North Kansas City company
settles charge related to
boycott of Israel
by Dan Margolies, Kansas City StarJune 25, 2003
Cook Composites and Polymers Co. has
agreed to pay a $6,000 fine to settle
charges that it violated Commerce
Department regulations aimed at countering
the Arab boycott of Israel.
The department's Bureau of Industry and
Security had charged that, in response to a
request from a customer in Bahrain, Cook
had furnished information stating that the
goods being shipped were not of Israeli
origin and did not contain Israeli materials.
The bureau also charged that Cook had
failed to report its receipt of the request.
Cook, of North Kansas City, neither
admitted nor denied the allegations, but
agreed to pay the $6,000 civil penalty.
The antiboycott provisions bar U.S.
companies from providing information about
their business relationships with Israel.
They also require that receipt of boycott
requests be reported to the Bureau of
Industry and Security, formerly known as
the Bureau of Export Administration.
Cook's chief executive, Charles Bennett,
was in Paris this week and unavailable for
comment. A spokeswoman for the company,
Rita Durocher, said the fine marked the first
time Cook has had a run-in with a federal
agency.
"If you go back and look at our record,
we've been flawless with other government
agencies," she said.
Cook makes polyester gels and other
coating resins. It operates plants throughout
North America.
The settlement with the Commerce
Department came after the Bush
administration in November warned U.S.
companies not to heed calls to boycott
Israeli goods and services. The warning
followed a call by the 22-member Arab
League to reactivate its decades-long
boycott of Israel.
In a statement released at the time by the
department, Commerce Undersecretary for
Industry and Security Kenneth Juster
reminded American companies that the
"U.S. government is strongly opposed to
restrictive trade practices or boycotts
targeted against Israel."
Knowing violators of the anti-boycott
provisions face fines of up to $50,000, or
five times the value of the exports at issue,
and possible imprisonment. Offenders can
also be denied export privileges.
The Bureau of Industry and Security says it
has imposed more than $26 million in fines
for violations of the provisions.
More than a decade ago, the Commerce
Department sent compliance officers to
Kansas City to check out tips that Marion
Merrell Dow Inc. and Marley Cooling Tower
Co. may have cooperated with the Arab
boycott. Nothing came of the investigation,
and no penalties were imposed.
In Cook's case, the Bureau of Industry and
Security charged that Cook failed to report
a letter of credit it received on Dec. 1, 1997,
from ABN AMRO Bank in Manama, Bahrain.
The letter asked it to confirm that the goods
being shipped "are not of Israeli origin nor
do they contain any Israeli"material.
The bureau also charged that on Jan. 20,
1998, Cook, through its freight forwarder,
provided a U.S. bank with a copy of a
commercial invoice confirming that the
goods were not of Israeli origin and did not
contain Israeli material.
Cook, with 558 employees overall and 120
employees locally, is one of North Kansas
City's biggest employers. The company bills
itself as the No. 1 producer of gel coats in
the world and, together with affiliated
companies, the No. 2 producer of resins.
Since 1990, Cook has had a joint venture
relationship with the chemicals division of
TotalFinaElf, a multibillion-dollar
petrochemicals giant based in Paris.
* * *
Here's the official Q&A about this law,
as found at the federal government's
Office of Antiboycott
Compliance website
Antiboycott Laws:
During the mid-1970's the United States
adopted two laws that seek to counteract
the participation of U.S. citizens in other
nation's economic boycotts or embargoes.
These "antiboycott" laws are the 1977
amendments to the Export Administration
Act (EAA) and the Ribicoff Amendment to
the 1976 Tax Reform Act (TRA).
Objectives:
The antiboycott laws were adopted to
encourage, and in specified cases, require
U.S. firms to refuse to participate in foreign
boycotts that the United States does not
sanction. They have the effect of preventing
U.S. firms from being used to implement
foreign policies of other nations which run
counter to U.S. policy.
Primary Impact:
The Arab League boycott of Israel is the
principal foreign economic boycott that U.S.
companies must be concerned with today.
The antiboycott laws, however, apply to all
boycotts imposed by foreign countries that
are unsanctioned by the United States.
Who Is Covered by the Laws?
The antiboycott provisions of the Export
Administration Regulations (EAR) apply to
all "U.S. persons," defined to include
individuals and companies located in the
United States and their foreign affiliates.
These persons are subject to the law when
their activities relate to the sale, purchase,
or transfer of goods or services (including
information) within the United States or
between the U.S. and a foreign country.
This covers U.S. exports and imports,
financing, forwarding and shipping, and
certain other transactions that may take
place wholly offshore.
Generally, the TRA applies to all U.S.
taxpayers (and their related companies).
The TRA's reporting requirements apply to
taxpayers' "operations" in, with, or related to
boycotting countries or their nationals. Its
penalties apply to those taxpayers with
foreign tax credit, foreign subsidiary
deferral, FSC (Foreign Sales Corporation),
and IC-DISC (Interest Charge-Domestic
International Sales Corporation) benefits.
What do the Laws Prohibit?
