The Swiss subsidiary of Continental Grain Co. has agreed to pay a $20,000 fine in connection with charges that it violated the law against cooperating with the Arab boycott of Israel in selling commodities to Iraq in 1978.
The case was the first concluded under the anti-boycott provision of the Export Administaration Act, passed in 1977. The subsidiary, Finagrain, was ordered to pay $10,000 on each of two counts, the maximum fine allowed.
More than 100 other cases are under investigation, according to Vincent J. Rocque, who heads a Commerce Department staff charged with enforcing the regulations.
The department cited the Geneva subsidiary for two specific violations of the law in connection with a shipment of Iraq in July 1978.
The department said Finagrain certified to Iraq that the commodities were not of Israeli origin and that the subsidiary was not affiliated with any blacklisted firm.
Multinational companies say that the Arab League maintains a blacklist of companies doing business with Israel and frequently applies pressure of companies to enforce an economic embargo of Israel.
The anti-boycott law resulted from a compromise between U.S. Jewish organizations and representatives of large corporations with Middle East business interests.
In a statement, the Commerce Department said the law "prohibits furnishing information about business relationships with boycotted countries or blacklisted persons."
Finagrain, in a consent agreement, was ordered to pay a fine and undertake "internal corrective measures" to assure future compliance.
A spokesman for Continental in New York City said the settlement was "the most expeditious and cost-efficient way of forestalling lengthy disputes."
Under the consent order, the company neither admitted nor denied the allegations.
Commerce Department officials said they were not permitted to disclose the nature of the commodities provided by Continental because this was proprietary information.
Continental, a New York-based global grain trading and agribusiness firm, reportedly has extensive business dealings in the Middle East. Nations such as Iraq and Algeria also receive substantial amounts of U.S. food products.
The action by Commerce marked a shift away from an earlier move by the government to tackle the boycott problem as an antitrust matter, a move that brought loud complaints from U.S. corporations.
The San Francisco-based Bechtel Corp. was accused by the Justice Department in 1976 of illegally participating in the Arab boycott by helping to ensure that blacklisted U.S. contractors were denied access to Arab markets.
Bechtel is challenging the antitrust aspects of the government's allegations.