LOreal fined $1.4 million for following Arab boycott

WASHINGTO, D.C. — In a clear sign that the United States will continue enforcing bans on compliance with the Arab boycott of Israel, the Commerce Department has levied the second largest fine since enforcement began more than 25 years ago.

American L'Oreal affiliates agreed to pay $1.4 million to settle an investigation of the cosmetics giant. As is customary in such settlements, the firms did not admit complying with the boycott.

The investigation should remind the exporting community that the Arab boycott of Israel "is not yet consigned to history," said John Despres, assistant secretary of commerce for export enforcement.

Anti-boycott laws "will continue to be enforced vigorously until the boycott is completely ended and U.S. law has been changed accordingly," he said.

The Commerce Department had charged L'Oreal affiliates in the United States with supplying information about their commercial relations in Israel to L'Oreal's Paris headquarters in the late 1980s. That information was allegedly used to assist the firm in dealing with Arab boycott authorities.

The settlement announced Tuesday was based on three documents containing 144 alleged violations.

According to the settlement, Parbel of Florida will pay $1.4 million; Cosmair Inc. will pay $9,000; and Bruce Mishkin, associate corporate counsel for Cosmair and the former vice president of Helena Rubinstein, will pay $50,400. All are L'Oreal affiliates.

The charges against L'Oreal and its affiliates were among the most significant ever made by the Commerce Department, Despres said.

Only Baxter International, which paid more than $6 million in fines in 1993, has paid more to the Commerce Department.

L'Oreal's attorneys maintain that the company and its affiliates are innocent. "This is a settlement of contested charges. We deny that there was any violation of the law," said Stanley Marcuss, an attorney representing L'Oreal.

Jewish organizations were quick to praise the Commerce Department.

"The lifeblood of the boycott is built around information received," said Jess Hordes, Washington director of the Anti-Defamation League. "The Commerce Department did a good job in enforcing U.S. anti-boycott laws."

Although praising the Commerce Department for its investigation of the case, American Jewish Congress officials noted that L'Oreal has substantially increased its investments in Israel.

"L'Oreal has demonstrated within the past year a complete abandonment of its former policies by developing a very large economic program in Israel," said Will Maslow, former editor of the now defunct AJCongress newsletter, Boycott Report.

One member of Congress who has been outspoken on the boycott welcomed the settlement. "The Arab economic boycott is not only illegal, it is immoral and any company that supports it must be brought to justice," said Rep. Charles Schumer (D-N.Y.), who chairs the Congressional Task Force to End the Boycott.

While L'Oreal officials maintain their affiliates did nothing wrong, company officials acknowledged that L'Oreal should not have sent letters in the late 1980s to the boycott office in Damascus, which detailed the company's involvement with Israel. In a letter to ADL national director Abraham Foxman, L'Oreal's chairman apologized for its past relationship with the boycott office in Damascus.