An Israeli shipping company, agreed yesterday to pay $1 million over the next five years to the U.S. Government in civil penalties for alleged illegal rebating practices.

The Federal Maritime Commission had charged the Zim Israel Navigation Co. Ltd., and Zim American Israeli Shipping Co. Inc., both part of Zim, the parent company, with paying rebates and misrating cargo in the U.S. shipments to and from the Far East, Europe and the Mediterranean area.

Such rebating would be violation of the Shipping Act, and is viewed by federal regulators as a ploy to avoid having to charge regulated rates.

The settlement is part of a huge enforcement program the FMC is conducting in the shipping industry. Several carriers, including Sea-Land and Seatrain, have already agreed to even larger payments.

But the Zim case marks the first settlement made against a foreign-flag carrier. U.S. had complained that they used rebates to get their rates down to a competitive level with foreign carriers, which were also violating the regulated rates with alleged illegal rebate plans.

"The commission intends to vigorously pursue negotiations with other foreign flag carriers," said FMC chairman Richard Daschbach in announcing yesterday's action, "and failing settlement, we will seek statutory remedies in court."

"I expect this and other major settlements, coupled with the likely enactment of anti-rebating legislation currently pending before the U.S. Senate to enable the commission to move toward successful completion of its rebating investigations and focus its attention on other important problems," Dashbach added.

The rebating investigation by the FMC, as well as related investigations by the Securities and Exchange Commission and federal grand juries in Newark and Cleveland have revealed a pattern of questionable payments and rebates in excess of $100 million, according to sources close to the investigations.

There have been criminal indictments brought against certain firms and individuals, but the majority of cases are expected to result in civil fines, the sources said.

The FMC regulates the rates shippers can charge in an effort to keep the shipping field competitive, because of fears that without regulation only a few large carriers would survive.