.S. government says sponsor terrorists, a Cybercast News Service investigation has established.

Financial disclosure forms show that Rep. Jane Harman (D-Calif.) -- one of the leading national security experts in Congress -- has hundreds of thousands of dollars invested in nine corporations listed by the Securities and Exchange Commission as doing or having done business with a terror-sponsoring state.

Reps. Randy Neugebauer (R-Texas) and Nick Rahall (D-W.Va.) have smaller investments in as many such companies. Sen. John Kerry (D-Mass.) and Rep. Robin Hayes (R-N.C.) each have more than $1 million in companies that are doing or have done business with one or more of these countries.

The five countries on the U.S. State Department's list of terror-sponsors are Cuba, Iran, North Korea, Sudan and Syria. (The SEC relies on the State Department's list.)

Most members of Congress whose offices commented for this story said the members did not have direct control over their investments because their money was either handled through a blind trust or through a broker.

"Because he's a congressman, he no longer controls the funds that are invested," Neugebauer spokesman Josh Noland told Cybercast News Service. "The funds are in a blind trust. The decisions are not made by him."

Chris Holton, director of the conservative Center for Security Policy (CSP) 'divest terror' initiative, said that congressmen should take special care concerning where they put their money.

"Members of Congress have a special duty over and above the rest of us," Holton told Cybercast News Service. "Blind trusts -- I don't know. But a broker handles it? You've got to be kidding me. You are a member of Congress. You should know about these things."

All members of Congress with investments in these countries were contacted for this story, as was each company listed.

The House passed divestment legislation pertaining to Iran and Sudan Tuesday, and it's now on its way to the Senate, which protects from litigation state governments that divest their public employees' pension dollars from companies that do business in countries on the blacklist. (See related story.) The campaign by state governments is designed to put economic pressure on these countries to change. A Bush administration official told Cybercast News Service that such efforts at the state level could harm diplomatic efforts.

However, in June, White House Press Secretary Tony Snow said divestment is "a federalism issue. We'll let the states make whatever decision they need to make."

The bulk of the companies are foreign-owned and trade in the United States, mostly in the oil or telecommunications sectors.

Dealing with blacklisted countries

German-based Siemens AG has telecommunications projects in Iran, Sudan and Syria. Rep. Harman has more than $250,000 invested in Siemens, while Rep. Carolyn McCarthy (D-N.Y.) has invested between $1,001 and $15,000 in the firm. (Financial disclosure forms for members of Congress generally provide only an investment range; for example, $1,001-$15,000 or $250,001-$500,000.)

Siemens AG's projects in Iran include development of the country's cell phone infrastructure and its power industry. Recently, Siemens signed a $570 million deal to build 150 railroad locomotives for Iran, increasing the number of locomotives in the country 50 percent.

Siemens is also involved in Sudan's power-generation industry and helped set up Syria's cell phone system, according to the CSP initiative, which calls the German firm the worst corporate offender.

The French-based Alcatel-Lucent SA, which does work in Iran and Sudan, earned the number two distinction from CSP. According to their financial disclosure forms, House Speaker Nancy Pelosi (D-Calif.), Sen. Kay Bailey Hutchinson (R-Texas), Sen. Jon Kyl (R-Ariz.), Sen. Tom Coburn (R-Okla.), Rep. James Sensenbrenner (R-Wisc.), Rep. Nick Rahall (D-W.Va.) and Rep. Zoe Lofgren (D-Calif.) are among the 16 members of Congress with holdings of more than $1,000 in the company.

Another one of those members, Rep. Virgil Goode (R-Va.), said through a spokesman that he was unaware, until Cybercast News Service brought it to his attention, that Alcatel-Lucent had such dealings.

"He said, 'Frankly, I don't like foreign stocks, and I'm selling it in the near future," Goode spokesman Linwood Duncan told Cybercast News Service.

Most members owned Lucent Technologies stock before it was purchased by Alcatel SA late last year in a merger.

Before the merger, Alcatel signed with state-owned companies in Iran for telecommunications work that the CSP contends could be used for military purposes. In Sudan and Libya, the company is upgrading and installing new communications networks and fiber optic cables, according to the Center. (Libya in 2003 pledged to renounce terrorism and was removed from the U.S. terror-sponsor list last year.)

"We do a very minimal amount of business [in Iran and Sudan], and it's not used for military purposes," Alcatel-Lucent spokeswoman Mary Ward told Cybercast News Service. "We enable the improvement of communications. That benefits the people of those countries. Increased communications increases the capacity to develop a democracy. Isolation undermines efforts to promote human rights."

