April 20, 2010 | Wall Street Journal

Ingersoll Bars Units From Sales to Iran

Ingersoll-Rand PLC said it has prohibited its subsidiaries from selling products to customers in Iran.

The move by the industrial-parts maker is part of an accelerating trend among major Western companies to reduce their business exposure to Iran.

The companies’ decisions have been driven in part by pressure from Western governments to halt dealings with Iran, U.S. officials and industry watchers say. But they add that energy, engineering and technology concerns are also increasingly spooked by legislation passed by the U.S. Congress in late January that would punish any international company aiding Iran’s oil and gas sector.

Companies including Ingersoll and Caterpillar could be targeted under this legislation, congressional officials say, because their gear could be used to develop Iran’s gas fields and refineries.

“The whole supply chain involved in the oil and gas sector is impacted,” said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington policy institute that focuses on Iran’s energy sector.

The U.K.’s BP PLC, India’s Reliance Industries Ltd., Geneva’s Vitol Holding PLC, and Trafigura Group are among energy companies that have recently moved to sever energy ties with Iran, according to according to people familiar with matter.

Ingersoll, which relocated its headquarters to Dublin from Bermuda last year, disclosed its new restrictions on sales to Iran in a letter to the lobbying group United Against Nuclear Iran. In the letter, Michael Lamach, chief executive of Ingersoll, said that effective immediately the company will order its foreign subsidiaries to “stop accepting orders for all products, components and parts where the subsidiary knows such products, components or parts would be destined for Iran.”

He also said that Ingersoll made the decision “in light of very real and escalating concerns about the intentions of the current regime in Iran.”

Kimmie Lipscomb, a spokeswoman for the New York-based lobbying group, said, “We applaud their decision to stop doing business in Iran. We see it as a positive step to sending a clear message to the Iranian regime.”

UANI’s advisory board contains former Democratic and Republican national-security officials, including R. James Woolsey, director of the Central Intelligence Agency in the Clinton administration, and Jack David, a deputy assistant defense secretary under George W. Bush.

Paul Dickard, a spokesman for Ingersoll, said the company’s business in Iran probably represents less than 0.1% of its $13.2 billion in 2009 revenue. He said the company has been watching the issue and that efforts by UANI “probably accelerated” its decision.

UANI was launched in September 2008 to try to prevent Iran from possessing nuclear weapons, and it has targeted more than 200 U.S. and foreign companies. The group had said it would “ostracize” Ingersoll for its machinery sales in Iran.

Mr. Lamach said Ingersoll was “deeply disappointed” by UANI’s tactics, which included a March 2 letter alleging the company had violated Securities and Exchange Commission rules by not reporting information about sales into Iran. He called the allegations “completely unfounded” and said UANI had apparently sent its letter to the media before giving the company a chance to respond.

Mr. Lamach added that Ingersoll’s Iran-related revenue was immaterial and that the company has no employees, operations or assets there. Ingersoll makes industrial equipment and air-conditioning systems, as well as locks and golf carts.

U.S. lobbyists said Tuesday they would accelerate pressure on the Obama administration to enforce the new U.S. legislation as well as to enforce sanctions passed against Iran in the past.

Read the letter sent to Congress by the American Israel Public Affairs Committee on Tuesday afternoon.

The American Israel Public Affairs Committee, Washington’s strongest pro-Israel lobby, circulated a letter through Congress late Tuesday pressing for more vigorous implementation of sanctions laws involving Iran. (Read the letter.)

The U.S. is negotiating to get the United Nations Security Council to pass a fourth round of economic sanctions against Iran for its nuclear work.

But many diplomats acknowledge that winning stringent new U.N. sanctions will be difficult. China, which has veto power in the Security Council, and Turkey and Brazil have resisted calls for extensive new penalties.

Meanwhile, on Wednesday, the Treasury Department’s point man on Iran sanctions, Undersecretary Stuart Levey, will travel to Switzerland, Saudi Arabia, the United Arab Emirates and Oman. “We are pointing out that they face dramatic risks by doing business with Iran,” Mr. Levey said in an interview Tuesday.