Firms licensed to do business in countries on U.S. terror list

An obscure Treasury Department office has granted licenses to major U.S. companies to do business with companies in Iran and other nations deemed state sponsors of terrorism, under a federal law that allows certain products to be exported to those countries, Treasury officials said Thursday.

The officials' remarks came after the New York Times Web site reported that the Treasury's Office of Foreign Assets Control had granted nearly 10,000 licenses to companies to sell goods as varied as popcorn, chewing gum, cigarettes and body-building supplements.

Under federal law, U.S. companies can trade with blacklisted countries if the Treasury approves the transactions as medical or humanitarian necessities, especially in relieving famine.

In the past, the Treasury has also let U.S. companies do business with foreign firms accused of selling banned technology to blacklisted nations - sometimes as a result of political pressure.

A Treasury official said Thursday evening, after the publication of the Times article, that "the great majority of the authorized exports" are mandated under federal law, which requires that Treasury allow exports of agricultural commodities, medicine and medical goods to Iran, Cuba and Sudan.

"Because the U.S. has the toughest and most comprehensive sanctions against Iran, allowing for the exportation of food, medicine and medical devices is consistent with our objective of not hurting the Iranian people," the official said, speaking on the condition of anonymity.

The official added that all licenses granted "advance our national security and foreign policy goals."

According to the Times report, the recipients of these licenses included Kraft Foods, Pepsi and a subsidiary of Citigroup, as well as lesser-known firms.

The definition of a humanitarian or medical necessity under the federal law is so broad that companies have been able to sell products that seem not to meet those criteria. For example, the Treasury approved sales of luxury food products to chain stores in Iran owned by blacklisted Iranian banks, according to The Times.

Stuart Levey, the undersecretary for terrorism and financial intelligence, said in a statement Thursday night that allowing "the export to Iran of food items like hot sauce or salad dressing from the U.S. is required by statute and, in any event, is trivial in the context of our Iran policy."

The transactions have not been free of political interference.

In 2003, long before Levey took his post, the Treasury had planned to deny a medical waste plant exemption requested by a Honolulu firm seeking to buy parts from a Chinese company that had been accused of selling missile technology to Iran and Pakistan.

But Sen. Daniel Inouye (D-Hawaii) intervened on behalf of the Honolulu firm, whose owner was a political supporter and financial contributor. A Treasury official confirmed the account.

An Inouye spokesman, Peter Boylan, told the Times that the senator's advocacy on behalf of the firm had nothing to do with the political contribution.

Boylan told the Post in a statement Thursday that the firm "committed to the transaction prior to implementation of the ban and without the [parts] his business would have failed immediately and more than 90,000 pounds of untreated medical waste would have been left unattended on the docks of an Oahu port." ]

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