By Timothy Gardner
WASHINGTON (Reuters) - A South Korean construction company reported to have recently engaged in Iran's energy sector had a contract with the U.S. government even as Tehran came under pressure for its disputed nuclear program, a U.S. government watchdog said on Monday.
Daelim Industrial Co had a nearly $1.5 million U.S. government contract to build family housing at a military base in South Korea at some point between mid-2011 and late 2012, the General Accountability Office said in a report on Monday. The GAO is the investigative arm of Congress.
Under U.S. sanctions law, any foreign company that has an investment in Iran's energy sector equal to or greater than $20 million is subject to punishments including being cut off from the U.S. financial system. Such companies should also be denied contracts with the U.S. government, it says. The GAO did not say how much Daelim's investments in Iranian energy were worth.
The U.S. sanctions aim to hinder Tehran's nuclear program, which the West believes is enriching uranium that could be used to develop nuclear weapons, a charge Iran denies.
The sanctions law signed in August gave the Obama administration the authority to punish companies that help Iran develop its energy resources, an important source of revenue for the country.
Daelim was one of at least seven companies from China, India, South Korea and South Africa that continued to have investments in Iran in 2012, the GAO said in December, in a report required by a U.S. sanctions law.
A Daelim spokesman in Seoul said the company was simply completing a construction project in Iran that predated the U.S. sanctions.
He added that the building contract did not constitute an investment in Iran's energy sector, as stipulated in the U.S. sanctions law, and that Daelim had not signed any new contracts in the Islamic Republic since 2010.
Daelim, which the GAO said had helped to develop Iran's South Pars gas fields and a liquefied natural gas project in Tombak, was the only one of the companies found also to hold a contract with the U.S. government, the GAO said on Monday.
The GAO has not determined whether the activities of the companies are sanctionable, a determination that would be made by the State Department and other agencies. The GAO provided a copy of the report to the State Department, which declined to comment.
(Additional reporting by Somang Yang in Seoul; Editing by Leslie Adler and Edmund Klamann)