[Congressional Record Volume 140, Number 140 (Friday, September 30, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                       DID TEXACO FAIL TO COMPLY?

                                 ______


                          HON. EDOLPHUS TOWNS

                              of new york

                    in the house of representatives

                       Friday, September 30, 1994

  Mr. TOWNS. Mr. Speaker, I strongly supported United States and U.N. 
sanctions against the government of Haiti. I believe these sanctions in 
fact, contributed to forcing the defacto government to finally yield to 
the latest round of negotiations for a peaceful intervention. Because 
of the manner in which they complied with these sanctions, one of our 
major oil companies, Texaco, now is being accused of noncompliance. If 
one examines Texaco's unique presence in Haiti, their actions are 
completely understandable.
  When President Clinton told the American people recently about the 
brutality and violence of the military regime in Haiti, Texaco knew 
only too well how true his words were. During 1991 and 1992, the Cedras 
regime used coercion and violence to intimidate Texaco Caribbean 
employees there from complying with U.S. sanctions against the de facto 
government.
  Throughout the violent and threatening period following the 
imposition of U.S. sanctions, Texaco sought to act in a legally and 
morally correct manner. Texaco Caribbean did not import any petroleum 
products into Haiti once the United States sanctions were imposed. It 
acted only as a distributor of products purchased by the Haitian 
Government, and then only under threat of military force.
  Texaco Caribbean was one of three petroleum distributors in Haiti at 
the time of the coup. The other two were subsidiaries of Exxon and 
Shell. However, Texaco Caribbean was the only company subject to the 
U.S. sanctions, being incorporated in the United States, while the 
other two companies are not.
  As a result, when the military regime, anxious to obtain fuel and 
money, imported petroleum products and ordered the three companies to 
accept shipments at their terminals, to distribute them and then to pay 
the regime for the shipments, the other two companies did so. But 
Texaco's Caribbean employees, in compliance with the U.S. embargo, 
resisted the regime's orders--and immediately became the targets of 
intense pressure from the de facto government.
  For example:
  Ten soldiers entered the home of Texaco Haiti's superintendent to 
demand that he release petroleum from Texaco's terminals. They 
unholstered their guns and one soldier hit the superintendent's child 
on the head with a rifle butt.
  Two Haitians associated with Texaco Caribbean, one a contract 
security guard and the other the recently retired marketing manager, 
were murdered.
  Armed men in a jeep plowed through the flower garden at the home of 
Texaco Caribbean's chief accountant, and then burst into his home, 
demanding payments for the regime. They threatened him with harm in 
front of his wife and children if he did not arrange payment by noon 
the following day. A senior official of the de facto government also 
told the chief accountant that the head of the regime himself was 
demanding payment for the product. He reminded the Texaco Caribbean 
employee that the government was prepared to take harsh measures 
against anyone who resisted its wishes. The chief accountant was also 
warned that, if Texaco delayed distribution of petroleum, the 
government would deal with him personally. ``I have overheard certain 
conversations that have scared me,'' the chief accountant was told, 
``and I am sure if you heard them, you would be scared to death.''