Pelosi spokesman Nadeam Elshami said the speaker's husband owns the Alcatel-Lucent stock and bought Lucent stock before the merger. "The Bush administration approved the merger," he told Cybercast News Service.

Holton contends the merger was "front page news" and that neither Pelosi nor other members should excuse the investment based on holding Lucent stock. The merger was publicly protested by Rep. Duncan Hunter (R-Calif.) because of Alcatel's work in Iran and Sudan, while the White House issued a formal statement approving the merger.

Apart from Siemens and Alcatel-Lucent, the CSP's "Dirty Dozen" includes four other companies in which members of Congress invest.

Rep. Harman has at least $50,000 invested in BNP Paribas of France, the only foreign bank operating in Iran. The CSP initiative says the bank has some $2 billion worth of projects in the country, including energy and infrastructure deals.

"BNP Paribas is a partner to its clients worldwide, adhering to all current ethical standards and regulations," said BNP spokeswoman Edwina Frawley. "As a European bank, BNP Paribas carries out its activities throughout the world in strict compliance with European laws and regulations. Moreover, in every country where it accompanies its clients, it is committed to complying with local laws and regulations."

Other investors in BNP are Reps. McCarthy of New York, Neugebauer of Texas and Jim Moran of Virginia.

Rep. Harman also has investments of at least $50,000 in ENI SPA, an Italian energy company with about $4 billion worth of projects in Iran, mostly involving oil drilling, according to the CSP. McCarthy, Lofgren, Moran, Rahall and Neugebauer each have between $1,001 and $15,000 in the firm.

Total SA of France is another leading energy firm operating in Iran, Sudan and Syria. It has more than $3 billion in projects in these countries, according to the CSP, and has worked closely with Iran's state-owned National Iranian Oil Company.

Rep. Frelinghuysen (R-N.J.) has more than $100,000 invested in Total. Meanwhile, Neugebauer, Moran, Rahall and Rep. Hal Rogers (R-Ky.) each have more than $1,000 in the company.

Rep. Lamar Smith (R-Texas) has investments in five companies that have done business in these countries, most notably more than $1,000 in PetroChina, an arm of the China National Petroleum Corporation, which has invested more than $1 billion in Sudan, according to the CSP.

Rep. Smith warned not to draw any radical conclusions from congressional investments. "My stock broker is responsible for investing in stocks," Smith said in a statement to Cybercast News Service. "It's far-fetched to make any connection that an investment in an international company or organization is an endorsement of terror."

SEC list draws fire

The SEC recently took down a Web page that listed companies invested in the five state sponsors of terrorism, in response to reported complaints from companies claiming the list included outdated information and provided no context about how much business a company did in a particular country.

"BP has no significant investments in Iran and does not currently have plans to make any," BP spokesman Neil Chapman told Cybercast News Service. The SEC listed the company as doing business with Iran. However, according to published reports, BP announced in 2005 it would avoid doing business in Iran because of U.S. sanctions.

Gary Flaherty, director of investor relations for the oil firm Baker Hughes, said in an interview: "We were listed on Sudan because we were exiting Sudan."

Among those investing the most in companies doing business with rogue nations is Sen. John Kerry (D-Mass.), who invested more than $1 million into Baker Hughes and more than $250,000 in Xerox. Both are listed by the SEC as doing business in Sudan. (Rep. Robin Hayes (R-N.C.) also has at least $1 million invested in Royal Dutch Shell, doing business in Iran and Syria, and at least $500,000 in BP.)

While Xerox also pulled out of Sudan in August 2006, the country has been listed as a terror sponsor since 1993.

Sen. Kerry also invested between $15,000 and $50,000 in BP and up to $15,000 in Conoco Phillips, which has done business in Iran, North Korea and Syria, according to the SEC.

"Sen. Kerry has no control over these specific trusts -- he has no buying or selling power," Kerry spokeswoman Amy Brundage told Cybercast News Service. "The trusts are family trusts that Sen. Kerry inherited, and he is one of dozens of other members of his family who are beneficiaries of the trust."

Sen. Tom Harkin (D-Iowa) has at least $500,000 invested in Conoco Phillips, according to his most recent report.

Rep. Frelinghuysen has more than $100,000 invested in Conoco Phillips, and more than $250,000 in Royal Dutch/Shell, which has had interests in Iran, according to the SEC.

Does My Congressman Invest in Terror-Sponsoring States? Check the Chart

Congressional Members With Largest Investments in Companies in Terror-Sponsoring Nations

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