Cheat-Seeking Missles

Monday, May 19, 2008

GE's Lame Excuses

Howard Kurtz has a thorough piece detailing the warfare between Fox News (Roger Ailes and Bill O'Reilly) and NBC (Jeff Zucker and Keith "Where are my viewers?" Olbermann). It's nasty stuff, and a fine morning read if you're interested in the intersection of news and egos.

There's been a lot going on for a long time in this feud, but the element that's elevated it to Kurtz-like levels is O'Reilly's personal accusations against GE CEO Jeffrey Immelt -- it's the stuff of leads:
Bill O'Reilly, the Fox News star, is mounting an extraordinary televised assault on the chief executive of General Electric, calling him a "pinhead" and a "despicable human being" who bears responsibility for the deaths of American soldiers in Iraq.
O'Reilly's point is that GE, owner of NBC, continues to sell goods to Iran through foreign subsidiaries, getting around US restrictions. Iran, for its part, is unequivocally involved in the killing of US military personnel in Iraq.

All good fodder, for sure, but PR guy that I am, I'm just focusing on GE's statements to Kurtz. Do they exonerate GE, or are they just spin? Here's their basic line, courtesy of Kurtz:
Under growing criticism from the public and its own shareholders, GE announced in 2005 that it would accept no new business in Iran and would wind down existing contracts, which mostly involved sales of oil, gas and energy and health-care equipment. The remaining work, valued at less than $50 million, amounts to less than .01 percent of GE's income, and the company says the final four contracts will expire within weeks.
Timeline: For a period of time prior to 2005, GE stockholders were protesting the company's trade with Iran. 2005: GE announces it will stop doing business with Iran. 2008: GE is still doing business with Iran, albeit at a lower level.

Here's another timeline. Date this one 1987:
In an effort to further isolate Iran, the Reagan Administration is moving toward more severe restrictions on trade with that country, State Department officials said today.

The impending crackdown was described as a reflection of the heightened tensions between the United States and Iran over the Persian Gulf. (NYT)
This news item wasn't really news, since Iran was already a State Sponsor of Terrorism. Here's State's position:
Countries determined by the Secretary of State to have repeatedly provided support for acts of international terrorism are designated pursuant to three laws: section 6(j) of the Export Administration Act, section 40 of the Arms Export Control Act, and section 620A of the Foreign Assistance Act. Taken together, the four main categories of sanctions resulting from designation under these authorities include restrictions on U.S. foreign assistance; a ban on defense exports and sales; certain controls over exports of dual use items; and miscellaneous financial and other restrictions.

Designation under the above-referenced authorities also implicates other sanctions laws that penalize persons and countries engaging in certain trade with state sponsors. Currently there are five countries designated under these authorities: Cuba, Iran, North Korea, Sudan and Syria.
Iran was named a State Sponsor of Terrorism on January 19, 1984 -- 21 years before GE shareholders pressured the American company to follow American laws, even in its European operations. GE was clearly aware that its sales to Iran would violate this law if they were made by American operations, so it purposefully did business with Iran through its European operations.

GE's excuse flunks. We expect American global enterprises to be American first and global second -- especially on issues like this.

Now let's look at how GE deals with the charge that its business practices have led to the deaths of Americans. Here's Kurtz again:
Last week, in an unrelated segment with CBS's Kimberly Dozier about being injured in Iraq, O'Reilly used a graphic that combined GE's logo with a photo of Ahmadinejad. The heading: "Business Partners."

GE spokesman Gary Sheffer called O'Reilly's remarks "offensive," saying: "He has a right to his opinion, and we equally have a right to be appalled by it. We felt he crossed the line. . . . Nothing we supply, or any goods and services we have supplied to Iran, is in any way endangering U.S. troops."
O'Reilly's graphic was certainly over the top, as GE's activities are certainly far below the attention of Mah- I'm in the -moud for peacock Ahmadinejad (rhymes with "I don't think Jeff Immelt's a cad"). But is O'Reilly's message similarly over the top?

Sheffer's denial is complete. Nothing now, nothing ever, supplied by GE has in any way endangered US troops. Additionally, Immelt had a statement issued last month that said sales of hospital equipment are allowed under a humanitarian program licensed by the U.S. government.

Earlier -- in 2005 -- Sheffer had this to say about GE sales to Iran:
"Senior management and the board decided in mid-December to discontinue taking new orders because of uncertain conditions relating to Iran."
"Uncertain conditions" was disingenuous, since the reason for the cut-off was quite a certain condition: Shareholders were rebelling, casting a spotlight on sales GE would just as soon keep quiet.

And what of the non-medical sales? The energy and gas production equipment?

GE can hide behind humanitarianism in their hospital equipment sales (and I'm sure the equipment is sold at a strictly humanitarian price point), but no such cover is provided for energy production equipment. What were our primary targets in our air bombing campaign against Germany in WWII? Military installations, factories and oil refineries and storage facilities.

None of the weapons Iran manufactures for use against us in Iraq can be manufactured without energy. None can be transported to Iraq without energy. And for that reason, Sheffer's blanket excuse is a moth-eaten heap of holes.

O'Reilly's on a high horse and he's using high octane rhetoric, but his position is more defensible than GE's. Thomas Edison probably isn't rolling over in is grave since he was a pretty unscrupulous businessman himself -- and that just might be the problem with GE.

hat-tip: memeorandum

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