A Test Case on Iran Sanctions

Cross-posted from the Project on Government Oversight .

If there’s one thing most Americans support in foreign policy, it’s sanctions against Iran to halt its alleged drive for nuclear weapons. From President Obama to Mitt Romney, Rick Santorum, and Newt Gingrich, leading candidates all want to put the economic squeeze on Tehran and to signal their support for Israel. President Obama recently announced he will ratchet up sanctions on the country’s oil exports and declared a “national emergency” to deal with the Islamic Republic. The Senate will try to iron out its differences over anti-Iran measures in coming weeks, as bus stations around Washington, DC, are studded with advertisements questioning the President’s resolve on the issue.

In this politicized environment, the last thing any candidate or legislator would countenance is gobs of U.S. taxpayer money going to a military contractor caught doing business with the Islamic Republic. Indeed, Congress specifically addressed that possibility in 2010, when contractors were required to certify in writing that they have no ties to Iran’s sanctioned enterprises.

And that’s why the current situation surrounding one big military contractor known as Kuwait and Gulf Link Transport Company, or KGL, seems so puzzling. Amid renewed allegations that the Kuwait-based behemoth is involved in dealings with Iranian shipping interests, ports, and front companies, KGL continues to hold up to $1 billion worth of contracts with America’s armed forces. No contractor to the U.S. military has ever been debarred for doing business with Iran, so KGL could emerge as a test case.

At the Pentagon, its number two official has repeatedly told skeptical Members of Congress that KGL is free of ties to Iran and has broken no law. Yet documents reviewed and interviews conducted by POGO show that the FBI and the Pentagon’s own Defense Criminal Investigative Service (DCIS) are apparently conducting a non-public probe of KGL that is at least a year old, taking evidence from former employees and others about alleged business dealings that could violate Iran sanctions laws.

The upshot is that instead of projecting a message of American resolve and clarity, the case of KGL seems to offer an ambiguous quagmire of mixed signals as key issues surrounding the company remain to be sorted out. Indeed, as the undisclosed federal probe of KGL drags on, the giant logistics provider continues to have access to U.S. military facilities and provide support for American troops in the tense Gulf theater.

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Adam Zagorin is Project on Government Oversight‘s journalist in residence.