Conduct that may be penalized under the
TRA and/or prohibited under the EAR
includes:
Agreements to refuse or actual refusal
to do business with or in Israel or with
blacklisted companies.
Agreements to discriminate or actual
discrimination against other persons
based on race, religion, sex, national
origin or nationality.
Agreements to furnish or actual
furnishing of information about
business relationships with or in Israel
or with blacklisted companies.
Agreements to furnish or actual
furnishing of information about the
race, religion, sex, or national origin of
another person.
Implementing letters of credit containing
prohibited boycott terms or conditions.
The TRA does not "prohibit" conduct, but
denies tax benefits ("penalizes") for certain
types of boycott-related agreements.
What Must Be Reported?
The EAR requires U.S. persons to report
quarterly requests they have received to
take certain actions to comply with, further,
or support an unsanctioned foreign boycott.
The TRA requires taxpayers to report
"operations" in, with, or related to a
boycotting country or its nationals and
requests received to participate in or
cooperate with an international boycott. The
Treasury Department publishes a quarterly
list of "boycotting countries."
How To Report:
EAR reports are filed quarterly on form BIS
621-P for single requests or BIS 6051-P for
multiple requests available from the
Department of Commerce's Office of
Antiboycott Compliance (OAC) in
Washington, D.C. To obtain these forms,
telephone OAC's Reports Processing Unit
at (202) 482-2448. TRA reports are filed
with tax returns on IRS Form 5713. This
form is available from local IRS offices.
Penalties:
The EAR prescribe the penalties for
violations of the Antiboycott Regulations as
well as export control violations. These can
include:
Criminal:
The penalties imposed for each "knowing"
violation can be a fine of up to $50,000 or
five times the value of the exports involved,
whichever is greater, and imprisonment of
up to five years. During periods when the
EAR are continued in effect by an Executive
Order issued pursuant to the International
Emergency Economic Powers Act, the
criminal penalties for each "willful" violation
can be a fine of up to $50,000 and
imprisonment for up to ten years.
Administrative:
For each violation of the EAR any or all of
the following may be imposed:
General denial of export privileges;
The imposition of fines of up to
$12,000 per violation; and/or
Exclusion from practice.
Boycott agreements under the TRA involve
the denial of all or part of the foreign tax
benefits discussed above.
The $10,000 maximum per violation
specified in the EAA is adjusted periodically
pursuant to law for inflation. The maximum
civil penalty for any violation committed from
October 23, 1996 through November 1,
2000 is $11,000 per violation. The maximum
civil penalty for any violation committed after
November 1, 2000 is $12,000 per violation.
settles charge related to
boycott of Israel
by Dan Margolies, Kansas City StarJune 25, 2003
Cook Composites and Polymers Co. has
agreed to pay a $6,000 fine to settle
charges that it violated Commerce
Department regulations aimed at countering
the Arab boycott of Israel.
The department's Bureau of Industry and
Security had charged that, in response to a
request from a customer in Bahrain, Cook
had furnished information stating that the
goods being shipped were not of Israeli
origin and did not contain Israeli materials.
The bureau also charged that Cook had
failed to report its receipt of the request.
Cook, of North Kansas City, neither
admitted nor denied the allegations, but
agreed to pay the $6,000 civil penalty.
The antiboycott provisions bar U.S.
companies from providing information about
their business relationships with Israel.
They also require that receipt of boycott
requests be reported to the Bureau of
Industry and Security, formerly known as
the Bureau of Export Administration.
Cook's chief executive, Charles Bennett,
was in Paris this week and unavailable for
comment. A spokeswoman for the company,
Rita Durocher, said the fine marked the first
time Cook has had a run-in with a federal
agency.
"If you go back and look at our record,
we've been flawless with other government
agencies," she said.
Cook makes polyester gels and other
coating resins. It operates plants throughout
North America.
The settlement with the Commerce
Department came after the Bush
administration in November warned U.S.
companies not to heed calls to boycott
Israeli goods and services. The warning
followed a call by the 22-member Arab
League to reactivate its decades-long
boycott of Israel.
In a statement released at the time by the
department, Commerce Undersecretary for
Industry and Security Kenneth Juster
reminded American companies that the
"U.S. government is strongly opposed to
restrictive trade practices or boycotts
targeted against Israel."
Knowing violators of the anti-boycott
provisions face fines of up to $50,000, or
five times the value of the exports at issue,
and possible imprisonment. Offenders can
also be denied export privileges.
The Bureau of Industry and Security says it
has imposed more than $26 million in fines
for violations of the provisions.
More than a decade ago, the Commerce
Department sent compliance officers to
Kansas City to check out tips that Marion
Merrell Dow Inc. and Marley Cooling Tower
Co. may have cooperated with the Arab
boycott. Nothing came of the investigation,
and no penalties were imposed.
In Cook's case, the Bureau of Industry and
Security charged that Cook failed to report
a letter of credit it received on Dec. 1, 1997,
from ABN AMRO Bank in Manama, Bahrain.
The letter asked it to confirm that the goods
being shipped "are not of Israeli origin nor
do they contain any Israeli"material.
