Calls to investigate Ofer Brothers following US report

Company claims it did not know its buyers had ties to Iran after US State Department report said it was involved in tanker sale to Tehran.

May 26, 2011 03:24
Sammy Ofer (right) with brother Yuli in 1999

ofer brothers_311 reuters. (photo credit: Reuters)

A day after the US State Department announced it would impose sanctions on Israeli company the Ofer Brothers Group for its role in the sale of a tanker to a banned Iranian company, anti-corruption watchdog group Ometz sent a letter to the attorney general asking him to conduct a thorough investigation into the company’s Israeli holdings.

The Ofer Brothers group was identified as one of seven companies facing US sanctions, for its part in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines.

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According to a fact sheet released by the State Department, the Ofer Brothers Group, together with Singapore based Tanker Pacific, “failed to exercise due diligence and did not heed publicly available and easily obtainable information that would have indicated that they were dealing with IRISL.

“By imposing these sanctions, we’re sending a clear message to companies around the world: Those who continue to irresponsibly support Iran’s energy sector or help facilitate Iran’s efforts to evade US sanctions will face significant consequences,” read the statement.

Ofer Brothers Group denied it had knowingly traded with a company that has ties to Iran.

In its letter, Ometz wrote that in light of the potential harm to the company following the sanctions, and due to the fact that the Ofer Brothers Group controls a considerable portion of Israel’s export and foreign trade which might also be affected by the sanctions, it was asking the Attorney General to order a police investigation into all the Ofer family’s companies in relation to the alleged offenses pointed out by the US government, which are also violations of Israeli laws.

“In light of the centrality and importance of the Ofer Brothers’ holdings to the Israeli economy, and in light of the published information on Ofer Brothers’ ownership of companies registered in other countries, Ometz believes that it is important that the police investigation include trade activities of Israeli companies owned by the Ofer brothers with non-Israeli companies to see if they have been used, either directly or indirectly, to transfer goods or information to countries with whom trade is forbidden by Israeli law,” read the letter.

The Justice Ministry confirmed receipt of the letter, but failed to say whether such an investigation would be ordered.

Though Israel has no legislation prohibiting or limiting the export of goods, a British Mandate era law, called the Trading with the Enemy Act 1939, is still in effect. The act determines that it is a criminal offense, punishable by up to seven years in prison, to conduct business with enemies or enemy states, specifying Iran, Syria and Lebanon as countries falling under the act.

The sanctions against the Ofer Brothers Group were imposed under the Comprehensive Iran Sanctions, Accountability and Divestment Act 2010 and related to the involvement of Ofer Brothers Group and its Singapore subsidiary Tanker Pacific Management in the sale of the MT Raffles Park in September 2010.

“The Ofer Group had no knowledge that a company to which it sold an $8.5m. tanker in September last year had ties to the Islamic Republic of Iran Shipping Lines,” the company said on Wednesday. “The United States is a country with far better intelligence capabilities and resources than a private company or business, and therefore we assume that this [allegation of links to Iran] is accurate,” a spokesman authorized to speak for the company told The Jerusalem Post.

The company “does not have any further information on what the United States is basing its findings, but we are sure that they have intelligence information that we don’t and therefore we are taking it as is,” he said, but added that the company to which the tanker was sold, Crystal Shipping, does not appear on the US Treasury website’s list of companies with which it is prohibited to do business.

It is also not clear if any of the companies involved in the transaction appear on the Israeli list of companies in which investment is prohibited.

In response to questions by the Post, the Finance Ministry’s spokesman’s office submitted the following statement: “The committee established under the Prohibition of Investment in Corporations that Conduct Trade with Iran Law, meets on a regular basis in order to compile a list of companies. Until the list is complete, we cannot address any individual company.”

That law went into effect in April 2008 in an effort to prevent Israeli financial institutions from investing in companies that conduct business with Iran or benefit it financially. The law forbids future investment and determines that ownership resulting from prior investment must be sold.

The spokesman said that the Ofer Brothers Group would cooperate fully with the Israeli Foreign Ministry should the ministry examine the matter.

Tanker Pacific Management said in its statement to the press that it was “startled to learn” about the State Department’s sanctions and that it takes seriously its obligations under applicable laws related to trading with Iran.

“Tanker Pacific has been working closely and fully cooperating with US authorities over the past months when it first received enquiries relating to the sale of the tanker referred to in the Department of State’s statement of 24th May 2011. Tanker Pacific has assured the American authorities that all appropriate action was taken at the time of the transaction to ascertain that the parties involved were not connected to the Iranian shipping company, IRISL, or any other entity subject to sanctions. It is Tanker Pacific’s firm policy not to transact with any such parties,” the company said.

Established by brothers Sammy and Yuli Ofer in the 1950s, the Ofer Group is today a multi-billion dollar global holdings group. Chaired by 50 percent owner Udi Angel, the conglomerate has interests in aviation, hi-tech, private equity, media and real estate. Its holdings include Zim Integrated Shipping Services, Israel Chemicals, Oil Refineries Ltd. and Bank Mizrahi. The group also owns 13% of Israel Corporation, one of Israel’s largest holding companies.

With the imposition of the State Department sanctions, Tanker Pacific and Ofer Brothers Group are barred from securing financing from the Export- Import Bank of the United States, from obtaining loans over $10m. from US financial institutions, and from receiving US export licenses.

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