U.S. Accuses Footware Maker of Complying with Arab Boycott

The U.S. Commerce Department is accusing L.A. Gear, the athletic footwear company, of violating federal laws barring acquiescence with the Arab boycott of Israel.

The purported violations are likely among the last involving Kuwait. They took place in July 1987 and January 1990, when the Los Angeles based outfit provided names and background data on its manufacturers to an unnamed company in the emirate.

Before leveling the public accusations, the Commerce Department “entered into settlement discussions with L.A. Gear,” said a Commerce Department official.

Those discussions “did not reach a successful conclusion” and prompted the government to issue a “charging letter,” the official said.

In a statement released Tuesday, L.A. Gear disputed that “it has engaged in any unlawful activity” and said it “believes that it has meritorious defenses to the allegations raised.”

If the administrative law judge hearing the case, Hugh Dolan, finds L.A. Gear to have violated boycott laws, it could face penalties of up to $460,000 and be denied export privileges.

It is “highly likely” that Dolan will significantly reduce the number of penalties from 46, said Will Maslow, general counsel to the American Jewish Congress and editor of its Boycott Report newsletter.

Maslow said Dolan issued a ruling to that effect Nov. 27 in the case of Martin Brothers, an export trading company.

Dolan has lumped together simultaneous violations, such as those incurred when an Arab country, on a single sheet of paper, asks for, and receives, information on several companies.

KUWAIT NOT ENFORCING BOYCOTT

But in that case, which Martin Brothers is appealing, Dolan ruled that the company would lose its export privileges for at least six months.

That marked the first time a U.S. company would face a sweeping export ban for violating the U.S. anti-boycott law, enacted in the mid 1970s at the urging of Jewish groups.

The groups are lobbying members of Congress to increase from $10,000 to $50,000 the maximum penalties for each boycott violation, as promised to them last year by then-Commerce Secretary Robert Mosbacher.

Maslow said that any violations by L.A. Gear are of “no great significance” because since the Persian Gulf War, Kuwait has stopped asking companies to assure that they comply with the 41-year-old boycott of Israel.

A Commerce Department official said Kuwait “has not been enforcing their boycott. However, there have been no official statements from Kuwait abandoning the boycott.”

The boycott is observed in varying degrees by the 20 members of the League of Arab States, whose Central Boycott Office in Syria developed the boycott policy.

Only one of the 20 Arab League countries, Egypt, trades directly with Israel. Of the other 19 countries, eight do business with companies that do business with Israel: Algeria, Djibouti, Kuwait, Mauritania, Morocco, Somalia, Sudan and Tunisia.

Eleven others bar any such business, directly or indirectly: Bahrain, Iraq, Jordan, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates and Yemen.

The Jerusalem Post reported Tuesday that the Israeli Cabinet has decided to “make the boycott issue central to all economic and political meetings between Israeli and foreign representatives.”

In addition, the Cabinet called on Israeli companies hurt by the Arab boycott to report the offending firms to the government, the Post also reported.

The Cabinet appointed a five-member committee composed of ministry directors general to coordinate the effort.

An explanatory note accompanying the announcement stated that Israel’s trade with France, Germany, Great Britain, Switzerland, Japan and Korea has been significantly affected by the boycott.

Maslow said this marks the “first time the Israeli government has ever assumed that it would ever take an all-out position attacking the boycott.”