General Motors is denying reports that company executives met with Iranian officials using Swiss passports.
The company, which is in the midst of severing ties with the U.S. federal government following a $50 billion taxpayer bailout, denied reports that GM had potentially violated U.S. trade sanctions against Iran.
The car company is now asking the French outlets that first reported the story to retract claims that Iran received shipments of new Chevrolet Camaros.
"The assumptions and inferences in the Le Figaro and/or L’usine Nouvelle articles are false," GM spokeswoman Heather Rosenker said in a statement. "General Motors [is in] consistent compliance with U.S. international and local laws throughout its operations in over 140 countries."
She added that the reports were "unequivocally false" and that no GM executive had met with officials from Iran Khodro, the nation’s largest vehicle maker, over the past two years.
Michael Rubin, a former Pentagon official and author of Dancing with the Devil: The Perils of Engaging Rogue Regimes, said that the reports, if true, are especially troubling given the nature of Iran’s car market.
Iran Khodro is a key player in the economic wing of Iran’s Revolutionary Guard. Its profits—which come from the domestic market, as well as exports to Venezuela, Lebanon, and Iraq—finance terrorism, Rubin said.
"Not only does GM appear to be violating the spirit of sanctions, if not the letter, they are showing the disdain they have for the victims of terrorism and our servicemen by working with the group that is responsible for terrorism," he said.
The allegations focus on GM’s relationship with French automaker PSA Peugeot Citroën, which maintained a strong presence in Iran before partnering with GM in 2012.
"Before entering an alliance with GM, Peugeot made the decision to suspend the production and shipment of parts and material into Iran," Rosenker said. "The suspension of Peugeot activity in Iran continues to this day. It should be noted that Peugeot has no industrial, nor direct, commercial activity in Iran."
The reports alleged that GM called for PSA to withdraw from the lucrative Iranian car market, so that it could increase GM’s market presence once the United States lifts its sanctions against Iran.
Not everyone is convinced, however. One executive with a global automaker based in France said that PSA officials and French reports are lashing out against their American partners "because they want to blame GM for their imminent bankruptcy."
"This is more of a case of GM blundering into Iran entanglement with the PSA deal," the source said.
Auto expert Ed Niedermeyer said that such reports call into question the company’s decision to enter into the PSA deal in the first place. PSA has suffered in recent years from falling demand in a stagnant European continent and could ill afford to lose out on the half-million vehicles it sold to Iran in 2011. Niedermeyer said that both companies have been hurt by the deal.
"If the French reports are true […] it appears that not only does GM seem to get a commercial advantage from government ownership, it appears we're seeing GM's economic interests outweighing the U.S.'s diplomatic investment in allies like France and Israel," Niedermeyer said.
The mere appearance of dealing with a hostile government that critics say is seeking nuclear weapons could hurt GM "whether that was a long-term play or GM making the most of a bad deal with PSA," according to Niedermeyer.
GM defended the 7 percent stake it owns in PSA in its statement.
"GM’s agreement with Peugeot is fully compliant with U.S. law governing trade with Iran, and is not intended to benefit Iran in any way," it said.
The United States is in ongoing negotiations with Iran to suspend its nuclear program.