  The brother of General Cedras--himself a former member of the 
infamous Tonton Macoute--called a Texaco Caribbean manager to bully him 
about Texaco's refusal to accept shipments of petroleum from the 
government for distribution. The refusal was seen as evidence of a 
``pro-Aristide attitude''--a chilling statement coming from a member of 
the violently anti-Aristide regime.
  Throughout this time, Texaco Caribbean's managers were repeatedly 
summoned by senior government officials who demanded greater 
cooperation. Even Haiti's notorious chief of police, Colonel Michel 
Francois, personally expressed his displeasure with the Texaco 
Caribbean's managers--a serious threat to a Haitian.
  Texaco Caribbean employees were clearly caught on the horns of a 
terrible dilemma, one not of their own making but a result of their 
efforts to comply with the U.S. sanctions. The dilemma was taking a 
personal toll. ``When I leave this office,'' one Haitian employee told 
his Texaco Caribbean supervisor in a phone call, ``I am not sure I am 
going to reach home.''
  Throughout this ordeal, Texaco had three goals: To comply with United 
States sanctions, to protect its employees, and to ensure that its 
physical assets in Haiti did not fall in the hands of the military 
regime, which could then generate profits directly from the 
distribution of fuel. Texaco Caribbean management in the United States 
constantly urged its Haitian employees to resist the regime's demands 
while becoming increasingly concerned about the untenable situation 
which had developed.
  Texaco Caribbean, in numerous discussions with the Treasury 
Department's Office of Foreign Assets Control [OFAC] and the State 
Department, told officials of the danger facing its employees. In those 
discussions, the only advice offered by U.S. Government officials was 
to comply with the sanctions, but to not risk the safety of Texaco 
Caribbean employees.
  Given the circumstances, Texaco Caribbean believed the only viable 
option to protect its employees and keep the operation out of the 
regime's hands was to create a trust, which would hold all Texaco 
Caribbean's Haitian assets until such time as United States sanctions 
were fully lifted.
  On a number of occasions prior to creating the trust, Texaco 
Caribbean presented the proposal to OFAC and to other members of the 
U.S. Government for review. When Texaco Caribbean received no response, 
it alerted OFAC and other officials in the State and Treasury 
Departments that time was short--that, in light of the daily threats to 
its employees, Texaco Caribbean had to act quickly. When Texaco 
Caribbean again received no response, it decided that the danger to its 
employees was so grave that it could no longer wait to take action.
  On June 4, 1992, Texaco Caribbean transferred its Haitian operations 
into a Bermuda trust. During the time it is in existence, the trust 
holds and operates Texaco Caribbean's former distribution system in 
Haiti. Texaco Caribbean has had no control over its former distribution 
business in Haiti. It is not entitled to any profits from its former 
operations--and has received none. All proceeds are to be used for 
humanitarian and educational purposes benefitting Texaco Caribbean's 
former Haitian employees, retirees and their families. The trust is 
also expressly forbidden from importing any petroleum products into 
Haiti.
  The U.S. Government was well aware that the trust was subject to 
immediate dissolution by the U.S. Secretary of Treasury at any time or 
whenever U.S. sanctions are fully lifted. This provision, designed by 
Texaco, was available to secretaries Brady and Bentsen any time they 
believed it was acceptable for the United States to allow the Cedras 
junta to expropriate Texaco's assets in Haiti, which that regime would 
have done the moment Texaco's Haitian employees refused to distribute 
product.
  When U.N. sanctions were imposed in 1993, also affecting, for the 
first time, the Shell and Exxon subsidiaries, Texaco assumed that all 
distribution of product would cease. In fact, a Haitian court ordered 
that all three companies continue to operate. The court order was 
backed up by threats of violence and insinuations of treason, against 
the Trust's employees, by the Haitian military. At this point, the 
pressure on the Haitian employees was relieved when the United States 
Naval Blockade stopped the regime from importing petroleum products by 
tanker.
  Under the circumstances and in light of the advice Texaco Caribbean 
received from legal counsel and U.S. Government officials, Texaco 
believes that Texaco Caribbean acted prudently and appropriately. 
Texaco took action to protect its employees--none have been injured 
since the Trust was created--to comply with United States sanctions, to 
keep the United States Government fully informed of its activities, and 
to keep its physical assets from benefitting the Haitian junta.
  In light of the dangers faced by their employees, I believe that 
Texaco acted prudently and within the spirit of the sanctions. 
Hopefully, in reviewing whether Texaco complied with the sanctions, 
others will also recognize the difficult dilemma faced by the company 
in their efforts to protect their employees.
         Department of Commerce, The Deputy Under Secretary for 
           International Trade Washington, DC.
                                                    March 7, 1994.
     Hon. Ronald K. Noble,
     Assistant Secretary for Enforcement, Department of Treasury.
       Dear Mr. Noble: I am writing regarding a problem that 
     Texaco has brought to our attention concerning Treasury's 
     Office of Foreign Assets Control (OFAC). I would appreciate 
     your reviewing this issue in light of the mitigating 
     circumstances of this case.
       Texaco operates a marketing and distribution business in 
     Haiti. On September 16, 1993, OFAC issued a pre-penalty 
     notice to the company indicating a proposed fine of $1.6 
     million of alleged violations of Haiti embargo.
       Texaco told us that its Haitian employees had been under 
     severe pressure since the October 1991 coup. While Texaco 
     instructed its employees to obey the sanctions, the Haitian 
     military directed them to distribute petroleum products 
     imported by the de facto government and to make payments to 
     the government. The employees were operating under fear of 
     physical violence. Two former employees had been killed and 
     family members had been threatened and beaten.
       In June 1992, Texaco transferred its Haitian assets to a 
     Bermuda trust, an action which it believed would permit 
     lawful operations in Haiti and would be in the best interests 
     of its Haitian employees. Texaco prohibited the trust to 
     import any petroleum products. Texaco informed OFAC of this 
     action and requested a license, if it was necessary to have 
     one. Eleven mouths later (May 1993), OFAC advised Texaco that 
     it would not grant a license and four months after that, 
     issued the pre-penalty notice.
       Texaco makes a compelling argument, and it appears to us 
     that they were between a rock and a hard place. Any attempt 
     to shut down the Haiti operation would have endangered the 
     lives of its employees. If Texaco had attempted a closure, it 
     would have been easy for the Haitian de facto government to 
     seize control of Texaco's terminals and to run the operation. 
     This would have maintained the availability of petroleum in 
     Haiti's distribution network and the goals of the embargo 
     would not have been advanced. Moreover, the de facto 
     government would have pocketed the profits. Instead, Texaco 
     provided that the trust will use any profits for humanitarian 
     and educational purposes in Haiti.
       Texaco has asked for our help in this matter. While we 
     realize it is a Treasury concern we indicated we would bring 
     the matter to your attention to see whether further review is 
     possible. I'd appreciate any advice you could provide.
           Sincerely,
                                                Timothy J. Hauser.