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Source: Dow Jones/The Wall Street
March 3, 2010
CHICAGO — Ingersoll-Rand PLC (IR) is being targeted over its ties to Iran by a lobby group that has already helped push other industrial groups to sever their business interests in the country.
New York-based United Against Nuclear Iran has called on the diversified industrial company to stop servicing Iran’s energy sector and accused the company of failing to adequately disclose its business activities in the country.
The lobby group has claimed credit for the recent decision by Caterpillar Inc. (CAT) to prohibit its non-U.S. subsidiaries from accepting orders known to be headed to Iran, the latest company to distance itself from Iran because of sanctions linked to the country’s nuclear program.
“Ingersoll-Rand’s decision to do business in Iran is wrong,” said UANI President Mark Wallace in a letter sent this week to Michael Lamach, chief executive of Ingersoll-Rand. “We urge Ingersoll-Rand to immediately cease all business dealings in Iran.”
The lobby group vowed to take “legal steps to ostracize” the company. It said it will urge the U.S. Securities and Exchange Commission to initiate an investigation into the company’s disclosure practices and threatened to press the New York Stock Exchange to delist Ingersoll’s stock.
Ingersoll-Rand gave no indication that it would comply with the group’s demands. The company maintains it isn’t obligated by securities regulations to disclose its business in Iran as a potential risk to the value of its stock because its sales volume in the country is small and doesn’t affect the company’s overall results. The company didn’t provide a specific sales figure, but estimated the amount at no more than two-tenths of 1% of annual sales.
“It certainly doesn’t come close to being material” to earnings, said Ingersoll spokesman Paul Dickard. “We’re conducting business under all the legal constraints that are out there.”
United Against Nuclear Iran, which includes members with political and diplomatic ties to both Republican and Democratic presidential administrations, has also pressured chemical company Huntsman Corp. (HUN) and German industrial conglomerate Siemens AG (SI, SIE.XE) over their business ties to Iran.
Ingersoll-Rand, whose product lines include Trane heating and air-conditioning units, commercial refrigerators and golf carts, manufactures air compressors, air-powered drills and other equipment used in oil and natural gas production.
To comply with the U.S. government’s ban on domestic companies selling directly to Iranian customers, companies have relied on overseas subsidiaries to sell products to independent dealers, who conduct the actual sales to customers in Iran. Ingersoll said any of its products that end up in Iran are manufactured in foreign countries by a subsidiary and contain minimal amounts of U.S.-made components.
“We’ll continue to monitor this situation,” spokesman Dickard said. Although Ingersoll-Rand relocated its headquarters to Ireland last year, it remains subject to U.S. regulations because many of its operations and top executives are based on U.S. soil.
United Against Nuclear Iran said its research identified at least three Iranian companies selling or using Ingersoll equipment. Havacaran Industrial Technologies describes itself as certified distributor of Ingersoll-built compressors and equipment. Privately-held Sameh Afzar Tajak Co., or Satco, assembles and sells Ingersoll compressors and materials-handling machinery, according to the group. Meanwhile, a drilling company that the group described as a subsidiary of the state-owned National Iranian Oil Co. says on its Web site that it uses Ingersoll compression systems, drills, hoists and other equipment.
Ingersoll’s stock was recently up 3.4% at $33.94.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com