L’Oreal Units to Pay $1.4 Million in Boycott Case

A Paris-based cosmetics company will pay the government $1.4 million to settle charges it violated a federal law penalizing companies that aid the Arab boycott of Israel.

The Commerce Department said Tuesday that it imposed the fine against subsidiaries of L’Oreal, the French cosmetic company, and Bruce Mishkin, a corporate counsel.

L’Oreal disputed the characterization of the payment as a fine and denied it engaged in any deliberate wrongdoing. It said it agreed to pay the money to avoid a long and costly lawsuit.

But U.S. officials said the payment, one of the largest in an anti-boycott case, should serve as a reminder to American companies.

“The Arab boycott of Israel is not yet consigned to history,” said John Despres, assistant commerce secretary for export enforcement. The law “will continue to be enforced vigorously until the boycott is completely ended.”

U.S. officials, who spoke on condition of anonymity, said the case stemmed from L’Oreal’s acquisition of Helena Rubinstein, which led Arab League boycott authorities in Syria to blacklist the French firm.

The officials said L’Oreal wanted to convince the Syrians that it was not doing business in Israel through the U.S. company.

Parbel, the Miami-based successor to the Helena Rubinstein company, violated federal law by sending information in 1989 to L’Oreal about the subsidiary’s business dealings in Israel, the Commerce Department said. L’Oreal was acting at the behest of the Syrians, U.S. officials said.

The department also alleged that the subsidiary violated the Export Administration Act by failing to report receiving the boycott-related requests from L’Oreal.