[Senate Hearing 110-101]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-101
 
               HALLIBURTON AND U.S. BUSINESS TIES TO IRAN

=======================================================================

                                HEARING

                               before the

        SUBCOMMITTEE ON INTERSTATE COMMERCE, TRADE, AND TOURISM

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 30, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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35-959 PDF                 WASHINGTON DC:  2007
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
              Margaret Spring, Democratic General Counsel
   Christine D. Kurth, Republican Staff Director and General Counsel
Kenneth R. Nahigian, Republican Deputy Staff Director and Chief Counsel
                                 ------                                

        SUBCOMMITTEE ON INTERSTATE COMMERCE, TRADE, AND TOURISM

BYRON L. DORGAN, North Dakota,       JIM DeMINT, South Carolina, 
    Chairman                             Ranking
JOHN D. ROCKEFELLER IV, West         JOHN McCAIN, Arizona
    Virginia                         OLYMPIA J. SNOWE, Maine
JOHN F. KERRY, Massachusetts         GORDON H. SMITH, Oregon
BARBARA BOXER, California            JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington           JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas
CLAIRE McCASKILL, Missouri






                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 30, 2007...................................     1
Statement of Senator Dorgan......................................     1
    Prepared statement...........................................     4
Statement of Senator Lautenberg..................................     5

                               Witnesses

Brown, Hon. Sherrod, U.S. Senator from Ohio......................     6
Comras, Esq., Victor D., Attorney/Consultant, Special Counsel, 
  Eren Law Firm..................................................    16
    Prepared statement...........................................    18
Thompson, Jr., William C., Comptroller, City of New York.........     8
    Prepared statement...........................................    11
Williams, Sherry, Vice President/Corporate Secretary, Halliburton 
  Company........................................................    13
    Prepared statement...........................................    14


                                Appendix

Halliburton Company, supplementary information...................    35


               HALLIBURTON AND U.S. BUSINESS TIES TO IRAN

                              ----------                              


                         MONDAY, APRIL 30, 2007

                               U.S. Senate,
   Subcommittee on Interstate Commerce, Trade, and 
                                           Tourism,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met at 2 p.m. in room SR-253, Russell 
Senate Office Building, Hon. Byron L. Dorgan, Chairman of the 
Subcommittee, presiding.

          OPENING STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. We'll call the hearing to order. This is a 
hearing of the Interstate Commerce, Trade, and Tourism 
Subcommittee.
    We are joined today by Senator Lautenberg and I've invited 
Senator Brown, who has legislation on the issue that is the 
subject of the hearing, to join us today. We will be joined by 
other colleagues as well.
    Today's hearing is intended to examine the question of 
whether U.S. corporations should be able to do business in 
countries that are prohibited, countries with whom we have 
economic sanctions. Particularly in this case we will talk 
about Iran, but other countries are involved as well.
    Should U.S. corporations be able to do business in these 
countries through their foreign subsidiaries? We have a number 
of countries that are subject at this point to sanctions, the 
countries of Cuba, Iran, North Korea, Sudan, Syria, for 
example.
    This country has passed legislation dealing with a number 
of these countries. With the country of Iran, we have passed 
the Iran Sanctions Act. In a number of cases, we know from 
information that we have received and we know from public 
published reports that American-chartered corporations have 
done business through the exceptions that exist with a number 
of these countries.
    Let me speak especially about the country of Iran for the 
moment, but it applies, as I understand it, to other countries 
as well.
    When our country with a foreign policy objective 
establishes sanctions against another country, a prohibited 
country, suggesting that for foreign policy reasons we want to 
prohibit certain economic activity and certain connections 
between our country and theirs, in order to, through economic 
sanctions, apply some pressure and some injury to a country for 
behaving in a manner that is not consistent with the manner 
that we determine appropriate.
    In circumstances where those companies are prohibited from 
doing business in those prohibited countries, however, 
companies are able to, in some circumstances, circumvent that 
by doing business through foreign subsidiaries, wholly owned or 
partially owned foreign subsidiaries.
    In the case of Iran, for example, the U.S. law that we 
passed contains a loophole. The Iran Sanctions Act allows 
foreign subsidiaries of U.S. corporations to do business with 
Iran, so long as the subsidiary operates independently.
    We have invited a number of witnesses today. One of the 
witnesses is the Halliburton Company. Halliburton is a U.S.-
chartered corporation that has had some publicity about it 
doing business with the country of Iran through a foreign 
subsidiary.
    In 2004, 60 Minutes did a report that disclosed how 
Halliburton had a subsidiary in the Cayman Islands with 
headquarters in Dubai, which did hundreds of millions of 
dollars worth of business in the country of Iran.
    In the 60 Minutes testimony, excuse me, 60 Minutes report, 
it appeared the Cayman Islands office was not much more than a 
mail drop and the Dubai office, which was supposed to operate 
independently of the Houston-based company, 60 Minutes found 
that the Dubai subsidiary shared office space, phone and fax 
lines with a division of the Houston company.
    Halliburton is by no means the only company that has had 
business ties to Iran or in other cases with other countries 
that have been prohibited countries by fashioning that business 
through a foreign subsidiary.
    There's no question that, for example, with Iran there are 
substantial oil and gas reserves. There's no question that some 
corporations in this country would want to do business in Iran 
even though it is a prohibited country and so we understand 
why, under current law, some companies have decided it's in 
their economic interest to fashion foreign subsidiaries to do 
this kind of business.
    The question that we pose at this hearing is; should this 
be the case. If we have a national goal here of establishing 
sanctions for good reason, should we allow those purposes of 
the sanctions to be undermined by U.S. companies creating 
foreign subsidiaries, or through foreign subsidiaries, doing 
business with a prohibited country? Does that not, in fact, 
undermine the very thing we're attempting to accomplish?
    The State Department, again, continuing with Iran, says, 
``Iran is the most active state sponsor of terrorism''--says 
that ``Iran has maintained a high profile role in encouraging 
anti-Israeli terrorist activity, rhetorically, operationally, 
and financially.''
    The Supreme Leader and the President of Iran has praised 
the Palestinian terrorist operations. Iran has provided the 
Lebanese Hezbollah and Palestinian terrorist groups, notably, 
Hamas and Islamic Jihad, funding, training and weapons. 
President Ahmadinejad recently hosted a conference aimed at 
denying the historical truth of the Holocaust.
    I raise all this simply to say there are reasons, important 
and strong reasons that this country has decided to impose 
sanctions on countries, in this case, Iran. I could give a 
similar discussion about North Korea and Syria. Having said 
that, it is striking to me that we have a law that would allow 
a U.S. company, through a foreign subsidiary, to do business 
with a prohibited country. Why on earth would we allow that?
    So today's hearing is intended to ask several questions, 
first, should it be legal for subsidiaries of U.S. companies to 
do business with prohibited countries through a U.S. 
subsidiary? Senator Lautenberg is introducing legislation to 
close this loophole.
    Second, should U.S. companies that decide to do business 
with a prohibited country, in this case, Iran, be eligible for 
Federal contracts?
    Senator Brown has introduced a piece of legislation, titled 
the Restoring Integrity in Contracting Act of 2007. This bill 
would prohibit U.S. companies that do business with Iran, 
through U.S. subsidiaries and I believe it's through any 
prohibited country; I'd have to check on that, from getting 
Federal contracts.
    Let me say I'm pleased that a representative of Halliburton 
has agreed to testify at this hearing. I would note that 
Halliburton has announced that it will no longer do any 
business with the country of Iran. That's a welcome statement, 
but Halliburton has been a major U.S. contractor and has done 
business with Iran for many years and we'll talk about that.
    The first witness today will be Sherry Williams, Vice 
President and Corporate Secretary of Halliburton.
    The second witness is William Thompson, the Comptroller of 
New York City. Mr. Thompson oversees $80 billion in pension 
funds for all city workers, part of which was invested in 
Halliburton stock and that of other companies engaged in Iran 
and Mr. Thompson has been instrumental in raising these issues 
with corporations in a very important way.
    And the third witness is Victor Comras. Mr. Comras retired 
from the State Department in 2001 and is now a practicing 
attorney and consultant on matters related to sanctions and 
embargos. He led the State Department's foreign policy trade 
control and sanctions programs for nearly a decade.
    In 1999, Secretary Madeline Albright put him in charge of 
developing an international sanctions program on Serbia aimed 
at bringing down the Slobodan Milosevic regime. He also served 
as the State Department's point man on sanctions related to 
Iraq, Iran, Libya, Haiti, Cuba and North Korea.
    I want to thank all the witnesses for appearing today and I 
want to just again say, the reason that we are holding this 
hearing is because many of us feel that we ought to answer a 
very important question. If this country has objectives by 
which it imposes sanctions on countries and creates a list of 
prohibited countries, should there be any circumstance in which 
a U.S.-chartered corporation would be doing business with those 
prohibited countries by creating a foreign subsidiary?
    I think not, but currently the law allows that kind of end-
run that I believe undermines our foreign policy objectives and 
we will, in this hearing explore whether the law should be 
changed and if so, how it should be changed.
    [The prepared statement of Senator Dorgan follows:]

              Prepared Statement of Hon. Byron L. Dorgan, 
                     U.S. Senator from North Dakota
    Today's hearing is intended to examine the question of whether U.S. 
companies should be able to do business in Iran through their foreign 
subsidiaries.
    The State Department lists a handful of countries as state sponsors 
of terrorism, and U.S. law generally prohibits U.S. companies with 
doing business with those countries, whether directly or through their 
foreign subsidiaries.
    But in the case of Iran, U.S. law contains a serious loophole. The 
Iran Sanctions Act allows foreign subsidiaries of U.S. companies to do 
business with Iran, so long as the subsidiary operates independently.
    One of the U.S. companies that we know has had foreign subsidiaries 
do business with Iran is Halliburton. In 2004, 60 Minutes did a report 
that showed how Halliburton had a subsidiary in the Cayman Islands, 
with headquarters in Dubai, which did hundreds of millions of dollars 
worth of business with Iran. The Cayman Islands office was little more 
than a mail drop. And the Dubai office was supposedly run independently 
of the Houston-based company, but the 60 Minutes investigation found 
that the Dubai subsidiary shared office space, phone, and fax lines 
with a division of the Houston company.
    Halliburton is by no means the only company that has had business 
ties to Iran in this fashion. But it was one of its most vocal in 
defending the propriety of this type of arrangement.
    Vice President Cheney, who in the 1990s was Chairman of 
Halliburton, gave a speech to an energy industry conference in 1996, in 
which he said that sanctions were the greatest threat to Halliburton 
and other American oil companies trying to expand overseas. He said 
that ``we seem to be sanction-happy as a government'' and that ``the 
problem is that the good Lord didn't see fit to always put oil and gas 
resources where there are democratic governments.''
    Indeed, in a 1998 speech at the Cato Institute, Vice President 
Cheney said that U.S. companies were ``cut out of the action'' in Iran 
because of the sanctions.
    Well, there is no question that Iran has very substantial oil and 
gas reserves. But there is good reason why the United States makes it 
illegal for U.S. companies to do business with Iran.
    For starters, according to the State Department, Iran is the ``most 
active state sponsor of terrorism.'' The State Department says that 
Iran has ``maintained a high-profile role in encouraging anti-Israeli 
terrorist activity--rhetorically, operationally, and financially.'' 
Supreme Leader Khamenei and President Ahmadinejad has praised 
Palestinian terrorist operations, and Iran has provided Lebanese 
Hezballah and Palestinian terrorist groups--notably Hamas, and Islamic 
Jihad--with extensive funding, training, and weapons. President 
Ahmadinejad recently hosted a conference aimed at denying the 
historical truth of the Holocaust.
    In addition, the Iranian regime is a country seemingly determined 
to acquire nuclear weapons. President Ahmadinejad has described the 
regime's quest for nuclear energy as an ``unstoppable train.''
    So it is striking that U.S. companies would permit any of their 
foreign subsidiaries to do business with Iran, even if such an action 
were arguably legal under U.S. law.
    Today's hearing is intended to ask several questions.
    First, should it be legal for subsidiaries of U.S. companies to do 
business with Iran through a U.S. subsidiary? Senator Lautenberg has 
introduced legislation to close this loophole.
    Second, should U.S. companies who do business with Iran be eligible 
for Federal contracts? Senator Brown has introduced S. 1004, the 
Restoring Integrity in Contracting Act of 2007, a bill that I have 
cosponsored. This bill would prohibit U.S. companies that do business 
with Iran through U.S. subsidiaries from getting Federal contracts.
    I am pleased that Halliburton has agreed to testify at this 
hearing. I would note that after we announced our intention to hold 
this hearing, Halliburton announced that it would no longer do any 
business with Iran. That's a welcome announcement, but I think that 
given that Halliburton has been a major U.S. contractor and has done 
business with Iran for years, we still have a lot to talk about.
    I should add that I expect that it is no easy step for Halliburton 
to appear before this Subcommittee, particularly given the fact that I 
have been critical of the company for its performance relating to 
contracts in Iraq. I do not intend to focus on the subject of Iraq 
contracting at this hearing, but rather to focus on Iran--and there is 
plenty to discuss on the subject of Halliburton and Iran.
    The first witness, Sherry Williams is the Vice President and 
Corporate Secretary of Halliburton.
    The second witness is William Thompson. the Comptroller of New York 
City. Mr. Thompson oversees the $80 billion in pension funds for all 
city workers, part of which was invested in Halliburton stock and that 
of other companies engaged in Iran.
    The third witness is Victor Comras. Mr. Comras retired from the 
State Department in 2001, and is now a practicing attorney and 
consultant on matters related to sanctions and embargoes. Mr. Comras 
led the U.S. State Department's foreign policy trade control and 
sanctions programs for nearly a decade. In 1999, Secretary Madeleine 
Albright put him in charge of developing an international sanctions 
program on Serbia aimed at bringing down the Slobodan Milosevic regime. 
He also served as the State Department's point-man on sanctions related 
to Iraq, Iran, Libya, Haiti, Cuba and North Korea.
    I thank all the witnesses for appearing today. I should note that 
though Senator Brown is not a member of the Commerce Committee, I have 
invited him to join us today given his interest in these issues.

