US regulators ask Ford about Syria, Sudan sales
Nov 24, 2006 (DETROIT) — U.S. Federal regulators are pressing Ford Motor Co. for information about its business in Syria and Sudan, which are under economic sanctions or other controls for being state sponsors of terrorism.
Ford said its operations in those countries are legal and not material to investors.
The Securities and Exchange Commission, in a letter to Ford dated July 5 but not released until Friday by the agency, said it appeared from Ford’s Web site and news media accounts that the company has operations in Sudan and Syria. It also said that Mazda Motor Corp., which is part-owned by Ford, has a presence 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 letter asks the company to describe its past, current and future operations in the countries and whether Ford believes contacts there “constitute a material investment risk for your security holders.”
Ford responded in a letter dated July 18 that it has one authorized dealership in Syria, which opened in May. Ford contended it is legally allowed to sell products in Syria that contain less than 10 percent of U.S.-originated content, and it legally can do business with Syrian nationals who are not government officials.
A State Department official confirmed that there is no across-the-board prohibition on a company doing business in Syria.
The letter noted that several U.S. government officials attended the grand opening of the Ford dealership in Syria, including representatives from the embassy in Damascus.
Ford said its Land Rover subsidiary has a contract with a distributor in the United Kingdom that sells vehicles in Sudan, and that Land Rover and Ford subsidiaries Volvo and Jaguar each have a dealership in Syria.
“These companies sell only products with less than 10 percent U.S. content to their authorized dealerships,” the Ford letter said.
Ford addressed the question about Mazda by stating that the Japanese automaker is a separate legal entity from Ford, although Ford owns about a third of Mazda.
In 2005, Ford said it did about $50 million worth of business in the countries cited by the SEC, a small percentage of its $177 billion in global revenues.
“We do not believe that a reasonable investor would deem this lawful activity material from a qualitative standpoint,” the letter said.
SEC spokesman John Nester said Friday that the agency reviews all company filings at least once every three years and often will ask for comments that result in changes or clarifications. He would not comment specifically on the request made of Ford.
Ford spokeswoman Becky Sanch said she could not comment, and Mazda spokesman Jay Amestoy said he had no comment.
(AFX)