Planning Research Corp., of McLean, has agreed to pay a civil penalty of $10,000 to settle a Commerce Department charge that the company discriminated against a Jewish job applicant to satisfy the demands of an unidentified Saudi Arabian client.
The American Jewish Congress praised the PRC case as an example of the Commerce Department's vigorous enforcement of a federal law prohibiting U.S. companies from furthering the Arab League boycott of Israel.
Moreover, the case illustrates the department's new emphasis on addressing the problem of illegal religious discrimination by U.S. companies complying with the boycott, said Will Maslow, AJC's general counsel.
PRC, a professional services company, said it did not violate the anti-boycott law and that the settlement approved in March illustrates how a good law can be difficult to implement.
"This was an isolated incident based upon a misunderstanding," Robert Holcombe, PRC vice president and general counsel, said of the alleged violation. "We firmly believe we didn't do anything improper."
The Commerce Department alleged that PRC violated the law in November 1981 while interviewing a Jewish candidate for a job to be performed in Saudi Arabia.
PRC evaluated the person's credentials and "determined that the individual initially qualified" for the position, Commerce officials said in a letter to PRC in November. The company then "determined that the applicant was Jewish and, in a conversation with such individual, decided not to proceed with a scheduled interview for the position," and later informed him that he would not get the job, the department said.
Commerce alleged that this was religious discrimination committed "with intent to comply with, further or support an unsanctioned foreign boycott." This would violate the 1977 amendments to the Export Administration Act which bar U.S. businesses from complying with Arab demands that their trading partners not conduct business with, or in, Israel; not conduct business with U.S. businesses blacklisted for trading with Israel; not hire Zionists and furnish information about the religion of their employes and their contributions to Jewish charities.
"PRC supports the law," Holcombe said. "We agree with the law and try to comply. In fact we do comply, and did in that case."
The alleged violation "came out of a misinterpretation" by the applicant of his conversation with PRC about working conditions in Saudi Arabia, he said. "All our person was trying to do was attempt, out of a feeling of fairness to the applicant, to clarify and answer questions about the Mideast. And that can have a discouraging effect."
In the end, the expected job in Saudi Arabia did not materialize, and PRC hired the applicant for another position in this country, Holcombe said. "It was settled amicably with the individual."
But the fine line between providing discouraging information and discouraging an applicant from seeking a job illustrates how the law aims to prevent U.S. companies from being made participants in a boycott.
For example, an Arab country may deny visas to Jews, but a U.S. company cannot reject a Jewish job applicant because that person may be denied a visa, said William V. Skidmore, director of the Commerce Department's office of anti-boycott compliance. "A U.S. company may not discriminate on religious grounds."
Such distinctions have "not been much of a burden or problem" for U.S. businesses, said John E. Hoffman, Jr., counsel to the Business Roundtable, which worked with Jewish and other business groups to devise the 1977 amendments.
The Arab boycott has been imposed informally in various ways since the state of Israel was established in 1948 and has been administered formally by the Arab League for more than 15 years, Skidmore said.
Egypt has not been party to the boycott since the Camp David agreements in 1979. The boycott sometimes is applied in an inconsistent, or pragmatic, manner, experts say. Arab nations have exempted computer firms from its blacklist because its members need computer services and products, and trade with defense-oriented companies that trade with Israel. For example, Arabsat made purchases from Ford Aerospace, although Ford Motor Co. is blacklisted for trading with Israel, Skidmore said.
The U.S. anti-boycott law does not attempt to interfere with the "primary boycott" -- the Arab nations' sovereign rights to set their own immigration rules or trading policy. Rather, the U.S. law was designed to combat the boycott's secondary effects, considered intrusions into U.S. commerce, such as preventing one U.S. company from doing business with another U.S. firm that might be blacklisted, or interfering with hiring practices in this country.
Initially, Commerce's anti-boycott office focused on violations of the law's requirement that U.S. companies report all requests from Arab clients for participation in the boycott. Such violations were easier to catch than others because of the opportunity to cross-check reports.
In the last year, the office has focused on "much more substantial violations, which are harder to prove," such as discriminatory hiring practices, Skidmore said.
Maslow, of the AJC, said the law has succeeded in achieving its limited goals without hurting U.S. business. By restraining U.S. businesses from complying with the boycott, the law has reduced Arab pressures on U.S. companies to cooperate, he said.
One aspect of the law that may have hurt U.S. companies is the requirement that firms not respond to Arab requests for information for boycott-related purposes, such as information about whether the company does business with Israel or a blacklisted firm, Hoffman said.
A company faced with such a request may violate the law by answering, or lose business by not answering, he said. "If you are trying to get a deal and don't answer these questions, the chances are you don't get a deal."
Skidmore said it would be difficult to estimate whether the law is reducing compliance with the Arab boycott, but said it has had an effect. "The law has been effective in bringing the whole subject to the attention of American business people." CAPTION: Picture, PRC of McLean has agreed to pay a $10,000 penalty to settle a Commerce Department charge that it complied with Arab boycott.