The Securities and Exchange Commission has raised disclosure issues with regard to Ford Motor operations in several countries deemed by the U.S. to be state sponsors of terrorism. In a letter fired off on July 5—but released last Friday by the regulator—the Commission asserted that the automaker’s website and news accounts suggest that Ford has operations in Sudan and Syria, and that a subsidiary has operations in Iran and Syria.
“Your annual report does not include any information about these operations,” SEC Division of Corporation Finance Branch Chief David R. Humphrey said in the letter to Ford Chief Financial Officer Don Leclair. The SEC further points out that Iran, Sudan, and Syria are identified as state sponsors of terrorism by the State Department, and are subject to economic sanctions and controls administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the U.S. Commerce Department’s Bureau of Industry and Security (BIS).
In the letter to the automaker, the SEC demands that Ford “describe” its past, current, and anticipated operations in Sudan, Syria, and Iran, including whether the operations involve subsidiaries, affiliates, joint ventures, or other direct or indirect arrangements. “Include in your response a description of the products and services you sell, and the nature and extent of your business operations in each country,” continued the missive.
The SEC also requested that the automaker reveal whether any of the distributorships through which its products are sold into the countries are owned or controlled by the governments of Sudan, Syria, and Iran, or whether the governments of these countries have a financial interest in the sale of Ford products to local customers. Further, the SEC asks Ford to discuss the materiality of its contacts with the trio of countries in light of their status as state sponsors of terrorism.
According to its website, Ford currently has five dealers in Syria. However, the company currently does not indicate that it has any operations in the Sudan.
In a response letter sent to the SEC’s Humphrey, and dated July 18, James C. Gouin, Ford’s vice president and controller asserts that Ford and its majority-owned subsidiaries “do not directly or indirectly conduct business in Sudan or Iran, except that our Land Rover subsidiary has a contractual relationship with a distributor in the United Kingdom that sells Land Rover models into various markets, including Sudan.” Gouin also said that laws administered by OFAC and BIS permit Ford to sell products into Syria as long as the products contain less than 10 percent of U.S.-made content In addition, Gouin’s letter said that the rules also permit any U.S. “persons”—for example, Ford—to do business with Syrian nationals who are not government officials.
“Specifically, we have one authorized Ford-brand dealership in Syria,” the letter further states. Also, the letter points out that non-U.S. subsidiaries Volvo, Land Rover, and Jaguar each have an authorized dealership in Syria. “These companies sell only products with less than 10 percent U.S. content to their authorized dealerships,” the letter notes.