Progress Report, 11/8/04 – American Progress Action Fund

Terrorism – Fines Reduced for Doing Business with Terrorist-Sponsoring States: President Bush talks tough when it comes to cutting off sources of terrorist financing. But an analysis by the Associated Press shows “the government’s average penalty against companies doing business with countries listed as terrorist-sponsoring states fell sharply after the Sept. 11 attacks.” Federal records indicated “the average penalty for a company doing business with Iran, Iraq, North Korea, Sudan or Libya dropped nearly threefold, from more than $50,000 in the five years before the 2001 attacks to about $18,700 afterward.” One explanation for the decline: “Nineteen executives or directors of companies fined by OFAC [the Office of Foreign Assets Control] for dealing with state sponsors of terrorism were top campaign fund-raisers for Bush.”

As CEO of Halliburton, Vice President Cheney “was a vocal critic of trade embargoes while he headed Halliburton, a Houston-based oil services conglomerate, from 1995 to 2000.” Under his leadership, “Halliburton expanded its trade with Iran through an offshore subsidiary,” an arrangement “now being investigated by a federal grand jury.”

The AP used publicly available OFAC records to compile a database of penalties paid by companies for doing business with terrorists or their state sponsors. The database includes entries for more than 500 such cases since 1996. Analysis of the database showed average penalties for violating the embargoes fell for every terrorism-sponsoring country after the attacks:

The average corporate penalty for doing business with Cuba was four times higher before the attacks. The pre-attack average penalty was nearly $98,000; the post-attack average was about $23,500. The State Department accuses Cuba of bankrolling some terrorist groups and sheltering members of Basque and Colombian terrorist organizations.

Penalties for prohibited business involving Iran were nearly twice as high before the attacks. The pre-attack average penalty for an Iran transaction was more than $33,500; the post-attack average fine was about $17,300.

Fines for trading with Iraq while Saddam was in power averaged more than $101,000 before the Sept. 11 attacks, then fell by more than a third to about $74,800 afterward.

Companies accused of dealing with Libya paid fines averaging more than $41,000 before the attacks, a figure more than three times higher than the postattack average of about $12,800.