    Let me call on Senator Lautenberg.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks, Mr. Chairman, for holding this 
important hearing. It seems impossible to imagine that American 
companies would try to circumvent the law and do business with 
an enemy of ours, when we are actively at war, when we keep on 
losing troops there, in Iraq. So, I think this is a 
particularly opportune moment to discuss this.
    I want to start off by talking about a young woman, who 
came from New Jersey, from Teaneck, New Jersey. Her name was 
Sarah Duker. She was studying in Israel and she and her fiance 
were killed when their bus was blown up in Jerusalem in 1996. 
She was 22 years old.
    The bus was found to have been blown up by Hamas. Hamas 
which receives funding and support from the Iranian government. 
Now without support from Iran, Hamas and other terror groups 
would not be able to carry out their attacks.
    President Bush has said, ``Money is the life blood of 
terrorist operations.'' So, it's stunning to me that some 
American companies, like Halliburton, have conducted business 
with terrorist states, like Iran, in defiance of the law that 
principles against it.
    Now I was the first member of the Congress to investigate 
Halliburton's dealings with Iran. Some of what we uncovered was 
forwarded to the U.S. Office of Foreign Assets Control in the 
Treasury and has become part of their investigation.
    We knew from a 60 Minutes piece, that the Halliburton 
subsidiary had an office in Dubai and I asked my staff to learn 
all we could about the activities of that office. My staff then 
obtained copies of faxes between the Iranians and Halliburton 
in Dubai.
    And we noticed that the Iranians addressed these faxes to 
specific people at Halliburton, the principal company. What is 
unclear is who these people were? Did they work for the Cayman 
Islands subsidiary or the parent company? Were they U.S. 
nationals?
    One fax was addressed to Ian Gooch and another to a Mr. 
McIntyre. A third fax was to a Mr. Proctor. Now, I'm going to 
be asking Ms. Williams today to identify what company these 
people work for and what was their national background.
    Another curious issue is Halliburton's January 2005 
announcement that it would no longer do work in Iran. Now what 
Halliburton didn't publicize at the time, that just before 
their announcement, they signed an arrangement to deal with 
Iran to help drill their South Pars natural gas field.
    And of course, since he had just inked a multimillion 
dollar contract with the Iranians, Halliburton's CEO, David 
Lesar, made clear that the company will have to honor their 
existing contracts with the Iranians, such as this South Pars 
deal.
    Doesn't sound like an honorable act to me. In fact, 2 
months after Mr. Lesar's announcement that the company was 
leaving Iran, NBC news sent out a video crew to Iran and caught 
an image of this. This was at Pars Gas Field in Iran and you 
see the name on the jacket, on the uniform of the fellow there, 
Halliburton.
    Mr. Chairman, we've got to stop this behavior. That's why I 
reintroduced my bill, Stop Business with Terrorists Act last 
week. The bill will close the loophole that Halliburton has 
exploited in order to do business with Iran.
    Simply put, Iran sponsors terrorists. Their terrorists have 
killed hundreds of Americans including, Sarah Duker, from New 
Jersey.
    Companies that help terrorist states generate revenues that 
are helping fund terrorist operations. It's that simple.
    In the Republican Congress, I attempted to pass my bill 
several times and we lost narrowly. In fact, on one occasion, 
we lost a roll call vote in the Senate by a single vote, 49 to 
50 and I know that my amendment helped keep pressure on 
Halliburton to announce that they were getting out of Iran, but 
we can't be fooled.
    Halliburton's not getting out of Iran because they are 
suddenly a good corporate citizen. They're not getting out of 
Iran because it's the right thing to do. Halliburton is getting 
out of Iran because they didn't like the bad publicity that 
they're getting, but they plan to come back when things cool 
down.
    In fact, Halliburton CEO, David Lesar, said to the press, 
``If more of our customers go to Iran, we're going to return to 
this market.'' They can't wait to get out of that place. We 
can't wait much longer to remove ourselves from places of 
danger.
    Mr. Chairman, we are trying to legislate on this issue 
because left to their own devices, companies like Halliburton 
will follow the money, not the morality and I thank you.
    And I wanted to welcome Mr. Bill Thompson here. We've 
worked together in the past and look forward to continuing our 
work.
    Senator Dorgan. Senator Brown.

               STATEMENT OF HON. SHERROD BROWN, 
                     U.S. SENATOR FROM OHIO

    Senator Brown. Thank you, Mr. Chairman, and thank you for 
the series of hearings that you're doing on trade and on our 
national and our economic security, like many of us, I 
certainly appreciate that.
    In the post-9/11 world, U.S. economic policy can no longer 
be viewed in a vacuum of bottom lines and profit margins. When 
we open our borders to trade, as we should, we open them to 
homeland security threats.
    It's imperative that Congress takes proactive steps to 
ensure that our homeland security needs are secured every bit 
as much as our economic well-being and it's imperative that the 
U.S. Government stop rewarding businesses, as Senator 
Lautenberg said, that partner with state sponsors of terrorism, 
such as Iran. We cannot hold Iran accountable if U.S. companies 
help build its economy.
    In 1995, my second term in the House of Representatives, 
Congress voted in support of the Administration's sanctions on 
Iran after that country was found to be in direct support of 
organizations that seek to harm the United States and our 
allies.
    Over the past several years, Iran has increased its defense 
spending from $4.2 billion in 2003 to $6.6 billion in 2006. 
More importantly, in 2005, IAEA inspectors confirmed that Iran 
had resumed uranium conversion in order to develop nuclear 
technology and to fund these efforts; Iran has been working to 
develop its energy sector, the life blood of its economy and 
the major source of its revenue.
    Oil exports account for roughly 80 to 90 percent of Iran's 
total export earnings, 20 percent of the total GDP and around 
half of its government's budget.
    Iran's oil exports have increased 46 percent over the past 
3 years to approximately $47 billion last year despite U.S. 
sanctions.
    While sanctions ban U.S. companies from engaging in the 
development of Iran's strategic energy sector, both foreign-
based trans-national corporations and subsidiaries of U.S.-
based firms have supported Iran's development of its energy 
sector over the past decade.
    Since 1999, foreign, direct investment in this sector has 
totaled more than $100 billion. Experts note that these foreign 
investments have the potential to significantly increase Iran's 
energy production and obviously its revenue potential.
    Over the past several years, while the U.S. has maintained 
sanctions on Iran, the Halliburton subsidiaries sold a reported 
$30 million in oil extraction equipment to companies working in 
Iran's energy sector.
    Notably a Halliburton subsidiary sold oil drilling 
equipment to help accomplish this objective assisting foreign 
firms in Iran's development.
    It's been reported that Halliburton recently elected to 
cease their work in Iran and that is a step in the right 
direction, as Senator Lautenberg said. However, aiding in the 
development of a country that seeks to do America harm is never 
in America's best interest.
    It's the responsibility of Congress to secure our Nation. 
It's the responsibility of our government to ensure that 
taxpayer's money in the form of government contracts should not 
go to corporations that seek to make a profit off rogue 
governments.
    This should also be the case for companies that move their 
headquarters offshore. That's why Senator Dorgan and I have 
introduced legislation to deny government contracts to U.S. 
firms that do business with state sponsors of terrorism or that 
choose to be corporate expatriates and move offshore to avoid 
paying taxes.
    The actions of these companies clearly undercut our efforts 
to stop the development of weapons of mass destruction and 
prevent the strengthening of terrorist organizations whose aim 
is to harm our country.
    We shouldn't help enrich companies that are undermining our 
national security goals. It's as simple as that.
    Thank you, Mr. Chairman, for the opportunity to join this 
subcommittee today.
    Senator Dorgan. Senator Brown, thank you very much. I'm 
going to introduce the witnesses starting with Mr. Thompson.
    Let me just again say that, the countries, those foreign 
countries that our State Department has identified as countries 
engaged in state-sponsored terrorism are countries against whom 
our government has taken certain actions, but a loophole exists 
allowing, in most cases, an opportunity for U.S. companies to, 
through a foreign subsidiary, continue to do business with 
countries that engage in state-sponsored terrorism and the 
question for this Congress, I think, is, should we allow that 
to continue?
    The answer to me clearly, is no and so how do we stop it 
and what kind of action do we take?
    Mr. Thompson has been engaged in this fight for some while. 
I first came to know him by reading about some of the work Mr. 
Thompson has done.
    He is the Comptroller of the City of New York. He is the 
Chief Investment Advisor to the City's five retirement systems 
which manage over, I now see, $100 billion in pension monies 
for the City, according to his testimony today and he has 
pressured corporations that they invest in, who do business 
with state sponsors of terrorism to change their policies and 
interestingly enough, has been quite successful taking a very 
unusual approach.
    Mr. Thompson, thank you for coming down from New York and 
being willing to testify and telling us what you have been 
doing and how you see this issue. You may proceed.

STATEMENT OF WILLIAM C. THOMPSON, JR., COMPTROLLER, CITY OF NEW 
                              YORK

    Mr. Thompson. Thank you, Mr. Chairman. It is definitely a 
pleasure to be here, Senator Brown and definitely my friend, 
Senator Lautenberg, always a pleasure seeing you, sir.
    I appear before you today to express my deep concern over 
the ability of American firms to circumvent the intent of 
sanctions law with respect to nations deemed to be sponsors of 
terror by our State Department.
    As Comptroller for the City of New York, I am the Chief 
Investment Advisor to the City's five retirement systems, 
managing over $100 billion in pension funds for the City.
    Our responsibility to protect retiree assets requires a 
constant effort to pursue the highest standards of corporate 
responsibility and companies in which we invest. We've argued 
that when companies fail to consider the possible reputational 
or financial damage resulting from their operations whether 
directly or indirectly, they put their shareholders long-term 
investments at risk.
    As Comptroller, I've pressured corporations we invest in 
that do business with state sponsors of terrorism to change 
their policies. New York City pension funds have taken on a 
number of U.S. corporate giants who are doing business with 
rogue nations, such as Iran and Syria.
    Americans have been hearing for years that there's a 
connection between money and terrorism, but most didn't realize 
that their own investments, including their retirement nest 
eggs could be financing regimes that condone and even encourage 
widespread violence and bloodshed.
    It certainly came as a shock to New York City's police and 
fire fighters, who suffered combined losses of 366 men and 
women on September 11, 2001. Our police and fire department 
pension funds own some 400,000 shares in Halliburton Company, 
valued at roughly $10 million.
    Our other funds had an additional $20 million invested in 
Halliburton. And Halliburton, as we now well know, was doing 
substantial business with Iran, a nation that had been 
identified by the United States Department of State as a state 
sponsor of terrorism.
    Halliburton was not alone. Because of the loophole in 
Federal law, other Fortune 500 companies like, General Electric 
and ConocoPhillips were doing the same. How did this happen? 
Our government forbids American companies from doing business 
with or in countries it identifies as terror sponsors.
    However, that ban does not apply to any foreign or offshore 
subsidiary, so long as non-Americans are nominally in control. 
This loophole was exploited by these companies.
    In February of 2000, Halliburton opened an office in 
Tehran, under the name of Halliburton Products and Services 
Limited. It's a Cayman Island-based subsidiary. The alleged 
headquarters for Halliburton Products and Services Limited was 
in Abu Dhabi in the Persian Gulf, where it shared office space, 
fax and phone numbers with its United States parent.
    Given this evidence, the notion that Halliburton's 
subsidiary was, in any way, independent was laughable. 
Halliburton owed an explanation to thousands of current and 
retired New York City police and firefighters, along with the 
rest of the members of the New York City pension system.
    On their behalf, my office submitted a shareholder proposal 
to Halliburton in November of 2002 to review the potential 
financial and reputational risks of its operations in Iran. 
Similar resolutions were filed at that time with General 
Electric and ConocoPhillips.
    When Halliburton agreed to such a review, we withdrew our 
proposal. Halliburton subsequently produced a report that, 
rather than addressing the broader risks inherent to doing 
business with rogue states, they offered a narrow legalistic 
explanation of how its operations fall within the bounds of the 
law.
    They were clearly unwilling to address the broader 
implications of its activities in Iran for both their 
shareholders and the country.
    In January of 2004, 60 Minutes aired a segment on 
Halliburton that mentioned the efforts of my office and raised 
the public awareness of this issue dramatically. The show 
uncovered new information about Halliburton's subsidiary.
    For instance, the Cayman Islands address is just a mailbox 
at a local bank and barely that. When mail arrived there it was 
rerouted to Halliburton headquarters in Houston.
    The attention from the 60 Minutes show led ConocoPhillips 
to announce within a month that they would not renew any 
current contracts in Iran by their foreign subsidiaries and 
cease any new business there.
    As pressure mounted on Halliburton, we filed resolutions in 
December of 2004 with two additional companies, Cooper Cameron 
and Aon, to likewise cease their back-door dealings with Iran.
    At the same time we applied pressure to another U.S. based 
company, Foster Wheeler, that's incorporated in Bermuda and 
therefore not subject to U.S. sanctions.
    I'm pleased to say that only 3 months later in February of 
2005, our campaign began to reap greater rewards as GE 
announced that they would let all current contracts in Iran by 
their foreign subsidiaries lapse and cease any new business. 
The next month, Cooper Cameron, affirmed to my office that its 
subsidiary would divest of any interest in its Iranian joint 
venture.
    Within weeks, Halliburton likewise committed with us, not 
to pursue new business in Iran after current contracts by their 
subsidiary ended. In December of that year, Foster Wheeler also 
made a similar commitment and in January of 2006, the last firm 
in our campaign, Aon, announced it would cease its back-door 
operations in Iran.
    Halliburton originally indicated that they'd be completely 
out of Iran by the end of 2007. I saw a few weeks ago that they 
announced that they are out for good.
    Ultimately we have to close the loophole in Federal law 
that allows U.S. companies to act through foreign subsidiaries.
    In past sessions of Congress, I've been proud to support 
language offered by Senator Lautenberg to do just that. The 
Lautenberg language, I believe is now contained, in Oregon 
Senator Gordon Smith's Iran Counter Proliferation Act of 2007. 
I support that legislation also and have just found out that 
the Senator has reintroduced it.
    Senator Lautenberg introduced legislation last week, bill 
S. 1234, which would achieve the similar purpose and I'm very 
supportive of that piece of legislation also.
    While the companies we identified as doing back-door 
business with state sponsors of terror have all signed letters 
of agreement with our offices to end that practice, other 
companies could choose to engage in such dealings tomorrow, or 
the next day.
    Only the passage of tough legislation can ensure that no 
new firms can take such measures. In the meantime we've begun 
the process in my office of reviewing how we may be able to 
influence firms with no ties to the United States and are not 
subject to SEC shareholder proposal rules and we're meeting 
with our trustees now to try and work on that.
    After the events of last summer, in which Israeli cities 
and towns were targeted by Hezbollah militia with missiles that 
many believe were supplied by Iran and Syria, our efforts to 
curtail the ability of these nations and others to engage in 
acts of terror are more important than ever before.
    And at a time when Iran has stated its intention to develop 
a nuclear program, we can't ignore the risks proposed by that 
regime, whether we're talking about the development of nuclear 
weapons in Iran or the export of weapons, technology and 
terrorism abroad.
    For the safety and security of the United States and other 
peace-seeking nations around the world, institutional investors 
have to continue to insist that the firms they invest in not 
attempt to wiggle out of sanctions against state sponsors of 
terror by acting through subsidiaries not beholden to American 
law.
    And again, Mr. Chairman, I'd like to thank you and the 
members of this subcommittee and the other members of the 
Senate for convening this panel on this critically important 
topic and for giving me the opportunity to present testimony 
today. Thank you.
    [The prepared statement of Mr. Thompson follows:]

