Cocaine profits made Beirut banks boom

You’ll hear a lot more in the coming months about how U.S. law enforcement exposed Hezbollah’s international narco-trafficking money laundering scheme.  But lost in the back slapping, attaboys, and high fives among prosecutors and politicians is just how much the scheme enriched the banking system of Lebanon and its Iranian partners.

New American Security senior fellow and money laundering expert David Asher discusses the details during an interesting presentation at the Washington Institute last month.  We’ll start the tape as Mr. Asher explains how used cars sold from the Americas  made their way to West Africa where the profits were mingled with illegal drug proceeds:

Michigan State declined Iran-backed Dubai campus bailout

Good for MSU and Lou Simon.  If they had accepted the funds, it’s very likely that Michigan State could have been held responsible for violations of sanctions laws and an even greater financial risk.  Not to mention the moral problem of working with an investor that may have been helping Iran gain money and scientific resources to acquire nuclear weapons to destroy Israel.

Normally we hear about undue influence from Saudi (Sunni) money on Western universities, but apparently Iran has tried buying academic influence as well.  From Bloomberg on Apr. 8, which says American universities are “infected” by foreign spies:

Michigan State University President Lou Anna K. Simon contacted the Central Intelligence Agency in late 2009 with an urgent question.

The school’s campus in Dubai needed a bailout and an unlikely savior had stepped forward: a Dubai-based company that offered to provide money and students.

Simon was tempted. She also worried that the company, which had investors from Iran and wanted to recruit students from there, might be a front for the Iranian government, she said. If so, an agreement could violate federal trade sanctions and invite enemy spies.

The CIA couldn’t confirm that the company wasn’t an arm of Iran’s government. Simon rejected the offer and shut down undergraduate programs in Dubai, at a loss of $3.7 million…

Safety smokescreen for Conviasa ban

The European Union has imposed an “operating ban” against the Venezuelan airline Conviasa.  This is the same airline that former ambassador Roger Noriega  said “conducts regular flights between Caracas and Damascus and Teheran. The Hezbollah networks use these flights and others to ferry operatives, recruits, and cargo in and out of the region.”  Amb. Noriega also suggested that Conviasa has been used to traffic cocaine from Venezuela to West Africa.

The new Conviasa ban has been attributed in public to questions about airline safety, but anti-money laundering insider Kenneth Rijock has pointed out on his blog that the ban may actually have been imposed due to the transport of nuclear materials from Venezuela to Iran with a stopover in Europe, or due to bulk gold smuggling by the airline to help buoy a faltering Iranian economy.  From Mr. Rijock on Apr. 4:

DID VENEZUELAN AIRLINE MOVE NUCLEAR MATERIAL THROUGH EUROPE ?

…The ban fails to specify exactly what operating conditions, ramp inspections, or other events caused this action, but the grounds may be much more disturbing than flight safety deficiencies.

Any one of these may have been the reason to ban Conviasa from EU airports:

1. Seats on Conviasa’s curious long-haul operation between Caracas, Damascus and Tehran, have a history of being inaccessible to civilian passengers. It has served as a conduit for Iranian nationals,  traveling for any number of reasons, including evasion of international sanctions, to gain access to the Western Hemisphere. Visas are freely available at the Venezuelan Embassy in Tehran for official travelers; I have seen a few of them on brand-new Iranian passports.
2. Anti-Terrorism experts believe that agents of the Iran Revolutionary Guard Corps, especially the Quds Force, its international wing, have entered Venezuela in that manner. Remember also that there is a Hezbollah Venezuela, and this is probably the only direct, open access for members of specially designated global terrorist organisations to travel from the Middle East to Latin America. The arrest and detention, at the US-Mexican border, of non-Spanish speaking Middle Eastern nationals suspected of terrorist affiliations, carrying valid Venezuelan passports, validates this belief. Hamas, ETA, whomever the terrorist group du jour happens to be currently in favour with the Chavez regime.
3. These wide-body A340 aircraft have been engaged in heavy cargo airlift of military materiel either way, eastbound or westbound. Most experts have heard rumours of missiles to Venezuela; small arms to Syria and Iran; what else has been shipped into Iran, evading the international sanctions ? These aircraft are exempt from normal customs procedures in Venezuela, so frankly, anything goes.
4. Gold has been known to have been shipped in bulk to Iran; we can also assume that bulk cash, in the form of US Dollars, is also traveling from the Chavez regime to Iran. Remember, due to the sanctions, Iran is in dire need of “Greenbacks” to purchase goods and services in the global marketplace for cash. They are getting some of those needs met from Iraqi sources, but their international purchases from suppliers willing to do business surely do not involve credit.
5. My best guess is that the EC does not want a nuclear accident at one of the EU airports, due to a mishap involving a Conviasa aircraft carrying Uranium to Iran, or even a nuclear device or component to Venezuela, whose leadership has longed to have the nuclear option. Is that really why Conviasa is now banned from EU airports ?

