Ofers Deny U.S. Charge of Selling Tanker to Iran

Israeli group one of seven firms hit by U.S. sanctions.

The Ofer Brothers Group, one of seven companies to be hit with U.S. sanctions for trading with Iran, yesterday denied it had ever sold ships to the Islamic state. The United States says Ofer Brothers sold a tanker to the Islamic Republic of Iran Shipping Lines. By boosting Iranian prosperity, the companies helped fund Iran's nuclear program, the U.S. argues.

"Tanker Pacific (Singapore ), Ofer Brothers Group (Israel ), and Associated Shipbroking (Monaco )... are being sanctioned for their respective roles in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines," the State Department announced.


Categorically denying the charge, an Ofer Brothers spokesman said official Israeli authorities would confirm the company's veracity.

Asked for comment, the Prime Minister's Office, which has been spearheading a global drive against Iran's nuclear ambitions, and the Defense Ministry said they were looking into the matter.

The State Department fell short of accusing intent: "We believe that Tanker Pacific and Ofer Brothers Group 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," it stated.

The Ofer Brothers Group is a family business, owned by brothers Yuli and Sammy Ofer. It owns the controlling interest in The Israel Corporation, through which it controls a sprawling business empire including Israel Chemicals and refining and shipping interests, through Ofer Shipping and cargo hauler Zim.

Squeezing supplies

The seven companies marked yesterday for sanctions are PCCI (Jersey/Iran ), Royal Oyster Group (United Arab Emirates ), Speedy Ship (UAE/Iran ), Tanker Pacific (Singapore ), Ofer Brothers Group, Associated Shipbroking (Monaco ), and Petroleos de Venezuela (PDVSA, Venezuela ).

Landing on the list means the Ofer Brothers and the other six companies cannot obtain financing from the Export-Import Bank of the United States, cannot obtain loans of more than $10 million from U.S. financial institutions, and cannot receive U.S. export licenses.

Deputy U.S. Secretary of State James Steinberg said the move against PDVSA would block it from access to U.S. government contracts and import/export financing but would not affect the company's sale of oil to the United States or the activities of its subsidiaries, including U.S.-based CITGO.

The intent is to squeeze Iran's gasoline supplies, Steinberg said. The impact could amplify as other companies recognize the risks of doing business with the Islamic Republic.

Senator Richard Lugar, the ranking Republican on the Senate Foreign Relations Committee, said the sanctions on PDVSA were a result of Venezuela's "unwillingness to break its ties with terrorist organizations and countries that support them."

"Ultimately I don't think Chavez will be able to do much about the sanctions," said Simon Wardell, director of oil markets at IHS Global Insight. "He could bluster: but he'll keep selling oil to America," he said.

Steinberg said the sanctions would be calibrated differently for each targeted firm. In some cases they were intended to shut down the company's operations, while in others they simply impose new restrictions. "All these companies have engaged in activities related to the supply of refined petroleum products to Iran," he said.

The main objective, he said, was to encourage Tehran to engage in real negotiations with the major powers over its nuclear program, which Western nations and Israel fear is aimed at producing nuclear weapons.

The State Department also announced new sanctions on 16 companies and individuals from China, Syria, Iran, Belarus and North Korea for nuclear and weapons proliferation activities involving Iran, North Korea and Syria.

Iran, gasoline importer

To try to get Tehran to drop its nuclear work, the U.S. Congress passed sanctions last year targeting Iran's energy and banking sectors by threatening to penalize foreign companies that do business with Iran. As a result, major oil companies have halted business with Iran, which is dependent on gasoline imports due to a lack of refining capacity.

The U.S. prohibitions are separate from UN Security Council sanctions imposed on Iran for its refusal to halt uranium enrichment. Those sanctions do not include a ban on gasoline sales.

Steinberg said Iran's response to the latest offer of nuclear talks was inadequate and that the United States and its allies would continue to increase pressure, although there has been little sign that Tehran is willing to change its position.