 Prepared Statement of William C. Thompson, Jr., Comptroller, City of 
                                New York
    Good afternoon, Chairman Dorgan, and honorable Members of the 
Subcommittee on Interstate Commerce, Trade and Tourism.
    I appear before you today to express my deep concern over the 
ability of American firms to circumvent the intent of sanctions law 
with respect to nations deemed to be sponsors of terror by our State 
Department.
    As Comptroller for the City of New York, I am the Chief Investment 
Advisor to the City's five retirement systems, managing over $100 
billion in pension monies for the City.
    Our responsibility to protect retiree assets requires a constant 
effort to pursue the highest standards of corporate responsibility at 
companies in which we invest.
    We have argued that when companies fail to consider the possible 
reputational or financial damage resulting from their operations--
whether directly (through their hiring policies, for example) or 
indirectly (through policies of the government with which they 
contract)--they put their shareholders' long-term investments at risk.
    As Comptroller, I have pressured corporations we invest in that do 
business with state sponsors of terrorism to change their policies. . . 
. New York City pension funds have taken on a number of U.S. corporate 
giants who were doing business with rogue nations such as Iran and 
Syria.
    Americans have been hearing for years that there's a connection 
between money and terrorism, but most didn't realize that their own 
investments, including their retirement nest eggs, could be financing 
regimes that condone and even encourage widespread violence and 
bloodshed.
    It certainly came as a shock to New York City's police and 
firefighters, who suffered combined losses of 366 men and women on 
September 11, 2001.
    Our Police and Fire Department Pension Funds owned some 400,000 
shares in Halliburton Co., valued at roughly $10 million. Our other 
funds had an additional $20 million invested in Halliburton.
    And Halliburton, as is now well known, was doing substantial 
business with Iran, a nation that had been identified by the U.S. State 
Department as a state sponsor of terrorism.
    Halliburton was not alone. Because of a loophole in Federal law, 
other Fortune 500 companies, like General Electric and ConocoPhillips, 
were doing the same.
    How did this happen? Our government forbids American companies from 
doing business with or in countries it identifies as terror sponsors.
    However, that ban does not apply to any foreign or offshore 
subsidiary, so long as non-Americans are nominally in control. This 
loophole was exploited by these companies.
    In February 2000, Halliburton opened an office in Tehran under the 
name of Halliburton Products and Services, Ltd., its Cayman Islands-
based subsidiary.
    The alleged headquarters for Halliburton Products and Services Ltd. 
is in Abu Dhabi in the Persian Gulf, where it shares office space, fax 
and phone numbers with its U.S. parent.
    Given this evidence, the notion that Halliburton's subsidiary is in 
any way independent of its parent is laughable.
    Halliburton owed an explanation to thousands of current and retired 
New York City police and firefighters, along with the rest of the 
members of the New York City pension system.
    On their behalf, my office submitted a shareholder proposal to 
Halliburton in November 2002 to review the potential financial and 
reputational risks of its operations in Iran. Similar resolutions were 
filed at that time with General Electric and ConocoPhillips.
    When Halliburton agreed to such a review, my office withdrew the 
proposal. Halliburton subsequently produced a report that, rather than 
addressing the broader risks inherent to doing business with rogue 
states, offered a narrow, legalistic explanation of how its operations 
fall within the bounds of the law.
    Halliburton was clearly unwilling to address the broader 
implications of its activities in Iran for both its shareholders and 
the country.
    In January 2004, the television news program 60 Minutes aired a 
segment on Halliburton that mentioned the efforts of my office and 
raised the public awareness of this issue dramatically.
    The show uncovered new information about Halliburton's subsidiary. 
. . . For instance, the Cayman Islands address is just a mailbox in a 
local bank--and barely that. When mail arrives there, it is rerouted to 
Halliburton headquarters in Houston.
    The attention from the 60 Minutes show led ConocoPhillips to 
announce within a month that they would not renew any current contracts 
in Iran by their foreign subsidiaries and cease any new business there.
    As pressure mounted on Halliburton, my office filed resolutions in 
December 2004 with two additional companies--Cooper Cameron (now 
Cameron International) and Aon--to likewise cease their back-door 
dealings with Iran.
    At the same time, we applied pressure to another U.S.-based 
company, Foster Wheeler, that is incorporated in Bermuda and therefore 
not subject to U.S. sanctions.
    I am pleased to say that only 3 months later, in February 2005, our 
campaign began to reap greater rewards as GE announced that they would 
let all current contracts in Iran by their foreign subsidiaries lapse 
and cease any new business.
    The next month Cooper Cameron affirmed to my office that its 
subsidiary would divest of its interest in an Iranian joint venture. 
Within weeks, Halliburton likewise committed with us not to pursue new 
business in Iran after current contracts by their subsidiary ended.
    In December of that year, Foster Wheeler made a similar commitment, 
and in January of 2006 the last firm in our campaign, Aon, announced 
that it would cease its back-door operations in Iran.
    Halliburton originally indicated to my office that it would be 
completely out of Iran by the end of 2007. A few weeks ago they 
announced that they are now out for good.
    Ultimately, we must close the loophole in Federal law that allows 
U.S. companies to act through foreign subsidiaries. . . . In past 
sessions of Congress, I have supported language offered by Senator 
Frank Lautenberg to do just that.
    The Lautenberg language is now contained in Oregon Senator Gordon 
Smith's ``Iran Counter-Proliferation Act of 2007.'' I support that 
legislation and encourage you all to work for its passage.
    While the companies we identified as doing back-door business with 
state sponsors of terror have all signed letters of agreement with our 
office to end that practice, other companies could choose to engage in 
such dealings tomorrow or the next day.
    Only the passage of the Smith bill will ensure that no new firms 
will take such measures.
    In the meantime, my office has begun the process of reviewing how 
we may be able to influence firms with no ties to the United States and 
are not subject to the SEC shareholder proposal rule.
    I am in the process of initiating a conversation with the Trustees 
of the five New York City pension funds on this matter.
    After the events of the summer, in which Israeli cities and towns 
were targeted by the Hezbollah militia with missiles that many believe 
were supplied by Iran and Syria, our efforts to curtail the ability of 
these nations and others to engage in acts of terror are more important 
than ever before.
    And at a time when Iran has stated its intention to develop a 
nuclear program, we cannot ignore the risks posed by the Ahmadinejad 
regime--whether we are talking about the development of nuclear weapons 
in Iran or the export of weapons, technology and terrorism abroad.
    For the safety and security of the United States and other peace-
seeking nations around the world, institutional investors must continue 
to insist that the firms they invest in not attempt to wriggle out of 
sanctions against state sponsors of terror by acting through 
subsidiaries not beholden to American law.
    I want to thank Chairman Dorgan and all the Members of the 
Subcommittee on Interstate Commerce, Trade, and Tourism for convening a 
panel on this critically important topic and for giving me the 
opportunity to present testimony here today.
    It has been my very great pleasure to share with you the 
experiences of my office and I look forward to our continued work 
together on this very important issue.
    Thank you very much.

    Senator Dorgan. Mr. Thompson, thank you very much. We 
appreciate your being here and your testimony.
    Next, we will hear from Sherry Williams, who is the Vice 
President and the Corporate Secretary of Halliburton Company. I 
believe that you are coming to us from the Houston office, is 
that correct?
    Ms. Williams. Yes, I am.
    Senator Dorgan. Welcome and thank you for traveling to 
Washington to come to this hearing. You may proceed.

    STATEMENT OF SHERRY WILLIAMS, VICE PRESIDENT/CORPORATE 
                 SECRETARY, HALLIBURTON COMPANY

    Ms. Williams. Chairman Dorgan and Members of the 
Subcommittee, thank you for the opportunity to testify here 
today about the work done by a subsidiary of our company in 
Iran.
    As you've heard, my name is Sherry Williams and I'm the 
Vice President and Corporate Secretary of Halliburton Company. 
Halliburton was founded in 1919 by Earl P. Halliburton and he 
grew with the industry to build Halliburton into what it is 
today, the second largest oil field services company in 
existence.
    Over the years, Halliburton has remained focused on the 
Western Hemisphere. Today 70 percent of our business is 
conducted in Canada, the United States and South America. Many 
of these fields, however, are maturing and reaching a state 
where they are no longer economically viable. For these reasons 
the company has grown its business in the Eastern Hemisphere as 
well.
    Work by Halliburton in the Middle East region is not a new 
phenomenon. The company has maintained international offices 
for more than 80 years. Over time, Halliburton broadened its 
business opportunities across the region through foreign 
offices and currently has over 300 subsidiaries.
    One such independent foreign subsidiary of the company, 
Halliburton Products and Services Limited or HPSL, has done 
work in Iran. HPSL formerly known as Otis International Limited 
was incorporated in the Cayman Islands in 1974 and was 
registered to do business in Dubai in 1978.
    Dubai has been HPSL's principal place of doing business 
since well before the imposition of Iranian sanctions in May 
1995. At the time of the implementation of Iranian sanctions 
and the executive orders in 1995, three highly qualified, major 
American law firms provided advice to Halliburton on the issue 
of whether independent foreign subsidiaries were impacted by 
the unilateral economic sanctions.
    In May 1995, OFAC hosted a meeting of many attorneys and 
some company representatives concerning advice about the 
sanctions law. The advice that came out of that meeting was 
that independent foreign subsidiaries, such as HPSL, were not 
within the bar of the sanctions to the extent that they were 
independent of the U.S. parents in undertaking and execution of 
their business.
    Nevertheless, Halliburton announced in January 2005 that it 
would not take any new contracts in Iran. Thus, HPSL has not 
entered into any new contracts or projects with Iran since that 
date. Existing contracts needed to be completed or the company 
would have been sued for breach of contract.
    The last of the contracts that existed at that time was 
completed this year. During HPSL's activities in Iran, 
decisions to undertake business were made by HPSL Managers and 
Boards of Directors. Halliburton Company did not direct or 
facilitate HPSL's activity. None of the HPSL Directors, 
Managers, or employees is a U.S. citizen or a permanent 
resident alien.
    The decision-making authority for HPSL on a day-to-day 
basis, thus resided with local foreign management. Although 
Halliburton has grown its business opportunities in the Eastern 
Hemisphere, it is clear that the company has more to do, more 
work to do, to remain competitive.
    Our biggest competitor, Schlumberger, a French company, is 
extremely active in the region and in other places where we are 
prohibited from operating due to sanctions.
    Where Halliburton is barred from performing in a country or 
leaves that country due to economic sanctions, our 
international competitors pick up the work that we leave 
behind.
    Schlumberger has recently stated that it intends to 
continue work in U.S.-sanctioned countries and Schlumberger is 
also listed as a New York Stock Exchange Company.
    Let me conclude by noting that Halliburton has been a proud 
American company for nearly 90 years and intends to remain just 
that. We recently announced that our CEO, David Lesar, has 
established an office in Dubai. The press coverage of that fact 
was incorrect, leaving many with the mistaken impression that 
Halliburton is moving its headquarters out of the United 
States.
    The company will remain headquartered in Houston. It will 
remain a Delaware incorporated corporation subject to all laws 
of the United States and the Securities and Exchange Commission 
and Halliburton will remain a Houston company that is proud to 
be one of Houston's best places to work according to the 
Houston Business Journal. Thank you all very much.
    [The prepared statement of Ms. Williams follows:]

