US sanctions Sharjah company for sales to Syria

Pangates International Corporation was accused of supplying the Syrian government and Sytrol, a state-owned oil company sanctioned by the US and the EU, with a large amount of speciality petroleum products.

ABU DHABI // A Sharjah-based company was sanctioned by the US government last week for aiding the Syrian regime.

Pangates International Corporation was accused of supplying the Syrian government and Sytrol, a state-owned oil company under sanctions from the US and the European Union, with a large amount of speciality petroleum products.

“Although these products can be used for military or civilian purposes, they have limited civilian application in Syria,” said a US Department of the Treasury spokesman. “The US Treasury took action to increase pressure on the Syrian regime and those providing support that could aid its military efforts.”

From at least 2012 to April this year, the company was said to be supplying the Syrian government with products including automotive gear box oil, turbine oil additives and marine engine oil.

Between January and April 2012, Pangates allegedly supplied 155 metric tonnes of fuel additive, 3,300 metric tonnes of lubricant oil additives and 1,000 kilograms of static dissipater additive – required by military jet fuels to increase the conductivity of the fuel.

In early 2012, Pangates also provided more than 4,000 tonnes of base oil to Syria, as well as supplying aviation fuel the following year. In April, it was said to have “helped arrange” for 1,000 tonnes of aviation fuel for the regime.

“The Syrian government’s continued violence against its own people is abhorrent,” said David Cohen, the US undersecretary for terrorism and financial intelligence. “We remain committed to applying economic and financial pressure on those providing support to the Assad regime.”

The company was sanctioned last Wednesday and it will remain on the Specially Designated Nationals (SDN) list of the Office of Foreign Assets’ Control (Ofac) until it demonstrates that it is no longer engaged in such behaviour.

“US persons are generally prohibited from engaging in any transactions with Pangates,” said Adam Szubin, Ofac director. “And any assets of Pangates subject to US jurisdiction are frozen.”

The company was sanctioned under US executive order 13582, which blocks all property of the Syrian government and bans certain transactions related to Syria.

“Sanctions are a means to an end,” he said. “The ultimate goal of sanctions is behavioural change. Ofac therefore seeks to respond to those who demonstrate a change in the behaviour that resulted in sanctions.”

Johan Bergenas, an Abu Dhabi security expert and deputy director of the Managing Across Boundaries Initiative at the Stimson Centre think tank, said that the Middle East had been the site of a wide range of illicit proliferation activities through front companies that provided materials related to weapons of mass destruction to countries such as Syria over the last decades.

“That is the nature of the proliferation challenge today,” he said. “A web of actors participate and we know that private-sector entities are an important part of the supply chain. It is important to point out, however, that companies in, for example, the US and the UK have also been identified as suppliers of proliferation-sensitive technology to the Middle East region.”

He said governments needed to do a better job at engaging private-sector firms in a productive dialogue that ensured global security while not hampering the industry’s need for legitimate business.

“It’s in companies’ interests not to deal with sanctioned private- sector entities because they too have a responsibility to prevent the illicit proliferation of WMD,” said Mr Bergenas. “Instability as a result of WMD proliferation is in no one’s interest and getting caught being a part of the illicit supply chain of WMD materials will have devastating consequences for the quarterly bottom line.”

From the onset of unrest in Syria to today, the US had imposed sanctions on nearly 200 individuals and organisations, including the government of Syria, its central bank and affiliated oil companies. The Syria International Islamic Bank was accused of helping what the US called the efforts by the government of Bashar Al Assad to obtain weapons of mass destruction.

Since 2012, Ofac has removed nearly 500 people from its SDN list upon showing a behavioural change.

“We at the treasury are committed to using sanctions aggressively but responsibly,” Mr Szubin said. “[This is] to advance US foreign-policy goals and protect our country’s most vital interests.”

Pangates, located in the Sharjah Airport Free Zone, declined to comment.

Over the past few years, companies and residents in the UAE have felt the pinch of US sanctions.

Last year, Syrian and Iranian nationals were refused service by certain banks in the UAE. A month later, gold dealers and exchange houses were targeted.

In 2012, former US secretary of state Hillary Clinton imposed sanctions on another UAE-based oil and gas company, Fal Oil Company Limited, under the Iran Sanctions Act, for conducting business with Iran’s energy sector. It was accused of providing more than US$70 million in refined petroleum to Iran.

Last November, US secretary of state John Kerry said the UAE had paid a great price for the Iran sanctions, including a $19 billion loss in business.