The Iran Sanctions Enabling Act of 2007 Jonathan A. Selva and Giovanni Spinelli
The Iran Sanctions Enabling Act of 2007 (the "Act"), was received by the United States Senate on August 1, 2007 and was read twice and referred to the Committee on Banking, Housing, and Urban Affairs (the "Committee") on August 3, 2007. The purpose of the Act is "to authorize state and local governments to direct divestiture from, and prevent investment in, companies with investments of $20,000,000.00 or more in Iran's energy sector, companies that sell arms to the Government of Iran, and financial institutions that extend $20,000,000.00 or more in credit to the Government of Iran for 45 days or more•"
The Act furthers this purpose in three ways: by providing for the publication of a list of such persons; by authorizing State and local governments to divest their assets from and prohibit investment of their assets in the persons listed and others; and, by providing "safe harbors" for mutual funds and employee benefit plans that decide to divest assets from or avoid investing in, the persons on the list.
If passed in its present form by the United States Senate and signed into law by the President, the Act would require that the federal government publish a list of "each person, whether within or outside of the United States, that, as of the date of the publication, has an investment of more than $20,000,000.00 in the energy sector in Iran, sells arms to the government of Iran, or is a financial institution that extends $20,000,000.00 or more in credit to the government of Iran for 45 days or more."
The Act defines "Person" as "(A) a natural person as well as a corporation, business association, partnership, society, trust, any other nongovernmental entity, organization, or group; (B) any governmental entity or instrumentality of a government, including a multilateral development institution (as defined in section 1701(c)(3) of the International Financial Institutions Act); and (C) any successor, subunit, or subsidiary of any entity described in subparagraph (A) or (B). Thus, the list would include foreign as well as United States persons, whether or not such foreign persons are present in the United States.
Pursuant to Sec. 3(c) of the Act, to identify persons with investments of more than $20,000,000.00, the word "investment" has the meaning given in section 14(9) of the Iran Sanctions Act (50 U.S.C. 1701 App. ): (9) Investment.--The term 'investment' means any of the following activities if such activity is undertaken pursuant to an agreement, or pursuant to the exercise of rights under such an agreement, that is entered into with the Government of Iran or a nongovernmental entity in Iran, on or after the date of the enactment of this Act [Aug. 5, 1996]:
(A) The entry into a contract that includes responsibility for the development of petroleum resources located in Iran, or the entry into a contract providing for the general supervision and guarantee of another person's performance of such a contract.
(B) The purchase of a share of ownership, including an equity interest, in that development.
(C) The entry into a contract providing for the participation in royalties, earnings, or profits in that development, without regard to the form of the participation. The term 'investment' does not include the entry into, performance, or financing of a contract to sell or purchase goods, services, or technology. For purposes of this paragraph, an amendment or other modification that is made, on or after June 13, 2001, to an agreement or contract shall be treated as the entry of an agreement or contract.
The Act does not define what it means to extend credit to the Government of Iran. However, the issue was addressed on the floor of the House:
Mr. FRANK of Massachusetts. • We will be expecting the administration, in preparing this list, to use the same kind of economic analysis we would use in any other case. If an activity, a purchase, an investment, a loan, any financial activity is contributing to the financial enhancement of the Iranian government, then it triggers, we would believe, this bill.
153 Cong. Rec. Daily Ed. H8857. Though the legislative history of an act is not law, it could be used by the executive branch and courts to support their own interpretations of the plain text of an act. The foregoing statements of Rep. Frank (the Chair of the House Committee on Financial Services and a sponsor of the Act) suggest a very broad definition of what it means to extend credit to the Government of Iran. The Act authorizes State and local governments to divest from and prohibit investment in not only the persons listed but also from other persons that sell arms to the Government of Iran, Sec. 4(b)(1)(B), other financial institutions that extend $20,000,000.00 or more in credit to the Government of Iran for 45 days or more, Sec.4(b)(1)(C), and persons included on any list of entities with investments in Iran, entities doing business in Iran, or entities doing business with the Government of Iran, which is issued pursuant to a law that (i) authorizes a State or local government to divest from, or prohibits a State or local government from investing assets in, the person; and (ii) is enacted by a State or local government on or before the first publication of a list under section 3. Sec. 4(b)(1)(D).
