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| July 26, 2005 | |||
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SENATOR COLLINS’ LEGISLATION STOPS U.S. COMPANIES FROM USING FOREIGN SUBSIDIARIES TO DO BUSINESS WITH TERRORIST STATES
Sen. Collins’ legislation closes loophole exploited by companies doing business in Syria and Iran |
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Washington, DC - The Senate today approved legislation authored by Senator Susan Collins (R-ME) that strengthens prohibitions on U.S. corporations from doing business with terrorist states. Senator Collins’ legislation makes it illegal for any company to evade or avoid - or attempt to evade and avoid - U.S. sanctions under the International Emergency Economic Powers Act (IEEPA). Specifically, the legislation clarifies and strengthens provisions that prohibit American corporations from creating a foreign subsidiary - which does not have to comply with U.S. law - for the purpose of getting around the IEEPA. Senator Collins’ legislation was approved as an amendment to the Defense Authorization bill, which is being considered by the Senate.
“This legislation strengthens U.S. law to prevent companies from doing business in countries that support terrorism. Specifically, it prevents U.S. corporations from creating a shell company somewhere else in order to do business with rogue, terror-sponsoring nations such as Syria and Iran,” said Senator Collins. “The bottom line is that if an U.S. company is evading sanctions to do business with one of these countries, they are helping to prop up countries that support terrorism - most often aimed against America. Denying business investments to states that finance and support terrorist activities is critical to the war on terrorism.” Current law does not specifically bar foreign subsidiaries of U.S. companies from doing business with terrorist nations as long as these subsidiaries are considered truly “independent of the parent.” There are reports that some American companies have exploited this loophole in the law by forming and incorporating subsidiaries overseas for the specific purpose of bypassing sanctions laws that prohibit U.S. companies from doing business with nations that sponsor terrorism. Senator Collins’ legislation prevents U.S. corporations from creating foreign subsidiaries to exploit this loophole. In addition, the amendment: provides the President with explicit subpoena authority to enforce the law; strengthens current sanctions by increasing the penalties for civil violations from $10,000 to $250,000 and for criminal violations from $50,000 to $500,000; and prohibits U.S parent firms from any involvement with an existing subsidiary that violates this law. Senator Collins’ legislation also respects the law of foreign nations where these subsidiaries may be located by directing the IEEPA solely at the actions of U.S. parent companies and their employees. “The vote by the Senate today makes clear that U.S. corporation cannot circumvent the law to do business with terrorist states and strengthens the enforcement of this law,” said Senator Collins. “At the same time, the legislation is carefully crafted to avoid unintended consequences that will harm our relations with our international allies.” |
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