25 June 97
Financial Post
Peter Morton, Washington Bureau Chief

Bow Valley Energy Ltd. is the second Canadian company to suffer fallout from the U.S. tendency to punish governments it doesn't like

Sen. Alfonse D'Amato has warned the Calgary-based oil company it is violating the Iran-Libya Sanctions Act, a law D'Amato pushed through Congress last August to try to combat terrorism thought to be coming out of the two countries.

D'Amato accused Bow Valley of being a "pariah company known for supporting rogue states" and of paying hard currency to help Iran build nuclear weapons.

"For the principle of profit, you are aiding and abetting the terrorist regime of Iran," D'Amato, a Republican from New York, said in a letter to Bow Valley vice-president Rod Blair.

Bow Valley is in a consortium with a British engineering firm on a bid to service oil wells in the Balal oilfields in Iran. The deal with National Iranian Oil Co., which has not yet been signed, is worth more than US$40 million.

Bow Valley president Walt DeBoni denied the company is doing anything illegal under Canadian law. He said yesterday it has no U.S. assets that could be vulnerable to seizure.

"Everything we do is in compliance with Canadian law," he said. "Anything we do in Iran does not support terrorism."

The accusations from D'Amato come at a difficult time for Bow Valley, which is involved in delicate negotiations to close the deal with Iran.

If the U.S. administration follows D'Amato's lead, Bow Valley will join Toronto-based Sherritt International Corp. in falling under new U.S. sanction laws designed to punish governments the Americans have quarrels with.

Sherritt's top 11 executives have been barred from the U.S. under the Helms-Burton law because of the company's nickel-mining operation on what was once American-owned property in Cuba before the communist revolution in 1959.

D'Amato accused Bow Valley of helping Iran get hard currency from oil production, something described as a "direct threat to U.S. national security" because, the senator maintains, the Iranian government will spend the cash on nuclear weapons and terrorism.

Last week, Iran was accused of buying missiles capable of hitting the U.S. Navy in the Persian Gulf.

Ottawa has been lobbying the U.S. administration to repeal D'Amato's bill and Helms-Burton because they are in violation of international trading laws, a contention the U.S. rejects.

Bow Valley would get what protection it could from Ottawa if the U.S. administration hits it with sanctions, said Charles Larabie, a spokesman for Trade Minister Sergio Marchi.

"There's no sign anything Bow Valley would do there contributes to international terrorism," Larabie said. "It is inappropriate for Sen. D'Amato to use this language against any Canadian, non-American or even American company."

A D'Amato aide said yesterday the senator plans to go farther by pushing for even tougher amendments to the 10-month old Iran-Libya law.

The law imposes a wide range of sanctions on all companies doing business in Iran or Libya if the contracts are worth more than US$40 million. That threshold is slated to drop to US$20 million in August.

USA Engage, a coalition of U.S. companies led by Boeing Corp., is trying to fight the growing trend toward sanctions.

The latest is a bill from Sen. Arlen Spector, a Republican from Pennsylvania and Rep. Frank Wolf, a Virginia Republican, which would impose sanctions on any government thought to be persecuting Christians.

"You're talking about pretty much the entire Muslim world and China," said USA Engage vice-president Dan O'Flaherty, adding that New York City is calling for similar sanctions.

The coalition estimates that sanctions have already cost U.S. companies about US$20 billion in sales.

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