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 user 2009-09-01 at 9:56:05 am Views: 36
  • #22422
    Fiorina, eyeing Senate run, faces questions over HP sales in Iran
    — Over the past dozen years, Hewlett-Packard has sold hundreds of
    millions of dollars worth of printers and other products to Iran
    through a Middle East distributor, sidestepping a U.S. ban on trade
    with the country.Now the person who headed HP for much of that time,
    Carly Fiorina, is ramping up to run for U.S. Senate. And questions are
    emerging about what Fiorina knew about HP’s growing presence in Iran
    during her six-year tenure at the Silicon Valley firm from 1999 to
    2005.With Iran drawing condemnation abroad for its suspected pursuit of
    nuclear weapons and crackdown on government dissidents, Fiorina could
    find herself on the defensive. Did the former CEO know that her company
    was selling its wares to Iran through a European subsidiary and then a
    Middle Eastern distributor while she was at the helm? If an HP
    executive had such direct knowledge, that would violate the trade
    embargo.Fiorina, a Republican who is gearing up to challenge three-term
    Democratic incumbent Sen. Barbara Boxer in 2010, declined an interview
    request. But she issued a statement through her campaign spokeswoman
    saying that she was unaware of any sales to Iran during her time at the
    company.”It is illegal for American companies to do business in Iran,”
    the spokeswoman, Beth Miller, wrote. “To her knowledge, during her
    tenure, HP never did business in Iran and fully complied with all U.S.
    sanctions and laws.”

    Early this year, the U.S.Securities and
    Exchange Commission issued a letter to HP seeking information about the
    company’s dealings in Iran, Syria and Sudan. HP responded that in
    fiscal 2008 about $120 million worth of products were sold to Iran by a
    Dutch subsidiary through a Middle Eastern distributor. But even as the
    company claimed that those sales were legal because its subsidiary was
    acting on its own, HP in January announced it was severing ties with
    Dubai-based Redington Gulf. The distributor had sold HP products to
    Iran since 1997, two years after the United States imposed a complete
    ban on exports to Iran.The announcement came days after The Boston
    Globe reported from Iran that HP printers had become nearly ubiquitous
    there despite the embargo.

    One former federal trade enforcement
    official said HP’s dealings with the country are ripe for further
    investigation. If Fiorina or other HP employees based in the United
    States were aware that HP products were being resold to Iran, they
    could face fines or even prosecution for violating the trade embargo,
    said Mike Turner, former director of the Office of Trade Enforcement at
    the U.S. Department of Commerce.”If I was still sitting in my chair
    today,” said Turner, who retired as head of the enforcement agency two
    years ago, “I’d be looking at who at HP had knowledge of this and when
    did they develop that knowledge.”

    But one expert who represents
    firms seeking to comply with trade laws said he would be surprised if a
    company as large and sophisticated as HP did not take pains to insulate
    its U.S. operations from any sales to Iran.”It had to be heavily
    vetted,” said Douglas Jacobson, an attorney with the Washington, D.C.,
    law firm Sandler, Travis & Rosenberg. As long as the sales were
    conducted by an entity outside the country and without knowledge or
    help from a U.S. employee, he said, the transactions pass legal
    muster.Even if HP is able to satisfy legal questions, that doesn’t mean
    Fiorina is in the clear politically. HP’s relationship with its Middle
    East distributor, Redington Gulf, flourished on her watch.In 1999,
    after she took over at HP, the company’s Middle East general manager
    was quoted in a United Arab Emirates English-language newspaper calling
    Iran “a big market for Hewlett-Packard printers” and noting sales
    growth in the country was 50 percent. Fiorina herself in 2003 cited the
    Middle East as a growth region amid flagging sales elsewhere (she did
    not mention Iran specifically). And the same year, Redington Gulf
    trumpeted in a press release that sales of HP products had topped $100
    million.”The seeds of the Redington-Hewlett-Packard relationship were
    sowed six years ago for one market — Iran,” the release said.

    likely primary opponent, Assemblyman Chuck DeVore, R-Irvine, who
    happened to work on trade enforcement matters for the U.S. Defense
    Department in the 1980s, is already raising the issue in campaign
    missives.”There is a record of the firm using “… gymnastics to
    circumvent U.S. export controls against the Islamic Republic of Iran,”
    DeVore said in an interview. “I find that troubling and a point of
    weakness” for Fiorina.Boxer’s campaign declined to comment. But state
    Democratic Party chairman John Burton predicted voters won’t buy
    Fiorina’s explanation.”She’s running a company and doesn’t know what’s
    happening there?” Burton said. “It’s always somebody else’s fault.”