The Act also encourages mutual funds and employee benefit plans to change their investment policies by granting them safe harbors for divesting from and avoiding investment in the persons on the list. Section 5 provides that mutual funds are protected from civil, criminal and administrative actions based solely on divestment from, or avoiding investment in, securities issued by companies that are included on the list. Section 6 provides that divestment of assets from, and avoidance of investment of assets in, persons on the list shall not be treated as breaches of fiduciary responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132).
THE $20,000,000.00 THRESHOLD OF THE IRAN SANCTIONS ENABLING ACT OF 2007 The Act as submitted to the Committee does not specify whether the government may aggregate multiple investments in Iran's energy sector by a single entity to determine whether the $20,000,000.00 is met or whether the government may aggregate investments by subsidiaries in order to subject a parent corporation to the Act's provisions.
The Committee is in the process of coordinating the terms of the Act with the Iran Sanctions Act of 1996 and with other acts related to Iran that were also recently received by the Senate. It is possible that the Committee will use the Iran Sanctions Act of 1996 as a guide and prepare a version of the Act providing for the aggregation of investments by single entities and subsidiaries to meet the $20,000,000.00 threshold. If so, then a single entity with two $10,000,000.00 investments in Iran's energy sector would be subject to the Act. Similarly, if 10 subsidiaries of an entity each have an investment of $2,000,000.00, the Act would be triggered against the parent.
We note that the Iran Sanctions Act of 1996 contains a provision that specifically calls for the aggregation of investments to determine whether its threshold is met. The purpose of the Iran Sanctions Act of 1996 is •to impose sanctions on persons making certain investments directly and significantly contributing to the enhancement of the ability of Iran or Libya to develop its petroleum resources, and on persons exporting certain items that enhance Libya's weapons or aviation capabilities or enhance Libya's ability to develop its petroleum resources, and for other purposes.
The Iran Sanctions Act of 1996 also states that:
SEC. 5. IMPOSITION OF SANCTIONS.
(a) SANCTIONS WITH RESPECT TO IRAN.--Except as provided in subsection (f), the President shall impose 2 or more of the sanctions described in paragraphs (1) through (6) of section 6 if the President determines that a person has, with actual knowledge, on or after the date of the enactment of this Act, made an investment of $40,000,000 or more (or any combination of investments of at least $10,000,000 each, which in the aggregate equals or exceeds $40,000,000 in any 12-month period), that directly and significantly contributed to the enhancement of Iran's ability to develop petroleum resources of Iran.
The Committee is also currently considering an amendment to the Iran Sanctions Act of 1996 to clarify that it would apply to subsidiaries:
SEC. 201. APPLICATION TO SUBSIDIARIES.
(a) In General- Except as provided in subsection (b), in any case in which an entity engages in an act outside the United States which, if committed in the United States or by a United States person, would violate Executive Order No. 12959 of May 6, 1995, Executive Order No. 13059 of August 19, 1997, or any other prohibition on transactions with respect to Iran that is imposed under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) and if that entity was created or availed of for the purpose of engaging in such an act, the parent company of that entity shall be subject to the penalties for such violation to the same extent as if the parent company had engaged in that act.
(b) Exception- Subsection (a) shall not apply to any act carried out under a contract or other obligation of any entity if--
(1) the contract or obligation existed on May 22, 2007, unless such contract or obligation is extended in time in any manner or expanded to cover additional activities beyond the terms of the contract or other obligation as it existed on May 22, 2007; or
(2) the parent company acquired that entity not knowing, and not having reason to know, that such contract or other obligation existed, unless such contract or other obligation is extended in time in any manner or expanded to cover additional activities beyond the terms of such contract or other obligation as it existed at the time of such acquisition.
(c) Construction- Nothing in this section shall be construed as prohibiting the issuance of regulations, orders, directives, or licenses under the Executive orders described in subsection (a) or as being inconsistent with the authorities under the International Emergency Economic Powers Act.
(d) Definitions- In this section--
(1) the term 'entity' means a partnership, association, trust, joint venture, corporation, or other organization;
(2) an entity is a 'parent company' of another entity if it controls, directly or indirectly, that other entity and is a United States person; and
(3) the term 'United States person' means any United States citizen, any alien lawfully admitted for permanent residence to the United States, any entity organized under the laws of the United States, or any person in the United States.
