Transport for London’s controversial sponsorship contract with Emirates airline could have placed some contractors in violation of US trade rules, according to one London Assembly Member.
Last week MayorWatch revealed how the airline’s agreement to sponsor the Thames cable car includes a clause allowing it to withdraw from the deal should TfL sell or assign the scheme to a “conflicting person”.
The break clause went further than usual, extending the definition of a “conflicting person” to include “any person who is a national of, or who is registered, incorporated, established or whose principal place of business is in a country with which the United Arab Emirates does not at the date of this Contract or at any relevant point during the Term maintain diplomatic relations;”
The effect of the clause was to limit TfL’s commercial options by making the contract subservient to the foreign policy of an overseas Government.
It would prevent TfL from selling all or part of the cable car to an Israeli national or business or financing the scheme through Israeli-based banks should they require its assets be put up as security.
TfL bosses initially sought to defend the clause, however when he became aware of it Mayor of London Boris Johnson ordered them to renegotiate the contract.
Andrew Dismore, a Labour member of the London Assembly, says the contract may have placed some of TfL’s contractors and suppliers in breach of US foreign trade laws.
According to his office, the US Export Administration Act forbids any US based operation from doing business with any other business or organisation that has agreed to boycott Israel.
This means US companies or those who have operations in the US that have traded with TfL during the period covered by the Emirates contract could be in breach of US law.
Mr Dismore says “TfL has put major companies and itself at significant risk of prosecution due to this contract fiasco.”
“The US government is very clear that businesses operating in the United States are not to be involved in a boycott of Israel and if found to be dealing with a business that is so involved, face a fine up to $250,000.”
Appearing before Assembly on Wednesday morning, Mayor Johnson said: “I don’t believe in allowing any foreign policy considerations to intrude into the governance of London and that clause was plainly inappropriate and it’s been taken out.”
He added: “That clause, which I think was completely wrongly drawn up. as soon as it was drawn to my attention we sorted the matter out.”