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Crashing all our hopes, there were no questions regarding U.S. sanctions asked during last week’s Republican debate hosted by CNN. Earlier, we were optimistic that a sanctions-related question would be posed to candidate Carly Fiorina after a Bloomberg story alleged that, while at HP’s helm, HP might have been involved in otherwise prohibited trade-related dealings with Iran. Sadly, we were let down.

Nonetheless, Ms. Fiorina was interviewed on Fox News Sunday with Chris Wallace this weekend, where host Wallace posed questions regarding her time at HP, including the fact that HP’s foreign subsidiary was engaged in selling printers to Iran beginning in 1997.

Here is Ms. Fiorina’s response to the questioning:

The SEC investigation proved that neither I nor anyone else in management knew about it and the facts of the matter were the European subsidiary apparently was doing business with another company in the Middle East. That company was doing business with another company that was doing business with Iran. And when the company discovered this three years after I left, they cut off all ties with those companies.

The SEC investigated very thoroughly and concluded that no one in management was aware.

Clearly, there is a fundamental error in the way both Wallace and Fiorina are talking about this matter. There might be reputational considerations going into a determination of whether a foreign subsidiary of a major U.S. company like HP should be engaged in trade with Iran or Iranian parties. There might even be a policy question as to whether HP should have allowed its foreign subsidiary to engage in trade with Iran at a time in which HP the parent was prohibited from doing so.

But there was nothing unlawful at the time with executives of a U.S. parent company having knowledge that a foreign subsidiary of the U.S. parent was engaged in trade-related dealings with Iran. Knowledge is and was not sufficient for a finding of a prohibited “facilitation” under the ITSR (or the ITR). As CEO of HP, Fiorina could have known that a foreign subsidiary was exporting HP printers to a distributor in Dubai – the products of which were then re-exported to Iran – as long as she was not involved in any way in facilitating the transaction, including by rendering her approval for it. Prohibited facilitation is not so broad as to cover mere knowledge that an otherwise permissible transaction is occurring.

Neither Wallace’s charge nor Fiorina’s defense thus makes much sense in regard to the actual sanctions prohibitions targeting the activities of U.S. persons vis-à-vis Iran. As Bloomberg framed it, there might be a policy issue as to whether Fiorina believes HP should have allowed its foreign subsidiary to engage in such trade with Iran at a time that Iran was under U.S. sanctions, but there is not much of a legal question: based on HP’s representations in its filing to the SEC, the transactions with Iran were above water and permissible at the time that they were engaged.

In other words, the ITSR has enough existing sanctions prohibitions to bar U.S. persons from engaging in most transactions with Iran or Iranian parties. We don’t need to go around inventing new ones.

 

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