    Prepared Statement of Sherry Williams, Vice President/Corporate 
                     Secretary, Halliburton Company
    Chairman Dorgan and Members of the Subcommittee on Interstate 
Commerce, Trade, and Tourism, I want to thank you for the opportunity 
to testify here today about the work done by a subsidiary of our 
company in Iran. Your staff has indicated that you are concerned about 
the activities of subsidiaries in certain parts of the world and 
whether those efforts should be limited by U.S. laws.
    My name is Sherry Williams, and I am Vice President and Corporate 
Secretary of Halliburton Company. Halliburton was founded in 1919 by 
Earl P. Halliburton who lived the American dream. He worked the oil 
fields as a young man until he discovered a revolutionary way to cement 
oil wells, and he grew with the industry to build Halliburton into what 
it is today: the second largest oil field services company in 
existence.
    Over the years, Halliburton has remained focused on the Western 
Hemisphere. Today, 70 percent of our business is conducted in Canada, 
the United States and South America. Many of these fields, however, are 
mature and reaching a state where they are no longer economically 
viable. According to some recent statistics, two-thirds of the known 
petroleum and gas reserves in the world are in the Eastern Hemisphere. 
For these reasons, the Company has grown its business in the Eastern 
Hemisphere as well.
    Work by Halliburton in the Middle East region is not a new 
phenomenon. The company has maintained international offices for more 
than 80 years. More specifically, Halliburton has had offices in the 
Middle East for more than 60 years, beginning in 1946 with a project 
for Arabian-American Oil. The following year, 1947, marked the 
Company's first business in Kuwait.
    Over time, Halliburton broadened its business opportunities across 
the region through foreign offices and currently over 300 subsidiaries. 
One such independent foreign subsidiary of the company, Halliburton 
Products and Services Limited or HPSL, has done work in Iran. HPSL, 
formerly known as Otis International, Ltd. (OIL), was incorporated in 
the Cayman Islands in 1974 and was registered to do business in Dubai 
in 1978. Dubai has been HPSL's principal place of doing business since 
well prior to the imposition of the Iranian Sanctions of May 1995.
    We believe it to be well established that owned or controlled 
foreign subsidiaries of U.S. companies are not subject to the U.S. 
trade sanctions against Iran. Prior to 1986, The Office of Foreign 
Assets Control's (OFAC) sanctions programs covered U.S. companies, as 
well as foreign companies that were owned or controlled by U.S. 
companies. Today, only the Cuban sanctions program still has such broad 
coverage. For programs instituted since 1986, such as the Iranian 
Sanctions, OFAC's sanctions programs have clearly excluded foreign 
subsidiaries of U.S. companies from their scope, but they have 
continued to prohibit their U.S. parent companies from facilitating or 
otherwise engaging in activities of those subsidiaries involving 
sanctioned countries. In other words, with specific reference to the 
Iranian Sanctions, mere ownership or control by a U.S. company is not 
enough to destroy a foreign subsidiary's independence, and OFAC has 
never required U.S. companies to divest their holdings in foreign 
subsidiaries merely because they do business with sanctioned countries. 
Instead, the rules look to actual or required involvement by a U.S. 
parent in a foreign subsidiary's operations to determine whether that 
foreign subsidiary has the requisite authority and ability to operate 
independently. The sanctioning of foreign subsidiaries was the topic of 
at least one piece of legislation in 1995, S. 277. While there was 
discussion of this legislation, it was never enacted.
    At the time of implementation of Iranian sanctions and executive 
orders in 1995, three highly qualified major law firms provided advice 
to Halliburton and other companies now included within Halliburton to 
consider the issues of whether independent foreign subsidiaries were 
impacted by the unilateral economic sanctions. In May 1995, OFAC hosted 
a meeting of many attorneys, and some company representatives. The 
advice that came out of that meeting was that independent foreign 
subsidiaries, such as HPSL, were not within the bar of the sanctions to 
the extent that they were independent of U.S. parents in the 
undertaking and the execution of such business. The law firms also 
determined that the sanctions did not apply to wholly-owned 
subsidiaries, such as HPSL, that are of foreign incorporation and 
subject to decision-making by non-U.S. citizens.
    Nevertheless, Halliburton Energy Services announced in January 
2005, that it would take no new contracts in Iran. Thus, HPSL has not 
entered into any new contracts for projects in Iran since that date. 
Existing contracts needed to be completed or the company would have 
been successfully sued for breach of contract. The last of the 
contracts that existed at the time of the announcement were completed 
this year.
    During HPSL's activity in Iran, decisions to undertake business 
were made by the managers and the Board of Directors. Halliburton did 
not direct or facilitate HPSL's activity. None of the HPSL directors, 
managers, or employees are U.S. citizens or permanent resident aliens. 
The decision making authority for HPSL on a day-to-day basis thus has 
resided entirely in local management.
    Before it ceased doing business in Iran, HPSL had about 133 
employees. As of 2004, HPSL's employees included 2 Algerians, 1 
Bangladeshi, 11 U.K. citizens, 1 Canadian, 10 Egyptians, 16 Filipinos, 
40 Indians, 13 Indonesians, 33 Iranians, 2 Pakistanis, 3 Palestinians, 
1 Portuguese, and 1 Sudanese. There were 41 employees who lived and 
worked in Iran full-time. Thirty-three of those local employees were 
Iranian and 8 were third-country nationals.
    Although Halliburton has grown its business opportunities in the 
Eastern Hemisphere, it is clear that the company has more work to do in 
order to remain competitive. On March 14, 2007, the Wall Street Journal 
published an article concerning our CEO's move to Dubai. The article, 
entitled ``Halliburton Plays Catch Up'', made a strong case that our 
competition is more deeply entrenched in the Eastern Hemisphere than we 
are, and that the Company will need to ``hustle'' to meet the 
competition. Two of our biggest competitors, Schlumberger and 
Weatherford, are both extremely active in that region and in other 
places where we are prohibited from operating due to sanctions. When 
Halliburton is barred from performing in a country or leaves that 
country due to unilateral economic sanctions, it does not mean that the 
available work in those countries ceases. Rather, the work continues, 
but our international competitors pick up the work we leave. 
Schlumberger and Weatherford have stated they intend to continue to 
work in U.S.-sanctioned countries. Both companies are listed on the New 
York Stock Exchange.
    It should be of some concern that non-U.S. companies are gaining 
control of energy assets in countries where U.S. industry cannot work, 
making it far more difficult for us to reach our national goal of 
energy security. It is also troubling that our competition does not 
always perform with as much respect for the environment as Halliburton 
does. We use literally hundreds of new technologies to find petroleum 
assets, image them, extract them, and transport them in an 
environmentally safe, inexpensive manner.
    Let me conclude my remarks by noting that Halliburton, which 
employs 45,000 people in nearly 70 countries around the world, has been 
a proud American company for nearly 90 years and intends to remain just 
that. The Company is incorporated in Delaware and its principal 
executive office is in Houston, Texas. We recently announced that our 
CEO, Dave Lesar, has established an office in Dubai. The press coverage 
of that fact was incorrect, leaving many with the mistaken impression 
that Halliburton is moving its corporate headquarters out of the United 
States. That is simply not the case. The company ``Halliburton'' 
remains headquartered in Houston, where it is proud to be one of 
Houston's ``Best Places to Work'' according to the Houston Business 
Journal.

    Senator Dorgan. Ms. Williams, thank you very much. Finally, 
we will hear from Mr. Victor Comras, retired from the U.S. 
State Department in 2001, now a practicing attorney and 
consultant on matters relating to sanctions and embargos. Mr. 
Comras, you may proceed.

   STATEMENT OF VICTOR D. COMRAS, ESQ., ATTORNEY/CONSULTANT, 
                 SPECIAL COUNSEL, EREN LAW FIRM

    Mr. Comras. Thank you, Mr. Chairman. Thank you for inviting 
me here to give you my views on the application of U.S. 
sanctions against Iran.
    I've watched closely as the United States has sought to 
engage other countries to join with us in applying increased 
pressure on Iran to comply with international counter-
proliferation and counter-terrorism norms. This has been a very 
slow and painful process.
    One can understand that there's a certain reluctance to put 
sanctions on Iran because of the dislocation that that might 
cause to the world oil market which could drive the price of 
oil well above current levels, but one must also weigh the 
enormous strategic and security risks posed by a nuclear armed 
Iran that supports international terrorism.
    Every day the international community stands down, only 
serves to strengthen Iran's resolve to forge ahead making 
further confrontation increasingly inevitable and at an ever 
increasing cost.
    Since 1995, we have employed our own sanction laws and 
regulations to seek to impair Iran's ability to acquire weapons 
of mass destruction and to reduce the resources available to 
them to fund terrorism activities. These sanctions have slowed 
them down, but we have not stopped them. For that we need 
broader international sanctions to bring home to Iran's leaders 
that such conduct will not be tolerated.
    The recent sanctions measures adopted by the Security 
Council fall well short of these objectives. They've made 
little impact, if any, on Iran's leaders and they do little 
more than freeze the overseas assets of a few dozen Iranian 
individuals and entities associated with their uranium 
enrichment program.
    They do almost nothing to limit Iran's trade or access to 
foreign investments, loans or financial and development 
assistance. They've left on the table billions of dollars of 
trade deals and investments which undercut the international 
communities' stated objective of getting to Iran, getting Iran 
to change course.
    They demonstrate that key countries can continue to lack 
the political will necessary to face up to Iran's challenge and 
this signal has been received loud and clear by the current 
Iranian regime.
    That brings us back to what we can and should do to protect 
our national security and foreign policy interests. I think it 
is very important that the Congress and the Administration are 
now reviewing our domestic sanctions against Iran to see how 
they might best be used and leveraged to apply pressure on Iran 
and those doing business with Iran.
    Let's start with our own business activities. Our own trade 
with Iran has grown considerably since President Clinton 
imposed trade sanctions in 1995, from less than $500,000 in 
two-way trade in 1996, to over $242 million in 2006. In 
addition, foreign subsidiaries of some 35 different U.S. 
companies continue to remain active in Iran.
    This includes such companies as Halliburton, Baker Hughes, 
Smith International and General Electric. They get around the 
sanctions because the regulatory guidelines here are quite 
murky. The regulatory standards that apply to foreign 
subsidiaries have differed from one sanctions program to 
another.
    The Cuban-North Korean embargos, for example, do apply to 
foreign subsidiaries of U.S. companies. These sanctions were 
imposed under the Trading With the Enemy Act but more recent 
sanctions including the sanctions on Iran were imposed by 
Presidential executive orders issued pursuant to IEEPA.
    These sanctions reach out only to those foreign 
subsidiaries which are deemed owned and controlled by a U.S. 
person. So the issue has become whether or not there's a real 
and effective management separation between the foreign 
subsidiary and the U.S. parent.
    Halliburton's position is that its foreign subsidiary 
working in Iran, Halliburton Products and Services Ltd., is 
managed and run completely independent from the U.S. 
Halliburton parent.
    Nevertheless a public outcry against this sort of activity 
has led Halliburton and other companies, including GE, to 
announce that they would no longer solicit new business in 
Iran. This is an interesting declaration on their part given 
the fact that they have long claimed to exercise absolutely no 
corporate control over these subsidiaries.
    Iran's banking sector is notorious for its failures to 
comply with international anti-money laundering, fraudulent and 
corrupt practices, and counter-terrorism financing norms. Yet, 
Iranian banks continue to have broad access to, and to network 
through, the international finance system.
    The U.S. Treasury Department has recently begun to 
scrutinize these ties and they have put the international 
banking community on notice that keeping and servicing 
customers that the United States has identified as terrorists 
or proliferators could have serious consequences for their 
ability to do business in the United States.
    There is also a growing disinvestment movement in the 
United States which is targeting international firms doing 
business with countries like Iran that support terrorism and 
proliferation. This is beginning to have an effect.
    Several companies and international banks have recently 
indicated their intentions to withdraw from Iran. Others have 
cutoff Iranian business in dollars. We need to follow up on 
these kinds of measures.
    Overall, U.S. business with Iran remains relatively small 
compared to the booming $26 billion two-way trade that has 
developed between Iran and Europe over the intervening years. 
Iran's fledgling commercial classes become very reliant on this 
trade and it is this very commercial class that provides the 
greatest number of employment opportunities in Tehran and 
Iran's other urban centers.
    Actions that threaten to constrict this trade can have a 
considerable impact on the Iranian government and on the 
economy and this, I think, is essential for us to pursue. This 
is why it's so important that we continue to press our European 
friends in other countries trading with Iran to take the 
nuclear threat seriously and to use their own trading leverage 
with Iran to bring it to a halt.
    The Iranian sanctions target foreign companies that make 
substantial new investments in the Iran's oil and gas sector. 
That sector accounts for 80 percent of Iran's foreign earnings 
and over 50 percent of the government's operating budget. 
Despite its provisions, no sanctions have been applied to any 
of the huge investments now being made to support expansion of 
Iran's energy sector.
    Many argue that imposing sanctions on companies in third 
countries would be counter-productive to U.S. business 
interests and would harm our ability to convince these 
countries to cooperate further with us vis-a-vis Iran.
    But there's good reason to believe, Mr. Chairman that today 
in the current atmosphere of growing concern with Iran's 
nuclear program, the threat of such action might just lead 
companies in Europe, Japan and elsewhere and their governments 
to act more intently in pressing Iran to change course. Thank 
you very much, Mr. Chairman.
    [The prepared statement of Mr. Comras follows:]

