Spanish air firm seeks sanction relief after Syria trade gaffe

Documents unveiled by Wikileaks reveal how Washington imposed sanctions on Spains Orion Air for leasing a jet to a company that had links to the Syrian president.

Later this month, the US government is expected to review whether it will maintain intact a commercial sanction against a Spanish air company for sending a jet to Syria in violation of a trade embargo.

The British-made BAe 146300 aircraft reportedly is still parked at a Damascus airport despite efforts over the last two years by Spains Orion Air S. L. to push Syrian officials to return the jet. The US Department of Commerces Bureau of Industry and Security issued a 180-day sanction, known as a Temporarily Denying Export Privileges Order TDO, against Orion and Syrian Pearl Airlines in 2009. It renewed the TDO last April because the jet has not been returned.

A batch of US Embassy cables dating from between April and June 2009 and released by Wikileaks shows how US diplomats in Madrid circumvented the Spanish Foreign Ministry to personally alert Orion officials that they were breaking the law. The cables also document Syrias outrage at the affair.

The Syria Accountability and Lebanese Sovereignty Restoration Act of 2003, better known as the Syria Accountability Act, prohibits the export of nearly all US origin products to Syria, except food and medicine, unless the exports are authorized by the US Commerce Department.

On April 23, 2009, US Secretary of State Hillary Clinton sent a cable to the US Embassy in Madrid requesting that diplomats warn Orion about the consequences that it could face if it went ahead with the lease agreement.

A TDO against Orion Air would prohibit any person from selling or supplying U.S.-origin items, including aircraft and spare parts, to Orion Air, wrote Clinton, adding that the company could face civil and criminal penalties, including fines of up to 1,000,000 and 20 years imprisonment per violation. Clinton revealed that the biggest shareholder in Syria Pearl was Cham Holding, a company founded by Rami Makhlouf, the first cousin to Syrian President Bashar al-Assad. On February 21, 2008, the US Department of Treasury placed Makhlouf on a specially designated national list for contributing to or benefiting from corruption in Syria.

Orion allegedly went ahead and delivered the jet despite the US warnings.

On May 5, 2009, Orion Air Director General Arancha Merino contacted the US Embassy after she was contacted by US officials and told them that her company would face bankruptcy and possible legal action by the Syrians if a second plane was not delivered, as agreed. Merino said she had consulted with Spanish authorities, who assured her that leasing the aircraft to Syrian Pearl would not violate Spanish or international law. She did not say that the Spanish authorities had made any assurances about US law. She acknowledged that the aircraft contain more than 10 percent U.S.-origin content but reiterated the company’s belief that a wet lease does not constitute an export, the cable states.

Surprise and confusion

In Damascus, the Beirut-based Spanish counsellor for economic and commercial affairs, Miguel Iriso, met on May 14 with US Embassy officials to tell them that Madrid was surprised and confused that US diplomats contacted Orion Air executives directly rather than first going through the Spanish Foreign Ministry with their concerns.

Iriso asked US diplomats for an explanation of how a wet-lease of British-manufactured aircraft might violate US sanctions law and what potential ramifications could result from the issuance of the Temporary Denial Order TDO.

A US official told him that Syria had approached other manufacturers, such as Airbus, Embraer and Bombardier to purchase or lease jets.

Consequently, the large aircraft companies who had opted not to contract with Syrian Pearl out of respect for our sanctions regime were likely to be watching our response to Orion Air’s decision, wrote then charge daffairs Maura Connelly, who is now the US Ambassador to Beirut. Seeming satisfied, Iriso thanked us for the explanation and said that the Spanish had so far only heard one side of the story from the company.

On May 19, the Embassy wrote: officials appear sincere in their interest to engage further with us on this issue, but, like Orion Air itself, appear to hold out hope that the company can somehow fulfill its contract with Syrian Pearl and still avoid trouble with the , which appears to be an unrealistic scenario.

The grounded jet

On June 15, Orion Air Manager Jos Mara Orea called the US Embassy to say that Orion had broken off dealings with the Syrian airline and to request that the TDO be lifted. “At the same time, he said that Syrian airport authorities were not allowing Orion’s crew access to the aircraft in order to fly it back. Orea said it was not clear whether the Syrian airline or the Syrian government was behind this, reads a cable from that same date.

Syrian Pearl Airways CEO Thaulow and Flight Operations Director Samir Imam met with US officials in Damascus to complain that his company was being targeted because of Makhlouf, who is unpopular in Washington.

The CEO confirmed that Syrian authorities would not allow the grounded BAE 146-300 to depart Damascus until Orion Air refunded a 590,000 Euro earnest money depositthat Syrian Pearl had paid, wrote Connelly. Shrugging,Thaulow said he assumed Orion Air had already spent the money and doubted Syrian Pearl would ever get its money back.

According to the April 25, 2011 issue of US Federal Register, Washingtons official gazette, the sanction against Orion was renewed in April for 180 days.

… Orion Air not only engaged in this conduct after having received actual as well as constructive notice of the applicable license requirements, but then sought to evade the [r]egulations and U.S. export controls by giving the U.S. Government false assurances that it would put the transaction on hold due to the U.S. Governments concerns.