Contracting with the Enemy

[The Editors: This is the first of a two-part FrontPage investigative series on General Electric and its troubling business practices. The first part explores the company’s ties to rogue nations like Iran. The second part will examine GE’s connections to the Obama administration and the benefits it has derived from high-level access to the White House.]

“We don’t run a charity at GE. We’re in business to make money for our investors.” – General Electric CEO Jeff Immelt

Being called a “state sponsor of terror” would seem to be bad for business. Yet the label has traditionally done little to deter one of the world’s largest companies, General Electric, from pursuing business relations with rogue nations. In fact, GE, like a number of other U.S. companies, has a history of exploiting legal loopholes during times of U.S. and U.N. sanctions in order to continue generating revenues from dangerous regimes – despite full knowledge of the treacherous nature of their clientele. A prime example is GE’s former relationship with Iran amidst allegations that the fundamentalist nation was assisting Iraqi insurgents in their efforts to kill U.S. troops.

Like most viable industrial companies, GE is in a constant state of looking for new business. As one of the world’s largest companies and one of the most recognizable brands in existence, this is only natural. However, GE’s once-troubling close relationships to Iran, Syria and Lybia make an exploration of its past history paramount.

It was not long ago that GE’s ties to rogue nations like Iran and Syria took center stage. In 2004, CBS News, among other outlets, reported on a loophole that allowed GE and related companies to circumvent U.S. sanctions in order to conduct business in countries like Iran and Syria. According to CBS, so long as foreign or offshore subsidiaries were run by non-Americans, legal restrictions on business services to rogue nations did not apply. At the time, former NYC comptroller William Thompson accused GE and its cohorts of helping to “underwrite and support terrorism” by operating in Iran. Thompson said that revenues earned from projects that companies like GE worked on were being allocated for terror-related activities. Additionally, he claimed that GE “violated the spirit of the law.”

In response, GE called CBS’s coverage “shallow and one-sided.” However, as criticism and public angst rose, the company changed course and decided to stop seeking new business in Iran. On Feb. 2, 2005, General Electric spokesman Gary Sheffer said,

“Because of uncertain conditions related to Iran, including concerns about meeting future customer commitments, we will not accept any new orders for business…this moratorium on new orders will be re-evaluated as conditions relating to Iran change.”

Pressures from Thompson and other prominent figures, like Sen. Frank Lautenberg (D-N.J.), who made very public claims that GE, Halliburton and other companies were collecting “blood money” in their dealings with rogue nations, led to this alteration of corporate policy. Still, this reversal did not apply to the contracts that were already in process at the time the decision was made. In fact, it was not until 2008 that GE finally completed Iranian contract work.

Though legal, the original work that was accomplished through a systematic loophole, as well as the continued contract work, violated business ethics and undermined the pressure that the U.S., U.N. and other partners were placing on rogue nations with nuclear and terror-related ambitions, like Iran – nations that were and continue to be bastions of instability. GE’s continued dealings with Iran afforded the state a measure of legal legitimacy, reduced the incentive to comply with sanctions, and ultimately halted the progress the international community was attempting to make in the region.

GE continued to do work on remaining Iranian projects (those contracted before the 2005 suspension) until 2008. This occurred despite U.S. knowledge of the role that Iran was playing in supplying weapons to Iraqi insurgents. Last month, Chip Cummins of The Wall Street Journal mentioned an acquisition that raises some eyebrows about GE’s true commitment to its 2005 business suspension. According to Cummins, in 2007 GE purchased Vetco Gray, a company that was doing business in Iran at the time (though GE has since allowed its contracts to close out). As a result of the actions of at least three unidentified employees, Vetco Gray was fined $26 million in 2004 for violating the Foreign Corrupt Practices Act by making payments to Nigerian customs officials.

Prior to negative press coverage for its engagement with Iran, GE had no qualms about contracting with rogue nations. Consider its relationship with Libya, a nation that was actively involved in terror activities in the 1980’s and 1990’s and was not removed from the U.S. State Department’s State Sponsors of Terrorism list until 2006. In 2004, Fortune magazine reported that, during years of active sanctions against the nation, GE conducted business with Libya through Nuovo Pignone (Italian subsidiary); work in Libya continues today, though U.S. relations with the former rogue nation have improved.