In addition, the Committee is also reviewing the Stop Business with Terrorists Act of 2007 and the Iran Counter-Proliferation Act of 2007 which both contain provisions similar to the proposed amendment to the Iran Sanctions Act of 1996.
Based upon the foregoing, we believe that the Committee will prepare a version of the Iran Sanctions Enabling Act of 2007 that would direct the government to aggregate investments by an entity and its subsidiaries to determine whether to include the entity on the list of those with $20,000,000.00 or more invested in Iran's energy sector.
RECENT STATE DEPARTMENT DESIGNATIONS UNDER EXISTING SANCTIONS OF CERTAIN IRANIAN ENTITIES AND INDIVIDUALS We take this opportunity to remind you of another recent development concerning United States sanctions against Iran. On October 25, 2007 the Department of State designated under Executive Order 13382 two Iranian entities of concern for proliferation of weapons of mass destruction: the Islamic Revolutionary Guard Corps ("IRGC") and the Ministry of Defense and Armed Forces Logistics ("MODAFL"). Pursuant to Executive Order 13382, this means that all property and interests in property of the IRGC and MODAFL, that are in the United States, that come within the United States or come within the possession or control of United States persons, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. Executive Order 13382 defines "United States person" as "any United States citizen, permanent resident alien, entity organized under the laws of the United States, or any jurisdiction within the United States (including foreign branches), or any person in the United States. "Person" is defined as "an individual or entity."
In addition, on October 25, 2007 the Department of the Treasury designated for proliferation activities under Executive Order 13382 nine IRGC-affiliated entities, five IRGC-affiliated individuals, Iran's state -owned Banks Melli and Mellat, and individuals affiliated with Iran's Aerospace Industries Organization (see attached list).
The Department of the Treasury also designated under Executive Order 13224 the IRGC-Qods Force (IRGC-QF) as providing material support to the Taliban and other terrorist organizations and Iran's state-owned Bank Saderat as a terrorist financier. Pursuant to Executive Order 13224, this means that all property and interests in property of the IRGC-QF and Bank Saderat that are in the United States or that come within the United States or that come within the possession or control of United States persons are blocked. The definitions of "United States person" and "person" as used in Executive Order 13224 are the same as those found in Executive Order 13382.
Treasury and State Department Iran Designations Identifier Information
Pursuant to E.O. 13224 (Terrorism) and E.O. 13382 (WMD)
October 25, 2007
E.O. 13224
1. Entity: BANK SADERAT IRAN
AKA: Iran Export Bank
AKA: Bank Saderat PLC
Location: PO Box 15745-631, Bank Saderat Tower, 43 Somayeh Avenue, Tehran, Iran, and all offices worldwide, including:
Location: 16 rue de la Paix, 75002 Paris, France
Location: Postfach 160151, Friedenstr 4, D-603111 Frankfurt am Main, Germany
Location: Postfach 112227, Deichstrasse 11, 20459 Hamburg, Germany
Location: PO Box 4308, 25-29 Venizelou St, GR 105 64 Athens, Attica, Greece
Location: 3rd Floor, Aliktisad Bldg, Ras El Ein Street, Baalbak, Baalbak, Lebanon
Location: 1st Floor, Alrose Bldg, Verdun Rashid Karame St, Beirut, Lebanon