The bureau also charged that on Jan. 20,
1998, Cook, through its freight forwarder,
provided a U.S. bank with a copy of a
commercial invoice confirming that the
goods were not of Israeli origin and did not
contain Israeli material.
Cook, with 558 employees overall and 120
employees locally, is one of North Kansas
City's biggest employers. The company bills
itself as the No. 1 producer of gel coats in
the world and, together with affiliated
companies, the No. 2 producer of resins.
Since 1990, Cook has had a joint venture
relationship with the chemicals division of
TotalFinaElf, a multibillion-dollar
petrochemicals giant based in Paris.
* * *
Here's the official Q&A about this law,
as found at the federal government's
Office of Antiboycott
Compliance website
Antiboycott Laws:
During the mid-1970's the United States
adopted two laws that seek to counteract
the participation of U.S. citizens in other
nation's economic boycotts or embargoes.
These "antiboycott" laws are the 1977
amendments to the Export Administration
Act (EAA) and the Ribicoff Amendment to
the 1976 Tax Reform Act (TRA).
Objectives:
The antiboycott laws were adopted to
encourage, and in specified cases, require
U.S. firms to refuse to participate in foreign
boycotts that the United States does not
sanction. They have the effect of preventing
U.S. firms from being used to implement
foreign policies of other nations which run
counter to U.S. policy.
Primary Impact:
The Arab League boycott of Israel is the
principal foreign economic boycott that U.S.
companies must be concerned with today.
The antiboycott laws, however, apply to all
boycotts imposed by foreign countries that
are unsanctioned by the United States.
Who Is Covered by the Laws?
The antiboycott provisions of the Export
Administration Regulations (EAR) apply to
all "U.S. persons," defined to include
individuals and companies located in the
United States and their foreign affiliates.
These persons are subject to the law when
their activities relate to the sale, purchase,
or transfer of goods or services (including
information) within the United States or
between the U.S. and a foreign country.
This covers U.S. exports and imports,
financing, forwarding and shipping, and
certain other transactions that may take
place wholly offshore.
Generally, the TRA applies to all U.S.
taxpayers (and their related companies).
The TRA's reporting requirements apply to
taxpayers' "operations" in, with, or related to
boycotting countries or their nationals. Its
penalties apply to those taxpayers with
foreign tax credit, foreign subsidiary
deferral, FSC (Foreign Sales Corporation),
and IC-DISC (Interest Charge-Domestic
International Sales Corporation) benefits.
What do the Laws Prohibit?
Conduct that may be penalized under the
TRA and/or prohibited under the EAR
includes:
Agreements to refuse or actual refusal
to do business with or in Israel or with
blacklisted companies.
Agreements to discriminate or actual
discrimination against other persons
based on race, religion, sex, national
origin or nationality.
Agreements to furnish or actual
furnishing of information about
business relationships with or in Israel
or with blacklisted companies.
Agreements to furnish or actual
furnishing of information about the
race, religion, sex, or national origin of
another person.
Implementing letters of credit containing
prohibited boycott terms or conditions.
The TRA does not "prohibit" conduct, but
denies tax benefits ("penalizes") for certain
types of boycott-related agreements.
What Must Be Reported?
The EAR requires U.S. persons to report
quarterly requests they have received to
take certain actions to comply with, further,
or support an unsanctioned foreign boycott.
The TRA requires taxpayers to report
"operations" in, with, or related to a
boycotting country or its nationals and
requests received to participate in or
cooperate with an international boycott. The
Treasury Department publishes a quarterly
list of "boycotting countries."
How To Report:
EAR reports are filed quarterly on form BIS
621-P for single requests or BIS 6051-P for
multiple requests available from the
Department of Commerce's Office of
Antiboycott Compliance (OAC) in
Washington, D.C. To obtain these forms,
telephone OAC's Reports Processing Unit
at (202) 482-2448. TRA reports are filed
with tax returns on IRS Form 5713. This
form is available from local IRS offices.
Penalties:
The EAR prescribe the penalties for
violations of the Antiboycott Regulations as
well as export control violations. These can
include:
Criminal:
The penalties imposed for each "knowing"
violation can be a fine of up to $50,000 or
five times the value of the exports involved,
whichever is greater, and imprisonment of
up to five years. During periods when the
EAR are continued in effect by an Executive
Order issued pursuant to the International
Emergency Economic Powers Act, the
criminal penalties for each "willful" violation
can be a fine of up to $50,000 and
imprisonment for up to ten years.
Administrative:
For each violation of the EAR any or all of
the following may be imposed:
General denial of export privileges;
The imposition of fines of up to
$12,000 per violation; and/or
Exclusion from practice.
Boycott agreements under the TRA involve
the denial of all or part of the foreign tax
benefits discussed above.
The $10,000 maximum per violation
specified in the EAA is adjusted periodically
pursuant to law for inflation. The maximum
civil penalty for any violation committed from
October 23, 1996 through November 1,
2000 is $11,000 per violation. The maximum
civil penalty for any violation committed after
November 1, 2000 is $12,000 per violation.
