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Tanker sale to Iranian company a sore spot for Israel

Israel's government, which has long attempted to isolate Iran, declines to defend an Israeli conglomerate accused of selling an oil tanker to an Iranian firm in violation of U.S. sanctions.

May 27, 2011|By Edmund Sanders, Los Angeles Times
  • Israeli Prime Minister Benjamin Netanyahu warned the U.S. Congress on Tuesday about the dangers of Iran.
Israeli Prime Minister Benjamin Netanyahu warned the U.S. Congress on… (Alex Wong / Getty Images )

Reporting from Jerusalem — The Israeli government moved Thursday to distance itself from one of the country's largest private conglomerates after embarrassing allegations emerged that the company violated U.S. sanctions against Iran by selling an oil tanker to an Iranian firm through an intermediary.

As Israeli Prime Minister Benjamin Netanyahu warned the U.S. Congress on Tuesday about the dangers of Iran and lambasted some nations for failing to do more to halt the Islamic Republic's nuclear ambitions, the State Department announced that the Israeli-owned Ofer Bros. Group was among seven companies that will face U.S. sanctions for violating American restrictions on firms dealing with Iran.

According to U.S. officials, Singapore-based Tanker Pacific, which is owned by Ofer, sold the tanker for $8.65 million in September to a front company that then sold it to Islamic Republic of Iran Shipping Lines. They said the deal violated U.S. sanctions imposed last year against Iran's energy sector.

The disclosure forced Israel's government to choose between standing behind the family-owned Ofer, which has denied that it knowingly sold the tanker to Iranians, or supporting the U.S. position. After a meeting Thursday among officials from the prime minister's office, and Foreign and Defense ministries, the government decided against intervening on the company's behalf.

"The recent American decision relates to a private company and the private company has to deal with it directly with American authorities," said Foreign Ministry spokesman Yigal Palmor. The government will investigate whether the company violated any Israeli laws.

Pressure had been building on the government from critics who said Israel would appear hypocritical if it failed to take the matter seriously, particularly given the country's efforts around the world to isolate its archenemy, Iran.

"Prime Minister Benjamin Netanyahu, who endlessly preaches the need for firm action against Iran to prevent it from acquiring nuclear arms, is not lifting a finger to stop Israeli companies and individuals indirectly trading with Iran," wrote Haaretz newspaper columnist Yossi Melman on Thursday. He said Israel's government had long failed to enforce its own laws restricting Israelis from engaging in commerce and investment with firms doing business with Iran.

"It's definitely awkward to find an Israeli company blacklisted like this," said one government official familiar with the matter.

Company officials initially dismissed the matter as a "misunderstanding" and expressed confidence that the government would back them up. Later the company blamed its broker for failing to uncover the links to the Iranian firm.

Ofer company officials declined to comment Thursday. But in a statement earlier this week, Tanker Pacific officials said they believed the U.S. decision was in error and vowed to work with American authorities to resolve the matter.

Ofer is a multibillion-dollar holding company with interests in oil refineries, chemicals, banking, aviation, high-technology and media. Brothers Sammy and Yuli Ofer are among Israel's most powerful tycoons.

In a statement released Tuesday, U.S. officials said Ofer "failed to exercise due diligence and did not heed publicly available and easily obtainable information that would have indicated that they were dealing with" an Iranian company. It said Ofer "should have known" it was dealing with a company that provided services to Iran.

As a result of the U.S. action, Ofer and Tanker Pacific are barred from securing financing from the Export-Import Bank of the United States, from obtaining loans of more than $10 million from U.S. financial institutions and from receiving U.S. export licenses.

One Israeli watchdog group, Ometz, has appealed to the Israeli attorney general to investigate all of Ofer's holdings.

edmund.sanders@latimes.com

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