Treasury releases list of alleged Iraqi network

April 02, 1991|By Dan Fespermanand Gilbert A. Lewthwaite | Dan Fespermanand Gilbert A. Lewthwaite,Sun Staff Correspondents

WASHINGTON -- The Treasury Department painted a "scarlet letter" of complicity yesterday onto 52 businesses and 37 individuals said to be part of a secret Iraqi network for worldwide arms dealing and investing. But the broad-brush labeling may have spattered some companies that have done nothing illegal, Treasury officials conceded.

In announcing the list, which included only two U.S. companies and no American residents, Deputy Treasury Secretary John E. Robson said, "Over the last decade, Saddam [Hussein] strengthened the sinews of his war machine through a sophisticated network of front companies and agents. Through it he got weapons, spare parts, machine tools and raw materials necessary to sustain his militarized state. And through it he may have hidden away ill-gotten fruits of embezzlements from the Iraqi people. We want the network exposed, and we want it neutralized. . . .[This list] has the effect of putting some sort of scarlet letter on them."

Mr. Robson said that the named companies and individuals are now off-limits to would-be trading partners under the terms of the embargo against Iraq. Anyone caught doing business with them will be subject to criminal penalties -- fines of up to $1 million and prison terms of up to 12 years.

In addition, Treasury has frozen the U.S. assets of the businesses and people on the list. Mr. Robson said no one yet knows how much those assets are worth, either here or abroad. But Treasury's director of foreign asset control, R. Richard Newcomb, said that the domestic assets identified so far amount to about $1 billion.

Those assets might eventually be used to help pay Iraq's war reparations to Kuwait, Saudi Arabia and Israel, Mr. Robson said.

In Great Britain, home to 31 of the companies and 13 of the individuals on the list, government officials who got an advance look at the list had earlier pointed out "certain inaccuracies and possible confusions," according to a Department of Trade and Industry official.

For example, the list originally included the British branch of Matrix Churchill Ltd., a machine tool manufacturing company that had been Iraqi owned. But British officials pointed out that the company was sold in October to a British firm with no connections to Iraq. Treasury officials removed it from the list before yesterday's unveiling but left on the Matrix Churchill Corp. of Cleveland, which has been shut down since Treasury froze the company's assets in September.

The list also included British businessman Paul Henderson, who had been managing director of Britain's Matrix Churchill Ltd. Mr. Henderson said he left the company in October after he "fell out with the Iraqis" over the gulf crisis, and he said his inclusion on the Treasury list was "a nonsense." Mr. Henderson said he is now a self-employed consultant, and no longer has any connection with Iraq.

The Department of Trade also expressed concern to Treasury officials that several of the British companies and individuals were listed with vague addresses, such as "England, United Kingdom." But several such addresses remained on yesterday's list.

"It is obviously fair to the companies not involved that this is made absolutely clear," a British official said. "This [Treasury report] is not an expose. It is basically something underlining for anybody taking an interest that there is Iraqi involvement in these companies."

The public relations travails of an Ohio firm have already shown what can happen when a company is mistakenly believed to have Iraqi connections. The company, Matrix Essentials Inc., a shampoo and hair lotion manufacturer, has become the target of insults and customer inquiries after being mistaken for the nearby Matrix Churchill business.

Treasury's Mr. Robson did not express concern about adverse public reaction that might be triggered by the list. He also conceded that it "is possible" that some of the named people and companies have done nothing illegal. His concern, he said, is that companies not on the list will automatically be considered blameless. "I want to emphasize that the fact that a name or a company isn't on this list does not imply the U.S. government's seal of approval," he said. "We have many more cases under investigation."

By exposing the names on the list, he said, "We are putting the world on notice that when you deal with them, you're dealing with [Mr. Hussein]."

The list does not include large companies in which Iraqis might hold a minority share, such as the already publicized 8.4 percent holding in Hachette of France, the media company that publishes several U.S. magazines.

Nor did the list include Anees Mansoor Wadi, an Iraqi national whose California home and other assets were seized by Treasury officials 11 days ago. Mr. Wadi is said to be connected with the Iraqi arms network and several Iraqi-controlled companies, including Bay Industries Inc., in Santa Monica, Calif., the only other U.S. firm on the list besides Matrix Churchill Corp.

Treasury officials were vague about what it took to qualify for the list. "I don't think we have a rigid, numerical cookie-cutter test that says you're in or you're out," Mr. Robson said. "It is an aggregate of considerations."

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