Ford Asked to Disclose Business Ties to 'Terrorist-Sponsoring States'

DETROIT – The U.S. Securities and Exchange Commission Friday disclosed it asked Ford Motor Co. (F) to detail its business ties to Syria, Iran and Sudan, three countries the U.S. government considers "terrorist-sponsoring states".

In a chain of correspondence, released Friday, but dating back to July, the SEC asked Ford to demonstrate that its "reputation and share value" were not at risk because of its business in those countries.

In mid-August, Ford said it sells vehicles through dealerships in Syria, while its Land Rover subsidiary sells its sports utility vehicles through a British distributor in Sudan.

Mazda Motors Corp., in which Ford has a 33 percent stake, sells its products through Japanese trading companies in Iran and Syria, Ford said.

"Our limited and lawful business activity in Syria is public information, and we have not been able to identify any resulting negative impact on our reputation or share value," Ford said in a letter to the SEC dated Aug. 16, 2006.

The SEC responded to Ford a week later, saying it had no further comment on the company's annual financial report.

A Ford spokeswoman and a SEC spokesman declined further comment Friday.

The unusual exchange between the No.2 U.S. automaker and the SEC follows letters written by the regulatory body to European and U.S. oil companies, asking them to inform investors about the risks they face from investing in countries the U.S. identifies as those supporting terrorism.

Ford said in the letter to the SEC that sales of Mazda vehicles by the distributors to outlets in Iran and Syria combined resulted in sales revenue of less than $60 million in 2004 and 2005, and $85 million in 2003.

"We do not believe that this de minimis business activity by Mazda impacts Ford's reputation or share value, or the value of Ford's ownership interest in Mazda," it said in the letter.

The authorized dealerships that sell products of Ford's non-U.S. subsidiaries in Syria are neither owned nor controlled by the Syrian government or government officials, Ford said in response to a SEC inquiry of distributor Griwati Auto in Syria.

The automaker further said it did not believe that any of the vehicle sales by dealerships in Syria in recent years were to the Syrian government or government-controlled groups.

But Ford said Land Rover vehicles were sold to various government departments in Sudan, with the bulk of the sales volume going to the Sudan's Ministry of Interior.

"We have been advised further that the other government sales have been largely used for agricultural development purposes," Ford said in the letter.