Location: PO Box 5126, Beirut, Lebanon
Location: Alghobeiri Branch - Aljawhara Bldg, Ghobiery Blvd, Beirut, Lebanon
Location: Borj Albarajneh Branch - Alholom Bldg, Sahat Mreijeh Kafaat St, Beirut, Lebanon
Location: Sida Riad Elsoleh St, Martyrs Square, Saida, Lebanon
Location: PO Box 1269, 112 Muscat, Oman
Location: PO Box 2256, Doha, Qatar
Location: No 181, Makhtoomgholi Ave, 2nd Floor, Ashgabat, Turkmenistan
Location: PO Box 700, Abu Dhabi, UAE
Location: PO Box 16, Liwara Street, Ajman, UAE
Location: PO Box 1140, Al-Am Road, Al-Ein Al Ain, Abu Dhabi, UAE
Location: PO Box 4182, Murshid Bazar Branch, Dubai City, UAE
Location: Sheikh Zayed Rd, Dubai City, UAE
Location: Khaled Bin Al Walid St, Dubai City, UAE
Location: PO Box 4182, Almaktoum Rd, Dubai City, UAE
Location: PO Box 316, Bank Saderat Bldg, Al Arooba St Borj Ave, Sharjah, UAE
Location: 5 Lothbury, London, EC2R 7HD, UK
Location: PO Box 15175/584, 6th Floor, Sadaf Bldg, 1137 Vali Asr Ave, 15119-43885, Tehran, Iran
2. Entity: ISLAMIC REVOLUTIONARY GUARDS CORPS (IRGC) QODS FORCE
AKA: Pasdaran-e Enghelab-e Islami (Pasdaran)
AKA: Sepah-e Qods (Jerusalem Force)
DESIGNATIONS BY THE STATE DEPARTMENT PURSUANT TO E.O. 13382
1. Entity: ISLAMIC REVOLUTIONARY GUARD CORPS
AKA: IRGC
AKA: IRG
AKA: AGIR
AKA: The Iranian Revolutionary Guards
AKA: The Army of the Guardians of the Islamic Revolution
AKA: Sepah-e Pasdaran-e Enqelab-e Eslami
AKA: Pasdaran-e Enghelab-e Islami
AKA: Pasdaran-e Inqilab
AKA: Revolutionary Guards
AKA: Revolutionary Guard
AKA: Sepah
AKA: Pasdaran
AKA: Sepah Pasdaran
AKA: Islamic Revolutionary Corps
AKA: Iranian Revolutionary Guard Corps
Location: Tehran, Iran
2. Entity: MINISTRY OF DEFENSE AND ARMED FORCES LOGISTICS
AKA: Ministry of Defense and Support for Armed Forces Logistics
AKA: MODAFL
AKA: MODSAF
Location: Located on the West Side of Dabestan Street, Abbas Abad District,
Tehran, Iran
DESIGNATIONS BY THE TREASURY DEPARTMENT PURSUANT TO E.O. 13382
Bank Melli
1. Entity: BANK MELLI IRAN
Location: Ferdowsi Avenue, P.O. Box 11365-171, Tehran, Iran, and all offices worldwide, including:
Location: 43 Avenue Montaigne, Paris 75008, France
Location: Holzbrucke 2, 20459 Hamburg, Germany
Location: Nobel Avenue 14, Baku, Azerbaijan Republic
Location: P.O. Box 2643 PC 112, Muscat, Oman
Location: PO Box 5270, Oman Street, Al Nakheel, Ras al Khaimah, UAE
Location: PO Box 248, Al Marash R/A, Hamad Bin Abdullah Street
Fujairah, UAE
Location: P.O. Box 459, Al Burj Street, Sharjah, UAE
Location: P.O. Box 1888, Clock Tower, Industrial Road, Al Ain, Abu Dhabi, UAE
Location: P.O. Box 2656, Hamdan Street, Abu Dhabi, UAE
Location: P.O. Box 3093, Khalid Bin Waleed Street, Bur Dubai, UAE
Location: P.O. 1894, Beniyas Street, Dubai, UAE
Location: No. 111-27, Alley - 929, District - Arasat Street, Baghdad, Iraq
Location: 704-6 Wheelock House, 20 Pedder Street, Hong Kong, China
2. Entity: BANK KARGOSHAEE
AKA: Kargosa'i Bank
Location: 587 Mohammadiye Square, Mowlavi St., Tehran, 11986, Iran
3. Entity BANK MELLI IRAN ZAO
Location: Number 9/1, Ulitsa Mashkova, Moscow 103064, Russia
4. Entity: MELLI BANK PLC
Location: 1 London Wall, London, EC2Y 5EA, United Kingdom
5. Entity: ARIAN BANK (Joint Venture between Banks Melli and Saderat)
AKA: Aryan Bank
Location; House 2, Number 13, Wazir Akbar Khan, Kabul, Afghanistan
Bank Mellat
6. Entity: BANK MELLAT
Location: 327 Taleghani Avenue, 15817 Tehran, Iran, and all offices worldwide, including:
Location: P.O. Box 375010, Amiryan Street #6, P/N-24, Yerevan, Armenia
Location: Keumkang Tower, 13th and 14th Floors, 889-13 Daechi-Dong,
Gangnam-Ku, Seoul 135-280, South Korea
Location: P.O. Box 79106425, Ziya Gokalp Bulvari No. 12, Kizilay, Ankara, Turkey
Location: Cumhuriyet Bulvari No. 88/A, PK 7103521, Konak, Izmir, Turkey
Location: Buyukdere Cad, Cicek Sokak No. 1-1, Levent, Istanbul, Turkey
7. Entity: MELLAT BANK SB CJSC
AKA: Mellat Bank DB AOZT
Location: P.O. Box 24, Yerevan 0010, Republic of Armenia
8. Entity: Persia International Bank PLC.
Location: Number 6 Lothbury, Post Code: EC2R 7HH, United Kingdom
IRGC Entities:
9. Entity: KHATAM OL ANBIA GHARARGAH SAZANDEGI NOOH
AKA: Khatam Ol Ambia
AKA: Ghorb Khatam
AKA: Khatam Al-Anbya
Location: Number 221, North Falamak-Zarafshan Intersection, 4th Phase, Shahrak-E-Ghods, Tehran 14678, Iran
10. Entity: ORIENTAL OIL KISH
Location: 2nd Floor, 96-98 East Atefi St., Africa Blvd., Tehran, Iran
Alternate location: Dubai, UAE
11. Entity: GHORB KARBALA
AKA: Gharargah Sazandegi Karbala-Moasseseh Taha
AKA: Gharargah Karbala
Location: No. 2 Firouzeh Alley, Shahid Hadjipour St., Resalat Highway, Tehran, Iran
12. Entity: SEPASAD ENGINEERING COMPANY
Location; Number 4 corner of Shad Street, Mollasadra Ave., Vanak Square, Tehran, Iran
13. Entity: GHORB NOOH
Location: P.O. Box 16765-3476, Tehran, Iran
14. Entity: OMRAN SAHEL
Location: Tehran, Iran
15. Entity: SAHEL CONSULTANT ENGINEERS
Location: Number 57, Eftekhar Street, Larestan Street, Motahhari Avenue, Tehran, Iran
Mailing address: P.O. Box 16765-34, Tehran, Iran
16. Entity: HARA COMPANY
AKA: Hara Institute
Location: Tehran, Iran
17. Entity: GHARARGAHE SAZANDEGI GHAEM
AKA: Gharargah Ghaem
Location: Number 25, Valiasr Street, Azadi Square, Tehran, Iran
AIO Individuals:
18. Individual: BAHMANYAR MORTEZA BAHMANYAR
DOB: December 31, 1952
POB: Tehran, Iran
Passport: 10005159 (Iran)
Alternate Passport: 10005159 (Iran)
19. Individual: AHMAD VAHID DASTJERDI
AKA: AHMED DASTJERDI VAHID
DOB: January 15, 1954
Passport: Diplomatic Passport A0002987 (Iran)
20. Individual: REZA-GHOLI ESMAELI
DOB: April 3, 1961
POB: Tehran, Iran
Passport: A0002302 (Iran)
IRGC Individuals:
21. Individual: MORTEZA REZAIE
AKA: Morteza Rezai
DOB: circa 1956
22. Individual: MOHAMMAD HEJAZI
DOB: circa 1959
23. Individual: ALl AKBAR AHMADIAN
AKA: Ali Akbar Ahmadiyan
DOB: circa 1961
POB: Kerman, Iran
24. Individual: HOSEIN SALIMI
AKA: Hossein Salami
AKA: Hoseyn Salami
AKA: Hussayn Salami
Passport: D08531177 (Iran)
25. Individual: QASEM SOLEIMANI
AKA: Ghasem Soleymani
AKA: Qasmi Sulayman
AKA: Qasem Soleymani
AKA: Qasem Solaimani
AKA: Qasem Salimani
AKA: Qasem Solemani
AKA: Qasem Sulaimani
AKA: Qasem Sulemani
DOB: March 11, 1957
POB: Qom, Iran
Passport: 1999 Diplomatic Passport 008827 (Iran)
2007/928
Released on October 25, 2007