Today, General Electric claims that outside of humanitarian aid neither the main company nor its subsidiaries engage in any business relationships with nations that are presently on the U.S. State Sponsors of Terrorism list (Cuba, Iran, Sudan and Syria). Based on GE’s history, however, the concern for state sponsors of terrorism is likely linked more to public perception and potential business impact than it is to ethical convictions. The company still stands by its handling of Iranian business, claiming on its web site that, “GE at all times acted in full compliance with U.S. and other laws. We have always required our businesses to follow U.S. sanctions and other applicable laws. In fact, our policies have been more restrictive than U.S. law.” But in a sign of its new position, on Sept. 2009, GE became the first company to sign UANI’s public statement claiming that it would not do business in Iran (aside from approved humanitarian work).

Still, the record is clear: Whatever it may say now, the company – with its various arms extending into commercial and consumer finance, aviation, aerospace, healthcare, entertainment and energy – has become proficient at finding loopholes in order to do business with rogue nations. When it comes to getting the job done and driving revenues, GE’s principal concern seems to be for its bottom line – even if it means contracting with the enemy.

  • poptoy

    This is absolutely shameful. You can bet the Kenyan knows about it and he does nothing to stop it. Damned Shame.

  • Gary Rumain

    This wouldn't be the first time. Nor the last.

    Anyone remember IBM's involvement with Nazi Germany?

  • The_Inquisitor

    Correct me if I am wrong, but it is my understanding that our government uses our tax dollars to guarantee payment to American corporations trading abroad. If so, this should be stopped immediately. Let corporations like GE take the full risk of getting paid by countries like Iran.

  • Jeremayakovka

    ftr, Dick Cheney acted similarly in the 90s when he headed Halliburton. You can read about it in Stephen Hayes's biography.

    • cjk

      Oh really? So why discuss this then? Tell me who in this country hasn't heard about Halliburton and Cheney? Who hasn't had Halliburton/Cheney drilled and pounded into their heads by the MSM and all their leftie buddies?
      Yet here we have demonrat party friends at GE running a company at least 10 times bigger than Halliburton and nary a peep. I guess you're just doing your part to keep it that way.

  • USMCSniper

    "The Capitalists will sell us the rope with which we will hang them." (Vladimir Ilyich Lenin 1870 – 1924, First Leader of the Soviet Union) is also the view of Iran.

  • 9-11 Infidel

    Imagine if a company in WWII had sold goods and services to our enemies and the newsreel people got wind of it. The people would have boycotted the company and someone else would have taken up the slack in missing goods and services. Supporting a rival would have been the patriotic thing to do. And the CEO would have been hanged in effigy or worse. GE brings nothing good to light anymore. Their name is Mudd. Time to boycott their products.

  • Primed Eagle

    I was always a Pratt & Whitney guy.

  • frondogcs

    For some time, American companies have trained themselves to think and act to be known as "International" companies, not American. They do not see themselves as either hostile to or supportive of the United States, merely indifferent. This simply reflects corporate cultures, which in turn have imbibed the culture, are not moral or particularly immoral, merely amoral. They prefer being part of organizations independent of and superior to those representing the citizens of the United States. This is all either good or bad – I've seen arguments either way – but it is demonstrably true.

  • cjk

    All they gotta do is just keep greasing their Demonrat and RINO friends who have absolutely no scruples or morality. The MSM ain't about to mention anything negative about these creeps and of course they own NBC.
    A real sleazy aspect is their heavy investments in 'green' technology (ha,ha,ha) and their corresponding backing for all green policies which really amounts to a type of insider trading in the long run.

  • Milwaukee Guy

    I don't buy anything GE if I don't have to. I have friends and relatives that work for GE and they all know how unethical of a company it is. It is also cut-throat in its advancement policies and is not the most pleasant place to work. They are a major employer in my area and enjoy a good reputation locally despite Immelt's treason.

  • American

    Are there not trade regulations regarding activity with rogue nations? It seems to me that I distinctly remember having these facts drilled into us at my employer before I retired. As I remember, there were stiff penalties that could occur if found in violation including jail. Personally, I try to avoid anything that has G.E. listed as involved in any way and have been for some time now. I consider this compnay to be anti-American and against freedom. Instead, I see it as a major member of the growing Fascist pool that is bedding down with this transforming government now in power. I used to fear for my grandchildren. Now, I fear for myself. Vote in November and in all elections. Vote is a four letter word to despots.

    • Jim C.

      There you go again, wanting to hanstring good American business with more regulations!