  Prepared Statement of Victor D. Comras, Esq., Attorney/Consultant, 
                     Special Counsel, Eren Law Firm
    Thank you, Mr. Chairman for inviting me to share my views on the 
application of U.S. sanctions measures against Iran. I have watched 
closely as the United States has sought to engage other countries to 
join with us in applying increased pressure on Iran to comply with 
international counter-proliferation and counter-terrorism norms. This 
has been a very slow and painful process, and it is regrettable that so 
little has been accomplished. The international community continues to 
remain reluctant and seriously divided when it comes to taking 
meaningful steps to convince Iran to change course.
    One can understand a certain amount of reluctance and caution on 
the part of many countries when it comes to imposing sanctions on Iran, 
given Iran's importance as a supplier to the world oil market. There 
are legitimate concerns that sanctions might cause dislocation in the 
world market which could drive the price of oil well above current high 
levels. But, one must also weigh the enormous strategic and security 
risks posed by a nuclear-armed Iran that supports international 
terrorism. Every day the international community stands down only 
serves to strengthen Iran's resolve to forge ahead making further 
confrontation increasingly inevitable, and at an ever increasing cost.
    This situation has placed a considerable burden on the United 
States, which many years ago chose to impose unilateral sanctions on 
Iran to demonstrate our approbation and concern with Iran's 
international misconduct. And it has imposed a considerable burden on 
U.S. companies. These U.S. measures sought to impair Iran's potential 
to develop chemical, biological, and nuclear weapons, and to reduce 
resources available to the Iranian government to fund terrorism. These 
objectives are still far from being realized, for we have, so far, 
failed to convince others in the international community to follow this 
lead, and to also adopt measures that will bring home to Iran's leaders 
that their conduct will not be tolerated.
    I have long advocated using well-considered targeted, economic and 
political sanctions to dissuade Iran from pursuing its irresponsible 
nuclear programs. By well-considered I mean sanctions tailored to 
achieve specific objectives by having a significant impact on those 
individuals or entities, and/or specific segments of the targeted 
country's economy, that are likely to influence the course of conduct 
in question. I believe that the credible threat or use of such 
sanctions offers us the best chance of convincing Iran to change course 
without having to engage in costly and dangerous military action. I do 
not believe that the current United Nations sanctions program can 
achieve these objectives.
    The recent sanctions measures adopted by the Security Council fall 
well short of the measures long advocated by the United States. They 
have had little, if any, impact on Iran's leaders and do little more 
than freeze the overseas assets of a few dozen Iranian individuals and 
entities associated with Iran's uranium enrichment program. The most 
important measure adopted by the United Nations, so far, has been to 
ban transactions with Iran's fifth largest bank, Bank Sepah, and to cut 
that bank off from the international financial network. Bank Sepah has 
been closely involved in funding Iran's missile development program. 
This is the kind of action that needs to be adopted and replicated on a 
much broader scale. Beyond that, the U.N. resolutions merely call upon 
all countries ``to exercise vigilance and restraint'' when it comes to 
supplying sensitive nuclear, military and dual-use equipment to Iran, 
or allowing key Iranian military and nuclear industry officials to 
visit and travel within their countries. Each country remains pretty 
much free to decide for itself which sensitive military equipment and 
technology they should no longer provide. These are not obligatory 
measures.
    The U.N. resolutions have purposely stayed away from limiting 
commercial ties with Iran or restricting investments, loans or 
financial and developmental assistance. They leave Russia free to 
pursue an ambitious multibillion dollar Iran trade promotion program 
and to support Iran's Russian-built nuclear reactor at Bushehr. They 
also leave on the table a substantial number of signed or still to be 
negotiated oil and gas development deals, including a potential $10 
billion investment by Royal Dutch Shell and the Spanish oil company 
Repsol YFP to develop Iran's South Pars field; the construction of a 
multi-billion LPG export plant by Total; and a $20 billion investment 
by SKS Ventures of Malaysia to produce national gas in Iran's Golshan 
and Ferdow fields. Chinese companies have also been active in lining up 
lucrative energy contracts with Iran. China's state-owned oil trading 
company, Zhuhai Zhenrong Corporation, has signed a 25-year deal to 
import some 110 million tons of liquefied natural gas (LNG) from Iran. 
And China's state-owned oil company, Sinopec, signed an agreement in 
October 2004 that allows China to import a further 250 million tons of 
LNG from Iran's Yadavaran oilfield over a 25-year period. This huge 
deal also envisages substantial Chinese investment in Iranian energy 
exploration, drilling and production as well as in petrochemical and 
natural gas infrastructure. Total Chinese investment targeted toward 
Iran's energy sector could exceed some $100 billion over 25 years.
    These are precisely the types of investments and business activity 
that the Iran Sanctions Act, and the preceding Iran-Libya Sanctions 
Act, sought to discourage so long as Iran continues to violate key 
international commitments that threaten international peace and 
security. These major investment projects undermine U.S. objectives to 
get Iran to change course, and they eliminate any chance for the 
current U.N. sanctions to influence Iran's leaders. They demonstrate 
that key countries continue to lack the political will necessary to 
face up to Iran's challenge. And this signal has been received loud and 
clear by the current Iranian regime.
    Iran will only change course if and when its leadership is 
convinced that the international community will, in fact, take the 
steps necessary to seriously impact Iran's leaders and Iran's very 
vulnerable economy. Such an impact on Iran's economy, Iran's leaders 
know, would, in turn, seriously threaten the stability and durability 
of their regime.
    That brings us back to what we can and should do to protect our own 
national security and foreign policy interests. I think it is important 
that the Congress and the Administration are now reviewing our domestic 
sanctions against Iran to see how they might best be used and leveraged 
to apply pressure on Iran.
    I am pleased that this process has already led to changes in policy 
and has already produced some results.
    Treasury Under Secretary Stuart Levey recently informed the Senate 
Banking Committee of the Treasury Department's new high level outreach 
program directed at the international private sector. Senior Treasury 
Department officials, he said, have met with more than 40 banks 
worldwide to discuss the threat Iran poses to the international 
financial system. The message was clear. By keeping and servicing 
customers that the United States has identified as terrorists or 
proliferators, the banks risk facing American public scrutiny and 
regulatory action that could have a serious impact on their ability to 
do business with the United States. An increasing number of 
international banks, financial institutions, and corporations are 
taking this message seriously and are now beginning to limit their 
exposure re Iran. Several international banks have already indicated 
their intentions to withdraw from Iran completely. Others have cutoff 
Iranian business in dollars. We must follow up on these kinds of 
measures.
    There are a number of additional steps we can take to maximize the 
leverage capabilities of the various sanctions measures that we have 
adopted.
    Following President Clinton's imposition of trade sanctions against 
Iran in 1995, annual both-direction trade with Iran fell to less than 
$500,000. But, by 2006, this combined trade had again grown to over 
$242 million ($85 million in exports to Iran and $157 million in 
imports, principally Iranian nuts, dried fruits, carpets, and caviar). 
This is still quite small compared to the booming $26 billion two-way 
trade that has developed between Iran and Europe over these intervening 
years. Iran's fledgling commercial class has become very reliant on 
this growing trade. And it is this very commercial class that provides 
the greatest number of employment opportunities in Tehran and Iran's 
other urban centers. Sanctions that threaten to constrict this trade 
could have a considerable impact on this commercial class, placing 
further distress on Iran's vulnerable economy and high urban 
unemployment. And this in turn will have an impact on Iran's leaders.
    Ironically, Iran, which is such a major exporter of oil and gas, 
is, itself a major importer of gasoline and other finished petroleum 
products. With a daily consumption of more than 18 million gallons of 
gasoline Iran must now import some 180 to 200 million gallons of 
gasoline per month. Rising petroleum prices have already been the cause 
of civil unrest, and gasoline shortages could have a significant impact 
on local business activity and put increased pressure on Iranian 
leaders to alter course. Royal Dutch/Shell is now serving as an 
advisory partner with Iran in an assessment project to upgrade Iran's 
refining capacities. This is the kind of activity that should be 
halted.
    The Iran Sanctions Act targets Iran's energy, oil and gas sector, 
and calls for U.S. sanctions to be imposed on foreign companies making 
investments of more than $20 million in 1 year in Iran's energy sector. 
The President is required to impose at least two out of a menu of six 
sanctions against overseas companies violating these guidelines. These 
secondary sanctions can be waived by the President, however, if the 
President certifies that waiving the sanctions is important to the U.S. 
national interest. Despite continued, and broad investment in Iran's 
energy sector, these sanctions have never been invoked.
    Many argue that imposing sanctions on companies in third countries 
would be counter-productive to U.S. business interests, and would harm 
our ability to convince these countries to cooperate further with us 
vis-a-vis Iran. But, there is also good reason to believe that, in the 
current atmosphere of growing concern with Iran's nuclear program, the 
threat of such action might lead Europe, and European companies doing 
business in both Iran and the United States, to act more intently in 
pressing Iran to change.
    We have already used third-party sanctions against companies in 
third countries that have violated the Iran Nonproliferation Act. This 
has included companies in Austria, Belarus, China, India, Macedonia, 
North Korea, Russia, Spain, Taiwan, UAE, and Ukraine. These measures 
may well have helped convince the international community to move 
forward on the U.N. sanctions that do target the sale of sensitive 
equipment and technology to Iran's military and uranium enrichment 
programs.
    U.S. sanctions regulations have prohibited U.S. persons from doing 
business directly or indirectly with Iran since May 1995. This ban also 
covers brokering transactions on behalf of Iran, or engaging in any 
transaction with a foreign entity where there is reason to know it is 
intended for Iran. But what about the dealings of foreign subsidiaries 
of U.S. firms with Iran? Here the guidelines are murky. The regulatory 
standards applied to foreign subsidiaries have varied over the years 
and under different sanctions and export control programs. The Cuba and 
North Korean embargos, for example, do extend to foreign subsidiaries 
of U.S. companies. These sanctions were implemented under the Trading 
with the Enemy Act (TWEA) which provides broad enough authority to 
cover foreign subsidiaries. But, more recently imposed sanctions, 
including the current Iran sanctions, are based on Presidential 
Executive Orders issued pursuant to the International Economic 
Emergency Powers Act (IEEPA). The authorities under that act are more 
circumspect. This is because IEEPA sanctions apply only to ``United 
States persons,'' and the Act defines ``United States person'' as ``any 
United States citizen, permanent resident alien, entity organized under 
the laws of the United States (including foreign branches), or any 
person in the United States.'' In line with this definition, the 
prohibitions in Executive Order 12959 of May 6, 1995, issued by 
President Clinton pursuant to IEEPA reach only to foreign subsidiaries 
``owned and controlled'' by a U.S. person, or otherwise used by a U.S. 
person to ``evade, avoid, or violate'' any of the prohibitions set 
forth in the executive order. The issue here is whether or not there is 
a real and effective management separation between the U.S. parent and 
foreign subsidiary, and whether or not the foreign subsidiary is 
actually being used by the U.S. person to ``evade or avoid'' the 
prohibitions against its doing business with or in Iran. These are 
difficult factual issues to determine.
    On January 11, 2005, Iran announced publicly that it had just 
concluded a contract with the U.S. Company, Halliburton, and an Iranian 
company, Oriental Kish, to drill for gas in Phases 9 and 10 of South 
Pars. Under the deal, a Halliburton subsidiary registered in the Cayman 
Islands, but doing business out of Dubai, Halliburton Products and 
Services Limited (HPSL), was awarded a subcontract from the Iranian 
firm Oriental Kish to provide some $30 million to $35 million worth of 
engineering services per year through Oriental Kish. HPSL had also 
previously been engaged, since 1995 in several other offshore oil and 
gas drilling and related engineering projects in Iran. In addition to 
its Dubai headquarter, the company reportedly also maintained an 
operational office in Tehran.
     Halliburton's position is that the transactions involving HPSL do 
not violate U.S. sanctions since Halliburton does not exercise 
direction or control of HPSL's activities. They point out that 
Halliburton Product and Services has no American employees; that its 5-
person board of directors consists of four British citizens and a 
Canadian citizen, but no Americans; and that the ``day-to-day'' 
management and decision-making responsibility at HPSL resides with the 
Management Director (who is a British citizen) and other local 
management, all of whom reside in Dubai. Nevertheless, revelation of 
this Iran project led to a public outcry.
     In response, Halliburton subsequently announced that all 
Halliburton employees would be withdrawn from Iran and that it would 
end its pursuit of future business in Iran, apart from the ongoing 
Oriental Kish deal.
    Halliburton is not the only U.S. corporation with foreign 
subsidiaries working with and in Iran. Some of its main competitors in 
the oil field industry, including Baker Hughes, and Smith 
International, also have foreign operations there. General Electric's 
Canadian, Italian and French subsidiaries have also long been engaged 
in business deals with Iran, and there is a Swiss-owned Caterpillar 
dealership in the heart of Tehran. Some 35 foreign subsidiaries of 
different U.S. companies reportedly are now operating in Iran. Several, 
including GE have decided to follow Halliburton's example. They have 
announced they also will no longer seek new business deals with Iran. 
This is an interesting declaration given the fact that they have long 
claimed to exercise absolutely no corporate control over these 
subsidiaries.
    Iran's banking sector is notorious for its failures to comply with 
international anti-money laundering, fraudulent and corrupt practices, 
and counter-terrorism financing norms. Yet, Iranian banks continue to 
have broad access to, and to network through, the international 
financial and banking sectors. The U.S. Treasury Department recently 
began to scrutinize ties of foreign banks with branches in the United 
States with Iran. These actions are being taken ostensibly to ensure 
that U.S. branches are not used to facilitate exchanges or transfers 
for Iranian banks and other entities. The Treasury Department recently 
fined the Dutch bank ABN Amro some $80 million for failing to report 
the processing of financial transactions involving Iran's Bank Melli. 
And since January 2007 bars U.S. banks, including U.S. branches of 
foreign banks, from facilitating any dollar transactions for banks 
dealing with Iran's state-owned Bank Saderat or Bank Sepah.
    I believe additional Iranian banks should be added to the Treasury 
Department's designated list and that further actions should be taken 
to isolate these banks and to assure that all transactions stemming 
from, or destined to or through Iranian banks be subjected to close 
regulation and scrutiny. Such action would also bring home to Iran a 
significant cost for the irresponsible policies it is pursuing.
    As noted above, convincing foreign subsidiaries of U.S. companies 
to withdraw from Iran may provoke some reactions from their parent 
countries, especially in Canada and Europe, who remain very sensitive 
to what they consider U.S. attempts to reach extra-territorially into 
their bailiwick. But, our task now must really be to convince these 
countries to join with us in putting greater pressure on Iran by 
cutting back their business dealings with Iran.
    There are some positive signs that the EU leaders are finally 
coming to the realization that the EU's carrot-sweet negotiating 
approach toward Iran must be strengthened by the addition of sticks. EU 
Foreign Ministers agreed last week to move beyond the paltry Security 
Council measures and to impose a more extensive asset freeze, travel 
ban, and arms embargo on Iran. But, these measures still fall short of 
impacting Iran's vulnerable economy.
    We must continue to press our European friends and allies, and 
Japan to take even firmer measures. This should include getting their 
companies and financial institutions to refrain from entering into new 
deals or making further capital investment commitments in Iran until 
Iran complies with the U.N.'s non-proliferation resolutions. Beyond 
that, we must use our combined economic clout with Europe and Japan to 
retain pressure on Russian and China not to undercut these sanctions 
measures.
    Thank you, Mr. Chairman.

