Seizing on porous laws and lax enforcement of U.S. sanctions, American corporations have used foreign subsidiaries to openly conduct business with Cuba and Libya, according to documents and interviews.

The rules governing sanctions are so loosely drawn that law enforcement officials have had to abandon or back away from several investigations of American companies suspected of doing illegal business abroad, an examination of some cases shows.The most striking example involves Cargill Inc., one of the world's largest agricultural companies.

Three years ago, a team of government agents opened an investigation into charges that Cargill brokered ships loaded with sugar for the Cuban government, in apparent violation of the Trading with the Enemies Act.

In the ensuing months, investigators found hundreds of messages between Cargill and shippers overseas, evidence that executives at the company's headquarters in Minnetonka, Minn., had been involved.

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And last year, senior Justice Department officials predicted in internal memorandums that an indictment of Cargill, which could cost it hundreds of millions of dollars in federal subsidies and contracts, was imminent.

Today, however, government officials acknowledge that Cargill may never be charged, even though internal company records leave no doubt that its U.S. executives helped arrange some of the financing.

The company had seized on a loophole in the law that has made it virtually impossible to enforce the U.S. sanctions against multinational corporations: It traded with Cuba through a foreign subsidiary beyond the reach of American law.

Cargill is one of numerous American companies that have used foreign subsidiaries to trade with countries under U.S. sanctions, with the profits flowing back home, raising questions about the effectiveness of one of the most visible tools of U.S. foreign policy.

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