Illinois Firm May Face Charges of Violating Anti-boycott Laws

An investigation into allegations that Baxter International Inc., a major hospital supplies company, violated anti-boycott legislation has been referred to the U.S. Attorney’s Office in Chicago, paving the way for possible civil or criminal prosecution.

The U.S. Attorney’s Office had no comment, but a spokesperson for the Department of Commerce, which oversees legislation outlawing adherence to the Arab League economic boycott of Israel, said the matter was “referred to the Justice Department” on Feb. 27.

“The Commerce Department has conducted an extensive investigation” into allegations of boycott compliance, said Anne Sittmann, a department spokeswoman.

Should a case be opened against Baxter, it would mark one of the few times in the over 13 years since the anti-boycott legislation was first enacted that a company found itself facing off against the U.S. government in court.

Most allegations of anti-boycott legislation violations are settled through a Commerce Department administrative process, in which a company accepts a civil financial penalty but does not necessarily admit to the alleged violations.

The Arab-led economic boycott not only precludes companies from doing business with Israel, but seeks to bar business relations with companies that do business with the Jewish state.

Baxter International, which is based in Deerfield, Ill., has faced numerous charges by Jewish groups and others that it violated anti-boycott laws in its dealing with Arab countries.

The Commerce Department’s Office of Anti-Boycott Compliance reportedly began investigating allegations against Baxter around November 1989.

The allegations center on a possible bribe offered eight years ago to remove Baxter from an Arab list of companies that should be boycotted because they do business with Israel.

Questions have also been raised about whether Baxter’s 1988 sale of its intravenous fluids plant in Ashdod, Israel, was an attempt to comply with the Arab boycott.

Around the same time, Baxter entered into negotiations to build a similar plant in Syria, although a Baxter spokesperson said the plant was still in its design stage.

LETTERS CITED AS PROOF

The Baxter spokesperson, Les Jacobson, called the allegations of boycott compliance against Baxter “absolutely false” and said the plant in Ashdod was sold because it was not performing well.

The American Jewish Congress regional office in Chicago, which has a unit monitoring boycott compliance, has charged that letters in its possession show that Baxter officials gave Syrian authorities information about the company’s dealings with Israel, in possible contravention of anti-boycott legislation.

The four letters, sent in 1988 by Baxter officials to an official with the Syrian army, include statements that Baxter had sold its plant in Israel and had “no present intention to make new investments in Israel or to sell new technology to Israeli companies,” according to a statement issued by AJCongress.

Sylvia Neil, the group’s Midwest regional executive director, said the Chicago office received the letters from former Baxter employee Richard Fuisz, who was dismissed from the company in 1982 after heading a Middle East unit.

Fuisz has said he was fired for refusing to pay a bribe to get the company off the Arab boycott list, and he has since then raised numerous charges concerning Baxter’s alleged adherence to the boycott.

Baxter, meanwhile, had commissioned an independent review of its dealings in the Middle East concerning possible violation of the anti-boycott legislation. On Monday, shareholders meeting in Chicago voted down a resolution requiring the company to make the report public and end any compliance with the boycott.

Baxter officials said release of the report would damage lawyer-client confidentiality because of some personal information about company officials contained in the report.

According to a statement issued by the company, the report, prepared by Washington attorney Stephan Shulman, exonerates Baxter from any charges of boycott compliance and finds that the company did not pay any bribes or violate U.S. legislation by submitting certain information to Syrian officials.

Eight percent of Baxter shareholders voted for release of the report, including New York Comptroller Elizabeth Holtzman, who was voting on behalf of the 670,000 shares of Baxter stock held in a city workers pension fund.