    Senator Dorgan. Mr. Comras, thank you very much for being 
here. In your testimony, Mr. Comras, you said that there are 
``some 35 foreign subsidiaries of different U.S. companies 
reportedly now operating in Iran.'' What's the source of that 
number?
    Mr. Comras. I take that number from public press reports, 
Mr. Chairman.
    Senator Dorgan. Mr. Thompson, how many companies do you 
think have foreign subsidiaries now operating in Iran, how many 
U.S. companies?
    Mr. Thompson. We're not exactly sure. I mean, what we have 
done was to take a look and see where substantial business was 
being done and that's where we targeted companies as opposed 
to, say a bank that had a small branch in Iran, we didn't want 
to necessarily overreact, but what we had tried to do was to 
see where the substantial business was being done.
    So, we're not exactly sure, at this point, how many 
companies are, you know, doing real business through 
subsidiaries of American companies.
    Senator Dorgan. Is the loophole on foreign subsidiaries a 
loophole that applies with Cuba, Mr. Comras?
    Mr. Comras. There is no similar loophole in the Cuba 
embargo. Foreign subsidiaries are covered. In many cases, OFAC 
has issued specific or general licenses to cover the activities 
of some of these overseas foreign subsidiaries, but they are 
covered by the sanctions themselves.
    Senator Dorgan. How about North Korea?
    Mr. Comras. Same with North Korea, Mr. Chairman.
    Senator Dorgan. Is it the case that companies that decide, 
particularly I'm talking about American companies now, but the 
companies that come from other countries with whom we are 
allied to try to bring Iran, for example, into a different 
circumstance with respect to nuclear production?
    Is it the case that nuclear weapons production, I should 
say, is it the case that doing business with Iran by any of 
these corporations, especially U.S. corporations, enhances and 
strengthens their economy? Mr. Thompson.
    Mr. Thompson. Absolutely. It goes without saying. As I 
said, whether it is American-based companies through their 
subsidiaries, whether it's foreign-based companies, these days 
that are doing direct business, all of these activities enhance 
their economy and undermine the efforts to sanction countries 
that support terrorism.
    Senator Dorgan. Does it then, based upon what President 
Bush has said and what we know from intelligence reports and 
the public dialogue, does it help terrorism?
    Mr. Thompson. Absolutely.
    Senator Dorgan. It helps fund terrorism?
    Mr. Thompson. Yes, it does.
    Senator Dorgan. So, in this case American corporate 
activity, as well as corporate activity by our allies that are 
investing in the country of Iran are, you believe, furthering 
the interest of terrorism?
    Mr. Thompson. Yes, Mr. Chairman, we do.
    Senator Dorgan. I believe, Mr. Comras, you perhaps 
described Royal Dutch/Shell, $10 billion. Who went through a 
list of those?
    Mr. Comras. Yes, in my written statement. Yes, Mr. 
Chairman, there are a number of large proposals on the table 
and investments on the table including Total building an LPG 
facility, including Shell helping Iran come up with the 
possibility of developing new refineries to deal with its own 
requirements that it imports finished products today.
    With respect to China, which has an enormous amount of 
investment underway and an estimated $100 billion worth of 
investment that could result over the next 10 to 20 years.
    Senator Dorgan. Do either of you know whether there's a way 
for anyone to get a list or to obtain a list of American 
charter corporations doing business with Iran through a foreign 
subsidiary?
    Mr. Thompson. I would believe that there is such a list. 
I'm trying to remember, one of the individuals that we have 
worked with, last name, Robinson.
    Mr. Comras. Roger Robinson.
    Mr. Thompson. Roger Robinson. Roger has been very helpful 
in originally putting together a list and we believe that Roger 
would be able to come up with a larger list and then you can 
cull from that list, American companies that are doing business 
and we can make sure that we get him and put him in touch with 
your office.
    Senator Dorgan. Ms. Williams, I didn't quite understand, is 
Halliburton still doing business, but has announced that it 
will not do business in the future beyond this contract, or are 
all of your contracts now completed and you are no longer doing 
business through a foreign subsidiary in the country of Iran?
    Ms. Williams. All of our contracts are completed and we no 
longer have any further operations. There are some wind-down 
procedures that are happening, but that is not active 
operational work.
    Senator Dorgan. In 2005, Mr. Lesar, the CEO, said that when 
he announced that Halliburton would no longer do business in 
Iran, ``if more of our customers go there, we will return to 
this market.'' Has that changed?
    Ms. Williams. Well, it has to change because once we pulled 
out of the Iranian market; we are prohibited from going back in 
under the sanctions law.
    Senator Dorgan. Ms. Williams, your testimony, I believe, is 
that it was perfectly OK for Halliburton to do business in Iraq 
through a foreign corporation, excuse me, Iran.
    Let me say that again, your testimony was that it was 
perfectly proper for Halliburton to do business in the country 
of Iran, through a foreign subsidiary because it was allowed by 
law and I don't dispute that.
    Now you're promising never to do it again. Tell me the 
mindset of the corporation. What have you gone through to move 
from a position that this is perfectly appropriate. We want to 
do it. It's profitable to now, apparently, agreeing with Mr. 
Thompson and Mr. Comras, that it is in fact, strengthening a 
terrorist state by doing business in a country like Iran.
    Ms. Williams. What I would say is that our decision to pull 
out of Iran was based upon a number of factors and no one of 
them was the driving force in that. It was based upon the fact 
that it's very difficult to do business in Iran. It was based 
upon the fact that our business there had been diminishing over 
a long period of time and a number of other factors.
    And, so, when we decided to pull out, we had information 
from our legal team that the decision would create a barrier to 
re-entry and we were comfortable with that from a corporate 
perspective.
    Senator Dorgan. Was there any discussion about whether, 
from a values standpoint, that doing business through a foreign 
subsidiary with a prohibited country like Iran, was in fact, 
helping the terrorists?
    Ms. Williams. I was not a part of those discussions, 
Senator, so I cannot answer that question.
    Senator Dorgan. Let me ask about the Cayman Islands 
subsidiary. As you know, 60 Minutes did the piece, went to the 
Cayman Islands and you indicated the Cayman Islands subsidiary 
was created in 1974, I believe.
    Ms. Williams. Yes, it was.
    Senator Dorgan. Long ago. They went to the Cayman Islands 
and discovered there was no one there, apparently just a mail 
drop and then went to Dubai and discovered that the office in 
Dubai was an office where there was a sharing of telephones and 
faxes and so on with the Houston company and raised a lot of 
questions that were never really satisfactorily answered for 
me.
    Tell us about that. What can you tell us about a 60 Minutes 
report that goes to Dubai and incidentally, my understanding is 
that 100 percent of the profit of the Cayman Islands subsidiary 
came from the activities in Dubai and doing business with the 
country of Iran.
    Tell me about the response to the 60 Minutes report that 
they go to Dubai and it appears from that office that it is 
just an extension of the Houston office.
    Ms. Williams. I have not seen the 60 Minutes report, but 
what I can tell you is that the Cayman Islands registration is 
very similar to, I would say, the registration of our parent 
company which is registered in Delaware when we have no active 
business office in Delaware.
    So, the registration in the Cayman Islands is perfectly 
appropriate under the law and it's not different than how we've 
registered other subsidiaries.
    As far as the appearance that the Dubai office, I think 
that 60 Minutes, based upon the transcript that I reviewed and 
I did not see the report, they simply are incorrect in the 
assumptions that they made.
    The HPSL office operates in a completely separate location 
in Dubai. The Al-Moosa Tower location that they went to is a 
registered office of a subsidiary with none of the HPSL 
managers; none of the Board of Directors, none of the work from 
HPSL took place at that location.
    Senator Dorgan. Ms. Williams, you heard the testimony of 
the other two witnesses and clearly some companies that are 
chartered in foreign countries will continue to do business in 
Iran and we will attempt to find ways with our allies to shut 
that down, but if we are not successful, one could probably 
make the case that an American company is prohibited from doing 
business in Iran and yet their competitors are not.
    Let me ask what Halliburton's position would be if next 
week, for example, during a mark-up of this Commerce Committee, 
Senator Lautenberg would offer as an amendment his piece of 
legislation which I would certainly support.
    Would Halliburton be supportive of legislation that would 
shut down the loophole, or close the loophole?
    Ms. Williams. The Company has not taken any position on 
that, but what I can tell you is that we have followed U.S. 
law. We will continue to follow U.S. law and we believe that it 
is the role and the appropriate role of this body to set U.S. 
foreign policy and we will continue to completely comply with 
that, whatever Congress decides that policy is.
    Senator Dorgan. Mr. Comras, do you believe that having 
American corporations use foreign subsidiaries to invest in the 
country of Iran is assisting in the sponsorship of terrorism?
    Mr. Comras. Yes, I do, Mr. Chairman. I think that it's 
somewhat ironic and difficult to understand why we place a 
burden on American companies with respect to sanctions and then 
go ahead and allow foreign subsidiaries to continue to compete 
with companies that don't create these foreign subsidiaries.
    If our intent is to cut off our own companies from dealing 
with Iran and other terrorism-supporting states, it seems quite 
logical that we would want that to extend as far as possible to 
anyone that we could influence, including using our corporate 
influence and our overall policies to dissuade others, 
including foreign subsidiaries from undercutting the very 
objectives that our sanctions were put in place for.
    Senator Dorgan. Interestingly, if the foreign subsidiary is 
not controlled by the domestic corporation, how does the 
foreign subsidiary, when domestic policy and domestic politics 
in this country say, ``wait a second, you're doing business 
with terrorists, for God's sake. You're financing terrorism.''
    How does a foreign subsidiary, all of a sudden, make a 
decision on behalf of the domestic company, if it is in fact, 
independent? Mr. Thompson, could you answer that?
    Mr. Thompson. Difficult to answer, I mean.
    Senator Dorgan. What do you think?
    Mr. Thompson. It's clear that those subsidiaries, whether 
they are independent or not, and then all too often and in all 
too many cases, they aren't really independent, should not be 
doing business in those countries. It is as simple as that.
    Looking at what the parent can and can't do, it is just a 
back-door attempt to do business with these countries and I 
believe that legislation should close it off, period.
    Senator Dorgan. Ms. Williams, you're here. There are other 
companies that could be sitting in that seat, who have done 
business in Iran through a loophole that, in fact, has existed.
    You're quite correct that you have not violated the law 
with respect to intending to do business through a foreign 
subsidiary. I'm not so sure that Halliburton has been on the 
right side of the line with respect to the way that foreign 
subsidiary was established.
    For example, didn't HPSL in Dubai use the same telephone 
number as Halliburton's Dubai office?
    Ms. Williams. Senator, I would have to reiterate that that 
was, the telephone number listed in the telephone book is 
actually incorrect and we have checked into that.
    That was a registration office that was there because at 
one point we were changing the names from Otis International 
Limited to HPSL. The HPSL office, where all of its operations 
and its employees were, was a completely separate location and 
we would be happy to provide more detailed information on that 
to you or your staff.
    Senator Dorgan. Is it the case that 100 percent of the 
profits of your Cayman Islands subsidiary came from Dubai, from 
the foreign subsidiary in Dubai?
    Ms. Williams. Yes, because the Cayman Islands is a 
registration for HPSL and their operations office is in Dubai.
    Senator Dorgan. And that profit came exclusively from 
activities in Iran?
    Ms. Williams. The profit for that subsidiary came 
exclusively from Iran operations, yes.
    Senator Dorgan. Let me just say this. Well, first of all, 
Ms. Williams, I appreciate your coming to testify, but I do 
think that, we're holding this hearing because I think there's 
something dreadfully wrong.
    There is something fundamentally wrong and when I read what 
Mr. Thompson has been engaged in for some long while now, it 
occurred to me that we ought not to have to ask Mr. Thompson, 
who manages $100 billion of pension assets in New York City, to 
carry the burden of changing something that is wrong with 
respect to U.S. law. If we're going to have sanctions against 
prohibited countries then we ought not to have exceptions to it 
and we ought not have someone going around the sanctions 
through a loophole that says we still want to do business with 
a terrorist state.
    No company should be doing that, that is chartered in this 
country and we need to pass legislation, post haste, to address 
it.
    So, I appreciate my colleagues being here. Senator 
Lautenberg.
    Senator Lautenberg. Thanks very much, Mr. Chairman. One of 
the things I wanted to straighten out, Ms. Williams, is you 
said that the building, the Al-Moosa Tower, was no longer a 
place of occupancy by any Halliburton facility.
    Ms. Williams. No, Al-Moosa Tower is currently still a 
location for a Halliburton company. It is not the location for 
HPSL.
    Senator Lautenberg. Well, I hold here a fax, which I'm 
happy to share. It's addressed to Halliburton Products and 
Services, Al-Moosa Towers, Dubai. Now, they were working out of 
that building.
    Ms. Williams. There was a registration for that building, 
yes.
    Senator Lautenberg. Halliburton Products and Services did 
at some point work out of that building?
    Ms. Williams. Senator, I'm not sure about that answer, but 
I'd be happy to provide it later.
    Senator Lautenberg. I would appreciate it because it 
directly contradicts your statement.
    Do you know the names Ian Gooch, Mr. Proctor, Mr. McIntyre, 
are they familiar names to you?
    Ms. Williams. No, they are not.
    Senator Lautenberg. Well, this table that was introduced 
introduces their names as recipients of the request for 
contract from the Iranian company and they were addressed as 
such because they represent Halliburton and they wanted to be 
in touch with them.
    Now, so you don't know whether they work for Halliburton or 
not?
    Ms. Williams. Senator, I have never seen those faxes and I 
do not recognize those names. However if I could get copies of 
the names and faxes from your staff I would be happy to do an 
appropriate investigation into that.
    Senator Lautenberg. We'll give them to you, Ms. Williams.
    See, I wasn't sure if the Chairman reviewed process. Let us 
be clear. Profits earned by a subsidiary, wholly owned by 
Halliburton would eventually accrue the Halliburton's profit 
picture.
    Ms. Williams. I'm sorry, is that your question?
    Senator Lautenberg. Yes.
    Ms. Williams. Yes, it would.
    Senator Lautenberg. They would. OK. So Halliburton would be 
the beneficiary of these operations, assuming that they were 
profitable, fair to say?
    Ms. Williams. Any operations earned from any subsidiary 
does, you know, is accounted for in our books, yes.
    Senator Lautenberg. I wonder if there's any challenge to 
conscience if the rules are such that the company can't do 
business directly, but if the structure is developed such that 
profits pass through.
    Is there no responsibility, I don't want to put you on the 
spot, I think you're in a very delicate position, and I admire 
your willingness to be here, but when I see the sleight of hand 
that goes into creating this subsidiary and we see a picture of 
a Halliburton employee in an Iranian situation and we get these 
requests for proposals addressed to Halliburton employees and 
that we don't know who these people are.
    We know that they're Halliburton employees and they're 
stationed in Dubai and I just wondered whether you knew who 
they were.
    Now, something else that you said, Ms. Williams that is 
that you used a Delaware registration as a comparison, the 
consequences of a Delaware license for a company to do 
business, really it may hurt a particular state or community 
but it certainly doesn't imperil American lives and when you 
talk about well, if we're not there, competition will take the 
business. At what point do we say that we ought not to be doing 
things that endanger our people, simply because competition 
will be there.
    There were other companies doing business in Libya and we 
didn't worry about them doing business there when we refused to 
do business there. So, I don't frankly agree with you with the 
reasoning that you presented.
    Your CEO, David Lesar, announced in January 2005, we're 
getting out of Iran, however, just before that we all heard 
that a multimillion dollar deal with the Iranians was there to 
help them drill for natural gas.
    Do you see any conflict between signing the contract with 
the Iranian company with the subsidiary and then making a 
decision that they would get out of any further agreements? I 
think the Chairman asked questions alluding to that situation.
    Ms. Williams. Senator, in an effort to fully answer your 
question, can I consult my colleagues on one thing about your 
question?
    Senator Lautenberg. Please, please do.
    Ms. Williams. I would like to give you the most complete 
answer possible so I appreciate you letting me get a 
clarification.
    Senator Lautenberg. Absolutely.
