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Conoco Decision Draws Praise, Averts Showdown with Bronfman

March 14, 1995
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Under the threat of a presidential order and dissent within its own parent company, Conoco, the major American oil company, has canceled a $1 billion deal with Iran.

The move drew praise from Jewish groups and averted an anticipated showdown between Edgar Bronfman and the board of directors of Du Pont, Conoco’s parent company.

Bronfman, along with his brother Charles and son Edgar, holds a controlling interest in the Seagram’s company, which owns 24.3 percent of Du Pont, which in turn owns Conoco Inc., the Houston-based oil company.

Bronfman, a leading Jewish philanthropist and president of the World Jewish Congress, stood to gain hundreds of millions of dollars from the deal.

Instead, he led the charge to scuttle the agreement on Capitol Hill and within the administration.

In visits to Capitol Hill last week, Bronfman had signaled he would “do everything he can” to block the deal when it came before the Du Pont board, according to legislative aides who attended the meetings.

Sources close to Bronfman said if “push came to shove, he had the support” to kill the deal.

As Clinton was poised to sign an executive order banning U.S. companies from entering into contracts for the financing, supervision or management of oil development project in Iran, Conoco announced it would abandon its deal signed March 6.

Under the agreement, Conoco was to have built two off-shore rigs and natural gas lines for Iran. The company stood to gain $1 billion from the deal.

On Capital Hill last week, Bronfman met with Senate Majority Leader Bob Dole (R-Kan.); Speaker of the House Newt Gingrich (R-Ga.); Sen. Jesse Helms (R- N.C.), chairman of the Senate Foreign Relations Committee; Rep. Benjamin Gilman (R-N.Y.), chairman of the House International Relations Committee; and Rep. Dick Gephardt (D-Mo.), the House minority leader.

According to Capitol Hill staffers, Bronfman told senior House and Senate leaders that he is “unequivocally opposed” to the deal with a “rogue, terrorist state.”

Bronfman reportedly was trying to persuade members of Congress to pass legislation banning any other American companies from stepping in with Iran if he were successful in persuading the company to pull out of the deal.

The president’s executive order, according to the Capitol Hill staffers, essentially gave Conoco a face-saving way to bow out of the agreement with the National Iranian Oil Company.

Conoco called off the deal in a terse, three-paragraph statement released Tuesday by Constantine Nicandros, vice chairman of Du Pont and president and CEO of Conoco.

“Du Pont and Conoco pride themselves on being good corporate citizens in the United States as well as around the world. As a result, Conoco will not proceed with the agreement,” the statement said.

The Du Pont board would not have approved the deal if the U.S. government opposed the agreement, Nicandros said.

The deal had never been discussed or voted upon by the Du Pont board, Bronfman had reportedly told the members of Congress.

Bronfman is traveling out of the country and was unavailable for comment.

“If I were a professor of ethics at the Harvard Business School, I would use this as a case study of how a chairman of a company should behave,” Israel Singer, secretary-general of the World Jewish Congress, said, referring to Bronfman’s actions.

Although Clinton’s move will ban development in Iran, U.S. companies can continue to export oil from the Persian Gulf state to Europe and Asia.

American companies exported more than $3.5 billion worth of oil from Iran last year. In addition, U.S. companies exported over $210 million of goods to Iran last year.

Meanwhile, Sen. Alfonse D’Amato (R-N.Y.) is forging ahead with his proposed legislation that would tighten the loophole that allowed Conoco to sign the deal with Iran in the first place. The legislation would ban all trade between Iran and U.S. companies as well as their overseas affiliates.

“Right now the embargo is a myth. We should be ashamed of ourselves for helping Iran secure $3.5 billion in hard currency,” D’Amato said at a news conference.

D’Amato, who has scheduled hearings on the measure for Tuesday, praised the president’s decision.

“The president’s executive order was the right thing and I am pleased to see that Conoco made the decision themselves,” he said.

Many Jewish organizations, which had been quick to condemn the Conoco deal, offered praise Tuesday for Clinton’s order and Conoco’s decision.

“This sends an important message and we welcome Conoco’s decision,” said Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations.

“We hope that European countries will see that the U.S. is acting on principles and strategic interests and that they ought to do the same,” said Hoenlein on Tuesday during a visit to Washington.

He said he and other Conference of Presidents members “heard a very clear message of universal opposition from congressional leaders and senior administration officials” during their lobbying day.

Calling the president’s order an “important tool,” the Anti-Defamation League said in a statement, “This action enhances U.S. credibility in urging other nations to deny Iran financial assistance or other support for its aggressive and incendiary foreign policy.”

Several Jewish groups are supporting D’Amato’s bill.

Without such measures, “the United States helps support state-sanctioned terrorism which targets the U.S. and its closest allies, including Israel and Egypt,” said Phil Baum, executive director of the American Jewish Congress.

Passing this legislation would “demonstrate to the world that stopping terrorism is more important for the United States than making profitable oil deals,” Baum said.

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