"The federal government must do its part to heighten and enforce regulations regarding the operation of foreign subsidiaries of U.S. companies in terrorist states. Denying terrorist nations the economic support of U.S. investment is a critical component in the fight against terror."
The full text of the letter follows:
Dear Secretary Snow:
I am writing to request your attention regarding reports that some U.S. corporations are doing business with terrorist states by exploiting loopholes in current laws and executive orders.
Although U.S. sanctions provisions in the International Emergency Economic Powers Act (IEEPA) prohibit U.S. companies from conducting business with rogue, terror-sponsoring nations such as Syria and Iran, the law does not specifically bar foreign subsidiaries of U.S. companies from doing business with terrorist nations as long as these subsidiaries are truly "independent of the parent." I am extremely concerned by recent press reports that some U.S. companies may be exploiting this loophole in the law by creating foreign subsidiaries for the specific purpose of bypassing U.S. sanctions laws. The Office of Foreign Assets Control and other relevant government agencies must closely examine the relationship between U.S. corporations and their foreign subsidiaries to ensure that current legal requirements are not being evaded. Beyond better enforcement, however, is the question of whether stronger prohibitions need to be explicitly spelled out to ensure U.S. corporations are not inadvertently propping up terrorist-sponsoring governments. I understand the Administration has broad authorities under IEEPA to regulate foreign economic transactions that could benefit a foreign source posing a national security threat to the United States. This authority has been expressed in a number of executive orders that ban trade and investment with terrorist-sponsoring states and organizations.
When using your authority under IEEPA, I urge you to strengthen regulations of the activities of U.S. firms' foreign subsidiaries in the subject country. Making greater use of provisions that restrict any U.S. activity designed to avoid IEEPA sanctions, or that direct or assist any other entity in activities that would violate the sanctions if conducted by a U.S. citizen or entity, would be two methods of curbing these types of abuses when drafting executive orders under IEEPA authority.
It is vital that terrorist-sponsoring nations be denied the economic support of U.S. investment. Thank you for your time and attention to this critical issue.
Sincerely,
Susan M. Collins United States Senator
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