    Ms. Williams. What you're referring to is a proposal that 
started in negotiations in early 2004, which was over a year 
before Mr. Lesar made the announcement that we were pulling out 
of Iran. It was a consortium deal in which the portion that we 
were bidding on in 2004 was very small.
    What I can tell this committee is that contract was never 
signed. It never came to fruition and so at the time, Mr. Lesar 
made the announcement there was no contract that we had signed 
to continue with that deal.
    Senator Lautenberg. Is Halliburton still under 
investigation by the U.S. Attorney in the Southern District of 
Texas for possible violations of terror sanctions law?
    Ms. Williams. I think that the investigation is ongoing. We 
have responded to all of the inquiries from the Department of 
Justice and we did that as late as 2005 and for the past 24 
months we've heard no additional information from them. We have 
cooperated fully.
    Senator Lautenberg. Halliburton employees testified, did 
they testify before the Grand Jury?
    Ms. Williams. At this point I do not have that information, 
but I would be happy to get it and provide it to you.
    Senator Lautenberg. Please, let's see if they received 
subpoenas in this case.
    Did the decision in January 2005 have anything to do 
related to the U.S. Attorney's criminal investigation of 
Halliburton's activities?
    Ms. Williams. The decision in 2005 was based upon a number 
of factors. I was not participating in those conversations so I 
can not tell you with any certainty of whether that issue was 
discussed, but I do know that there were a number of issues 
that went into the final decision on the withdrawal from Iran.
    Senator Lautenberg. Mr. Thompson, you said that, I think it 
was the fire department pension.
    Mr. Thompson. Fire and police department pension funds.
    Senator Lautenberg. Police and fire, owned some 400,000 
shares in Halliburton Company.
    Mr. Thompson. Yes, at that point.
    Senator Lautenberg. Were you aware of the fact that the 
Vice President of the United States had more than that on 
option, over 400,000 shares on option?
    Mr. Thompson. I was not, Senator.
    Senator Lautenberg. Yes, he was. Do you know what the final 
exercise date is on those options?
    Mr. Thompson. I don't.
    Senator Lautenberg. I do. It's 2009, after its full service 
to the U.S. Government, all the way through there.
    Mr. Thompson, given your work and research, do you think 
that companies will stop doing business with terrorist nations 
on their own or is legislation needed?
    Mr. Thompson. Unfortunately, it's become clear over a 
period of years that while things may be legal, it doesn't mean 
that they are ethical and I believe that unless you close the 
loophole, companies will continue to attempt to do business in 
back-door fashions.
    Senator Lautenberg. Thank you very much. Mr. Chairman, 
thank you.
    Senator Dorgan. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. Thank you all for 
being here. I appreciate your willingness to be here and your 
candor with us.
    Ms. Williams, I look at this; I'm not a member of this 
Committee. I'm new to the Senate. I was in the House for 14 
years and I'm just sort of amazed by how all of this has 
unfolded in the last 5 years or so.
    Your company is one that has had billions of dollars in 
government contracts. Your company has made settlements with 
the government, I believe because of overcharges on services to 
our troops, often with non-delivery to the troops, often under 
performance on those contracts. Your company has had millions 
of dollars in contracts with terrorist states building up their 
economy.
    The Vice President of the United States, former executive 
of your company, draws a pension three times what the average 
American, middle class American earns in a year. Now you pretty 
much say and the Republican Congress has pretty much done 
nothing about any of this, now you say three things today.
    You say well, the company was a subsidiary. You say we, the 
company acted perfectly appropriately under the law and then 
you said besides the French do it too. The French company seems 
even worse. Do you or do other top executives at Halliburton 
really understand why the American public gets so angry about 
this?
    Ms. Williams. I would say that we, the company has been 
under the spotlight for a long time. We see what's printed in 
the press about us and we listen to what our own employees have 
to say and I think that from a purely sympathetic standpoint we 
can look and say, based upon the information that the American 
public gets that, you know, they have a right to their opinions 
and to voice their opinions about our company in any way they 
see fit.
    Senator Brown. Based on the information the American public 
gets, but the information is factual, huge government 
contracts, overcharging of those contracts, non-delivery and 
under performance in those contracts.
    When it affected American troops in the field, the Vice 
President, getting a huge pension from your company, dealing 
with terrorist states, all of those things are not just, you 
almost say it dismissingly, that's just what the American 
public hears. Well, those are facts that the American public 
hears.
    In your response to Chairman Dorgan about why you sort of 
moved out of Iran finally, albeit, reluctantly. None of those 
answers had anything to do with patriotism or anything to do 
with the values that I think our country holds dear.
    They were all sort of business decisions and I understand 
your business, but I understand that most businesses in our 
country operate at least under some modicum of values and 
patriotism and I just have been disappointed in all of those 
answers, but, more so, I appreciate your courage being here. I 
don't appreciate the company's behavior, the company for which 
you work.
    I guess I'll shift to Mr. Comras for a moment. You said 
that North Korea and Cuba are included in the Trading with the 
Enemies Act. Should we, as we figure all this out, working on 
Senator Lautenberg's bill, the bill that Senator Dorgan and I 
have introduced, how do we improve the current sanction 
regimes?
    Do we put it under the Trading with the Enemies Act? Is 
that something we should expand? Should we do it through other 
kinds of legislation? Give us and you too, Mr. Thompson, your 
recommendation, specifically on what we should do.
    Mr. Comras. I think there are many courses of action that 
can be taken, including, to clarify, under IEPPA, the coverage 
and the definition of U.S. persons and how that might relate to 
another line that is also in that Act. As well as in the 
Executive Order about avoiding or evading the sanctions, which 
is also illegal for a U.S. person to do by using a foreign 
entity.
    So, there are ways to look closely, even at the existing 
authorities and to reinterpret them, to clarify them and 
various measures and acts in the legislature, but I do think it 
is a loophole that does need to be dealt with.
    In part the loophole does have a rationale. That rationale, 
some of us recall from the time of the gas pipeline, when some 
foreign countries were very upset with what they viewed as the 
extra-territorial extension of U.S. authorities.
    And so we do walk something of a line here, but I think in 
the current context of Iran, it is very essential that we get 
to that line and that line, I think, clearly does include 
foreign subsidiaries of U.S. companies where the profits are 
going to the U.S. company and where it is, ultimately, the 
corporate decision of the parent rather than the subsidiary 
with respect to what its conduct is, and I think we see that in 
the parent being able to call it off and saying that no longer 
will these subsidiaries do this kind of business.
    So, I think that in this kind of context we should make it 
clear that a foreign subsidiary that is owned and that is 
corporately controlled by the parent should be covered, not a 
question of day to day management, but day to day who can make 
that ultimate decision and if that ultimate decision does, as 
in fact it does, reside here in the United States by a U.S. 
person then I think it should be obligatory on them to fall in 
line with the same measures as any other U.S. corporation would 
fall into.
    Senator Brown. Mr. Thompson, anything to add to that?
    Mr. Thompson. Times have changed. The world has changed and 
the fight against terrorism is one that now goes into corporate 
board rooms around this country and around the world.
    We need to close the loopholes now and opportunities for 
companies to do business in any fashion in any U.S.-based 
company, whether it is directly or indirectly, those loopholes 
should be closed.
    We need to choke the flow of dollars off to some of these 
regimes and some of these countries. Those dollars come back to 
haunt us, and are used against us in other ways. So we need to 
close those loopholes now and if it is in any way possible.
    Senator Brown. Thank you. Thank you, Mr. Chairman.
    Senator Lautenberg. Mr. Chairman, may I?
    Senator Dorgan. Senator Lautenberg.
    Senator Lautenberg. Thanks. If I could indicate something 
here that in the Halliburton directory, they list KBR as a 
division of the American company, a division. They list an 
address in Al-Moosa Tower, tenth floor and they have a 
designee. No, that's the address, I'm sorry, on the tenth 
floor.
    There's some conflict here as to whether or not the 
testimony was accurate as to whether or not there was a 
company, a Halliburton office and as well as the subsidiary 
office, fully owned subsidiary office that was in this building 
and I think you said in your testimony there was no such thing.
    Ms. Williams. There was a registration office and the HPSL 
had a separate office, however, as I indicated earlier, 
Senator, I'll be happy to track down this information and 
provide it to you so you'll be clear on those issues.
    Senator Lautenberg. I would appreciate it. Thanks, Mr. 
Chairman.
    Senator Dorgan. Ms. Williams, I started to say a bit ago, 
you are not the only corporation. You represent the Halliburton 
Company. You're a senior executive there. Other corporations 
could have sat in your chair having to answer the same 
questions.
    You happened to be here and you know yourself that 
Halliburton has become a rather high profile company with 
respect to contracting and a whole range of issues and I've 
been involved in raising those questions. I appreciate your 
coming to be willing to answer questions.
    I must tell you, I personally think that corporate 
decisions, with respect to these issues, have to contain more 
than just a business sense, just the numbers, just the issue of 
profitability.
    They also, it seems to me, if they are given life by a 
corporate charter in the country and that is what gives life to 
a corporation, they also must, it seems to me, answer the 
question, is this the right thing to do? Is this what our 
company wants to be doing and I think, not just with respect to 
your corporation, but a good many others, too many others.
    They apparently decided, you know what, profit really 
trumps the other questions or perhaps they won't even ask the 
other questions and I think Mr. Thompson has.
    Mr. Thompson has started a national discussion and a role 
as an activist, an equity shareholder. We want to ask these 
companies various questions. The thing that I don't understand, 
very frankly, one of the reasons I wanted to hold this 
hearing--In addition to the fact that my colleague, Senator 
Lautenberg has introduced legislation, my colleague, Senator 
Brown has. I have never quite understood how it could be that a 
foreign subsidiary would not necessarily have to be under the 
control of a parent corporation.
    The definition of that, the way it is made to sound by the 
companies that are doing business with Iran are well, we're 
doing business with Iran, but we're doing business through this 
company over in Dubai or wherever and we have no control over 
that.
    Well, of course, that's absurd on its face. The parent 
company will always have control, otherwise it wouldn't have 
the foreign subsidiary. So, it is the creation of a fiction 
here that has allowed some companies to do business with a 
terrorist state, a state that is, with respect to Iran, 
sponsoring acts of terrorism, funding acts of terrorism.
    And I personally believe it's long past the time for us to 
say we're going to stop it. We won't rely on Mr. Thompson to 
stop it. We won't rely on companies to decide by themselves 
that we will stop it. We'll just say it's a matter of law.
    We're going to put an end to this fiction. No more trading 
with the enemy. No more creating foreign subsidiaries for the 
purpose of engaging in a business for a purpose of profit in 
the country of Iran.
    And so that's why we hold this hearing. I've not been able 
to reconcile any plausible rationale for this fiction that 
somehow foreign corporations are not controlled by the domestic 
corporate entity that owns them.
    Does anyone want to respond to that? Is there any way for 
me to understand that allowing the creation of a corporate 
structure that is a foreign subsidiary, does not in fact, 
belong to the parent company and is, in fact, controlled by the 
parent company? Can anybody disabuse me of that fiction?
    Senator Lautenberg. May I add, Mr. Chairman, that would 
violate the laws of the country as well. The structuring of the 
corporation, is a device that, obviously, is used to the 
detriment of our country and as a matter of fact, I think, Mr. 
Comras, you said it correctly. What does it do to encourage 
other countries to pay attention to this? We lose our 
credibility and we lose our standing at the same time.
    Senator Dorgan. Let me say, first of all, I welcome the 
announced decision by Halliburton that it's no longer going to 
do business in Iran through a foreign subsidiary.
    I did not know until you indicated to me now that that 
business has virtually ceased, except for as you indicate, some 
clean-up details of a previous contract, but at this point that 
it ceased.
    My understanding is that other corporations have made 
similar announcements and I welcome those announcements as well 
because I think that moves us in the right direction and I 
think, perhaps, it does say to other companies that are still 
involved in doing business in Iran, they might ought to take a 
really close look at it because there's a lot of concern here 
in the U.S. Congress and with the American people that this is 
not good business.
    It is, in fact, undermining an important national goal and 
that is to try to prevent the country of Iran from acquiring 
nuclear weapons, prevent the country of Iran from sponsoring 
terrorism, from funding terrorist activities.
    That's a noble national goal that we have that, I think, is 
undermined by those companies that will still be doing business 
in the country of Iran.
    I intend to work with my colleagues and others to move 
legislation. We won't be having these discussions in the future 
because we will have cut off the opportunity to do that.
    Mr. Thompson, you wanted to say something?
    Mr. Thompson. Just, Senator, that I would agree that there 
is attention that has been focused in the last few years that 
it has forced a number of companies to cease doing business in 
Iran and in other nations like Syria.
    It is important to pass legislation because when that 
attention focuses in other places, if we don't pass 
legislation, there will be other companies who will fill the 
void through subsidiaries and come back and attempt to do 
business.
    So the passing of legislation and strong legislation that 
will prevent it, period, is the way to go.
    Senator Dorgan. Mr. Thompson, thank you for you work. Mr. 
Comras, thank you.
    Senator Lautenberg. Just one last thing, Mr. Chairman. And 
that is to quote Mr. Lesar when he said to the press and you've 
confirmed this, Ms. Williams. ``If more of our customers go to 
Iran, we will return to this market.''
    So the only guide is whether or not there's business there 
it has little to do with the law, or ethics of this decision.
    Senator Dorgan. Ms. Williams, I think you've responded to 
that earlier in one response. Did you want to respond again to 
that issue?
    Ms. Williams. I would just say that is the statement Mr. 
Lesar made; however, we have always followed the law. We will 
continue to do so and whatever this body decides is the United 
States applicable law and the United States foreign policy. We 
will follow that.
    Senator Lautenberg. I hope you get to be the CEO of 
Halliburton. We would be better off. Thank you.
    Senator Dorgan. To follow up on that point because I was 
going to say thank you for coming and giving the company credit 
for saying, ``we're leaving and we're not going to be doing 
business in Iran.''
    If his statement 2 years ago was a statement if that's 
where the business goes, we will be back. My assumption has 
been their most recent statement is we have decided we're not 
going to do business with Iran and my assumption was that 
statement was made because they understand that is not 
something that they want the company to be involved in for the 
reasons we've described today.
    I don't quite understand your answer because you will do 
what the law requires, but the law would, unless changed, the 
law would allow you to continue to do business in Iran. My hope 
would be that your statement, the corporate statement, is that 
you have decided that is not the good thing, a wise thing or in 
concert with this country's interests to do.
    Ms. Williams. Senator, what I would say to that is when we 
made the decision to pull out of Iran, we recognized that we 
would not be able to go back into that, or go back into that 
country even under the current law.
    So, as it stands our decision to pull out of Iran was one 
that was made with the understanding of the consequences that 
the law would not allow us to go back in. So, the current law 
would not allow us to go back in.
    If you all decide to change the law in some way, we will 
follow that law and continue to do so.
    Senator Dorgan. Well, Ms. Williams, thank you for coming, 
others would not. We appreciate your corporation sending you to 
represent their views.
    Mr. Thompson, thank you for your continuing work. I think 
you've stimulated a great deal of interest in the Congress on 
this issue.
    Mr. Comras, thank you for your many years of service.
    This hearing is adjourned.
    [Whereupon, at 3:30 p.m. the hearing was adjourned.]
                            A P P E N D I X

