Commerce Department Nabs 3 Companies in Ongoing Crackdown Against Boycott

The Commerce Department this week handed down civil penalties to three companies for allegedly violating United States provisions dealing with the Arab boycott of Israel, according to John Despres, assistant secretary for export enforcement.

Although the three companies — Chemical Bank of New York, Bank America International of San Francisco and Cedars Motors of Miami –agreed to pay the civil penalties, they did not admit or deny the alleged violations, according to a Commerce Department statement.

The Commerce Department alleged that in 1988 and 1989, Manufacturers Hanover Trust Co., which merged with Chemical Bank in 1992, provided Saudi Arabia with information regarding an individual’s business relationship with blacklisted companies and required another person to refuse to do business with blacklisted companies.

According to the Export Administration Act and Regulations, American individuals and companies are prohibited from giving information about their or any other companies’ business relationship with or in a boycotted country or companies that are known or believed to be blacklisted.

In another case, the Commerce Department alleged that Chemical Bank gave information to Kuwait regarding business relationships with three U.S. companies.

The Commerce Department fined Chemical Bank a total of $44,000 for its alleged activities.

Bank America International, as successor in interest to Security Pacific International, was fined $18,000 for alleged anti-boycott violations committed by Security Pacific.

The Commerce Department alleged that Security Pacific implemented letters of credit that contained a condition restricting negotiation of the credit to banks permitted to transact business with Arab countries.

In the third case, Cedars Motors, a car dealership, was fined $20,000 for allegedly failing to report — on 10 occasions between October 1988 and August 1991 — receipt of boycott-related requests.

The Commerce Department also alleged that Chemical Bank and Bank America International failed to report to the department their receipt of boycott-related requests, which is required under the Export Administration Act and Regulations.

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