A work-around for sanctions in Syria

Dan Gorenstein Aug 13, 2012

A work-around for sanctions in Syria

Dan Gorenstein Aug 13, 2012

Kai Ryssdal: A story now that blends international economic sanctions and the plain, ordinary automated teller machine. The Wall Street Journal reported this morning that National Cash Register, a company that makes ATMs, has allegedly done business in Syria. That’s a big no-no under current U.S. sanctions policy. NCR has hired a law firm to investigate the anonymous allegations — that’s important to mention. But is does kind of make you wonder how easy is it for American firms to violate sanctions, knowingly or otherwise.

Dan Gorenstein from New Hampshire Public Radio explains it’s easier than you might think.

Dan Gorenstein: What do you do if you make tires in the U.S., for instance, and really want to sell those tires to Syria?

Jeff Cramer: I’d set up a company in Germany, try to distance itself from the parent company.

Jeff Cramer works at Kroll Advisory Solutions, an international risk management and investigative firm.

Cramer: Tires get made in Germany and then shipped to the sanction country. The tires were not made in the U.S., right? They were not made in Akron, Ohio, or anything.

The former federal prosecutor says the incentive to skirt sanctions is real.

Cramer: There’s just too much money there for companies not to take advantage of at least the opportunity.

Jonathan Schanzer: ING. Barclays. Credit Suisse. Lloyd’s Bank. ABN AMRO.

Jonathan Schanzer is a former terrorism finance analyst at the Treasury Department. He says all of these firms have been hit with significant fines for defying sanctions in other countries. But…

Schanzer: They don’t lose their license.

The financial hit isn’t much of a deterrent. To some it’s just the cost of doing business. Schanzer says the real danger for firms is damaging their brand.

Schanzer: When you are in a publicly-held company, and it is divulged that you have been doing business with unsavory characters, like Iran or Syria, this doesn’t exactly drive your stock price up.

The risk of bad publicity is so great, Schanzer says usually all regulators need to do is threaten to publicly out the company.

I’m Dan Gorenstein for Marketplace.

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