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AnonymousInactivehttp://www.mercurynews.com/topstories/ci_13225640
Fiorina, eyeing Senate run, faces questions over HP sales in Iran
SACRAMENTO
— 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.Fiorina’s
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.” -
AuthorSeptember 1, 2009 at 9:56 AM
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