           Supplementary Information from Halliburton Company
1. HPSL Office in Dubai
    a. Senator Lautenberg displayed three FAXs at the hearing. Two of 
the three were sent in 1997 and one probably was sent in 1998 but all 
three are only partially legible. His request was that he wanted to 
know for whom the following people worked and whether they are U.S. 
nationals.

        Mr. Proctor
        Mr. McIntyre
        Mr. Gooch

        Senator Lautenberg. Did they work for the Cayman Islands 
        subsidiary or the parent company? Were they U.S. nationals? One 
        fax was addressed to Ian Gootz, another to a Mr. McIntyre, a 
        third fax was to Mr. Procker--Proctor.

    The three individuals mentioned in the FAXs and the subject of 
Senator Lautenberg's question are not U.S. citizens. Messrs. Proctor 
and Gooch were both employed by Halliburton Products and Services, 
Limited (HPSL) at the time of the FAXs. We believe that Mr. McIntyre 
was likely working for a U.K. subsidiary of Halliburton at the time of 
the FAXs. Mr. McIntyre had been at one time the manager of Otis 
International, Limited (OIL) before it became HPSL. According to the 
handwritten note on the FAX furnished by Senator Lautenberg, the 
correspondence was actively being transmitted on or about February 5, 
1998. Our records indicate that Mr. McIntyre was the Corporate 
Secretary of HPSL on that date.

    b. What was the location of the HPSL operating office (not 
registration office) in Dubai?

        Ms. Williams. The Al Mossa Tower location that they went to is 
        a registered office of a subsidiary, but none of the HPSL 
        managers, none of the Board of Directors and none of the work 
        for HPSL took place from that location . . . The HPSL office, 
        where all of its operations and its employees were a completely 
        separate location, and we would be happy to provide more 
        detailed information on that to you or your staff.

        Senator Lautenberg. No, the Halliburton Products and Services 
        did at some point work out of that building.

        Ms. Williams. Senator, I'm not sure about that answer. But I'd 
        be happy to provide it later.

        Senator Lautenberg. I would appreciate it because it directly 
        contradicts your statement.

    The registered Dubai address for HPSL was, has been, and remains at 
Al Moosa Tower. Since 1994, HPSL has maintained operations facilities 
in the following Dubai locations:

        Nad Al Sheeba (office), Sheikh Rashid Plot, Dubai, UAE.

        Al Quoz (storage location and cement-mixing plant), Al Quoz, 
        Dubai, UAE.

        Oilfield Supply Centre, B-15, Roundabout #8, Jebel Ali Free 
        Zone, UAE.

    The Al Moosa Tower address was never the operational home or 
address of HPSL. The Al Moosa Tower location was the home, for some 
period of time of a branch office of Halliburton Limited (HL) a U.K. 
corporation. and later of Halliburton Worldwide Limited (HWL), a 
company registered in the Cayman Islands.
2. Status of DOJ Investigation
    a. ``Senator Lautenberg. Is Halliburton still under investigation 
by the U.S. Attorney in the Southern District of Texas for possible 
violations of terrorist sanction law?''

    Ms. Williams statement during the hearing was as follows: (Page 14 
of the complete transcript provided to us, or page 53 of the partial 
transcript) ``I think the investigation is ongoing. We have responded 
to all of the inquiries from the Department of Justice and we did that 
as late as 2005 and for the past 24 months, we've heard no additional 
information from them.'' Her response to the question appears to answer 
the Senator's question correctly and fully to our knowledge at this 
time. The last submission to the Department was in the Fall of 2005. We 
have not been notified as to whether the investigation is completed or 
still ongoing.

    b. ``Senator Lautenberg. And please--let us see if they receive 
subpoenas in this case.''

    Regarding the Justice Department's request for documents, a 
subpoena was issued only to the company and not to any individuals, 
either with respect to production of documents or to provide testimony. 
That subpoena has been complied with.
3. Your E-mail of May 14, 2007 re Questions From Senator Lautenberg
    a. What activities and contracts is KBR currently executing in 
Iran?

    According to information received from KBR. neither KBR nor any of 
its foreign subsidiaries is currently performing work in Iran. Two 
foreign subsidiaries (GVAC and MWKL) may have remaining contract issues 
or obligations on contracts under which they previously provided 
support to other companies doing work in Iran.

    b. When did KBR receive its latest contract in Iran?

    According to the information we have, the most recent contracts 
undertaken by any element of KBR relating to Iran were entered into in 
April 2004. KBR, and its subsidiaries maintain that they have not 
sought or received any contracts relating to work in Iran since the end 
of 2004.

    c. Since September 11, 2001, what contracts did Halliburton win 
from the Government of Iran? What contracts did it execute in Iran? 
When did these contracts begin and end? What was the financial value of 
these contracts? Which economic sector did these contracts cover? Which 
U.S. companies were subcontractors to these contracts? Which non-U.S. 
companies were subcontractors to these contracts?

    Answer:


----------------------------------------------------------------------------------------------------------------
                                    Approx.
             Contract and Customer   Value                                  Completed Yes/  Sub-contracors (all
  Entity    (all involving the oil     ($       Started        Completed          No             non-U.S.)
               and gas industry)     000s)
----------------------------------------------------------------------------------------------------------------
HPSL        IOOC Material Supply      5,543  2001           End-2005        Yes            None
             Contract
----------------------------------------------------------------------------------------------------------------
HPSL        Petropars/(Enterprise)    1,419  Pre-2001       June 2002       Yes            Frank's International
                                                                                            Middle East LLC;
                                                                                            Drilling Tools
                                                                                            International LLC;
                                                                                            Geo Services S.A.
----------------------------------------------------------------------------------------------------------------
HPSL        Shell Exploration           348                                                None
----------------------------------------------------------------------------------------------------------------
HPSL        Statoil--South Pars      10,504  Q4-2003        End-2005        Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        POGC Integrated          16,285  Pre-2001       Q1-2006         Yes            Geoservices, S.A.;
             Services                                                                       Pathfinder Energy
                                                                                            Services B.V. ;
                                                                                            Weatherford Oil Tool
                                                                                            Middle East, Ltd.;
                                                                                            Baker Hughes EHO
                                                                                            Limited
----------------------------------------------------------------------------------------------------------------
HPSL        Agip Iran BV--(ENI)      21,488  2002           June 2006       Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        Petro-Iran, (PEDCO)      27,700  2002           September 2006  Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        Total--South Pars        12,616  Q1-2002        November 2005   Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        Total--Dorood Kharg      44,717  Q2-2001        March 31, 2007  Yes            Al Ahlia Oilfields
             Island                                                                         Development Company
----------------------------------------------------------------------------------------------------------------
HPSL        Norsk Hydro Anaran       12,183  Q4-2002        December 2006   Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        OOK-POGC                     0  N/A            N/A                            None
----------------------------------------------------------------------------------------------------------------
HPSL        NIOC                     18,977  Pre-2001       2006            Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        Kala                     30,783  Pre-2001       2006            Yes            None
----------------------------------------------------------------------------------------------------------------
HPSL        Others--Misc.            12,705  Pre-2001       2006            Yes            None
----------------------------------------------------------------------------------------------------------------
 In 2004 and 2005, HPSL negotiated with OOK to perform services for POGC. A preliminary agreement was reached,
  but no contract for actual work was ever concluded. The project was later canceled, and no work was ever done.