Not even cake sprinkles for Iran

McCormick Spice pulls plug on sales to the blacklisted nation

April 11, 2011|By Dan Rodricks

Should children in Iran not have sprinkles on their birthday cakes because the leaders of their country are considered sponsors of terrorism? Should McCormick & Co., the spice giant, stop selling seasonings and salad toppings in Iran because the country's leaders are suspected of pursuing an illegal nuclear weapons program?

Last month, the Hunt Valley-based company decided the answer to both those questions was yes. McCormick no longer sells its products in the land of Ahmadinejad.

The fact that it was trading at all in Iran, a country blacklisted as a state sponsor of terrorism, was revealed in a December story in The New York Times about American companies granted exemptions to do business with bad guys around the world. The Times reported that a little-known office of the Treasury Department, under pressure from major food companies and banks, had granted thousands of licenses that allowed U.S. corporations to do business in Iran and other blacklisted states.

In 2000, Congress, at the behest of the farm lobby and other trade groups, said that agricultural and medical humanitarian aid had to be exempted from sanctions. But the law was apparently written so broadly that items such as cigarettes, chewing gum and even "edible cake decorations" were considered allowable humanitarian aid.

McCormick applied for a license to sell salt substitutes, marinades, food colorings and cake sprinkles in Iran, the Times reported. It listed a number of chain stores that would buy its products. But, according to the Times, Iranian entities listed on the application as the end purchasers were connected to companies that had been blacklisted, and for good reason.

One of these, the Times said, was Refah, the largest supermarket chain in Iran. Its shareholders include the Bank Saderat Iran, blacklisted for being a link between the Iranian government and terrorist organizations, including Hezbollah and Hamas; Bank of Sepah, blacklisted for serving as "the financial linchpin" of Iran's efforts to procure a "missile capable of carrying weapons of mass destruction," and the Bank of Melli and Bank Tejarat, blacklisted for similar activities.

The Times reported that another chain store listed in the McCormick license application was owned by the government of Tehran, and a third was closely linked to the Islamic Revolutionary Guards Corps, considered a terrorist organization by the U.S.

When the Times revealed these connections to the Treasury official who granted McCormick the license, he defended the action, saying federal law required him to do so "unless he can prove that the investors engaged in terrorist activities own more than half of a company." The official admitted that the Office of Foreign Assets Control was not "doing corporate due diligence on every Iranian importer." Jim Lynn, McCormick's spokesman, told the Times: "We were not aware of the information you shared with us and are looking into it."

Here in Maryland, the host of a Jewish radio hour on WVIE (1370 AM) read the Times story and noticed McCormick's part in it. Jay Bernstein, who serves as co-host, with Larry Cohen, of Shalom USA, wrote a letter to Freeman Hrabowski, the president of the University of Maryland Baltimore County and a member of McCormick's board.

"Although McCormick's business dealings with Iran are sanctioned by the government," Mr. Bernstein wrote, "the fact that they take place at all is very disturbing. ... By doing business in Iran, companies like McCormick help prop up the authoritarian regime which is responsible for these misdeeds."

Mr. Hrabowski referred Mr. Bernstein's letter to McCormick's corporate office and, in March, Mr. Lynn responded, saying the spice company had found a new Iranian distributor who agreed to ensure that no McCormick products were sold to blacklisted entities.

That wasn't good enough for Mr. Bernstein. While McCormick might be in compliance with U.S. law, there was a moral and ethical question. It was Mr. Bernstein's view that McCormick had no business in Iran — not even to sell cake sprinkles. He expressed that sentiment in an emailed letter to Mr. Lynn on March 6.

On March 8, Mr. Lynn wrote back that McCormick had "re-evaluated our position on sales to distributors who re-sell into Iran" and "decided to cease such sales as long as Iran is subject to the comprehensive sanctions programs imposed by the U.S. government."

Mr. Bernstein was pleased. "This is a great example of a corporation 'doing the right thing,'" he said.

I'll give Mr. Bernstein credit for being an active citizen and calling out McCormick on policy, though I'm not as sure as he might be about the cake sprinkles. I can see more good than harm coming from Iranian children, and their mothers, having American-made sprinkles on their birthday cakes. For that, there ought to be an exemption.

Dan Rodricks' column appears Sundays, Tuesdays and Thursdays. He hosts Midday, Mondays through Fridays, on WYPR. His email is dan.rodricks@baltsun.com.

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