Should a Conviasa aircraft make a forced landing, or suffer an accident between Caracas and the Middle East, whether through equipment malfunction, or pilot error, we need to see what it is carrying on board, preferably with inspectors carrying radiation-measuring equipment, before its cargo is released. I wonder what will then happen to the Conviasa board of directors and the pilot in command.

No risk too high for South Africa

Here’s more on the South African love affair with Iran.  This time, Avi Jorisch takes on South Africa’s telecommunications powerhouse, MTN, for their deep presence in Iran and their complicity in quashing Iranian dissidents.

Even leaving aside the problem that their business ties could help prop up a regime driven by nuclear ambitions, it is a very foolish decision on MTN’s part.  FATF, the international financial watchdog, has warned that money invested in Iran has an unacceptably high risk of being laundered toward illegal activities.  Why would a responsible business want to take such a risk?

MTN has no business aiding terror in Iran
Allegations that SA cellphone company helps regime persecute opposition

Sunday Times – South Africa
March 25, 2012

MTN has a corporate responsibility to cease doing business with Iran and colluding with a state sponsor of terror that uses its technology to track, silence and kill its people. The South African government should take immediate action to prevent this abuse of the telecommunications industry.

MTN’s business ties to Iran are significant and represent approximately a fifth of the company’s revenue. It has a 49% stake in Iran’s second-largest cellphone operator, MTN-Irancell, which has cornered almost half of the Iranian cellphone market. The remaining 51% is owned by the Iran Electronic Development Company (IEDC), a company affiliated with the Iranian government. Its principal shareholder, Iran Electric Industries, has been blacklisted by both the US Treasury and the European Union for its role in proliferating weapons of mass destruction.

On January 27 an MTN spokesman said that while the company was monitoring events in Iran, it was conducting “business as usual” in the country. Minister of Communications Dina Pule further emphasized that there would be no pressure on MTN to pull out of Iran.

MTN has played a critical role in helping the Iranian regime to hunt down its opposition. In 2009, when Iranians took to the streets to protest President Mahmoud Ahmadinejad’s election, MTN-Irancell, along with Iran’s other cellphone carriers, reportedly followed government instructions to suspend text messaging and block internet phone services such as Skype, which were used extensively by the opposition movement…

Read it all here.

Iran trades weapons for heroin with the Taliban

From the Wall Street Journal‘s ‘Corruption Currents‘ blog on Mar. 7:

Treasury Sanctions Iranian General For Afghan Heroin Trafficking

By Samuel Rubenfeld

The U.S. Treasury Department said Wednesday it sanctioned an Iranian general under the Kingpin Act for allowing Afghan narcotics traffickers to smuggle drugs through Iran.

Iranian Islamic Revolutionary Guard Corps Qods Force General Gholamreza Baghbani is the chief of a Qods Force office near the Afghan border.

Treasury said he facilitated the smuggling of heroin precursor chemicals and shipments of opium through the Iranian border and into Iran in exchange for moving weapons to the Taliban on his behalf.

It’s the first time the Kingpin Act has been used against an Iranian official, Treasury said in a statement.

“Today’s action exposes [Qods Force] involvement in trafficking narcotics, made doubly reprehensible here because it is done as part of a broader scheme to support terrorism,” said David Cohen, undersecretary of Treasury for terrorism and financial intelligence, in the statement.

Some related background follows from another source:

• Is Iran providing tangible financial, military or political support for the Taliban?

There have been numerous public reports about support for the Taliban coming from Iran. There are reports that elements within the Revolutionary Guards may have transferred long-range rockets to the Taliban and provided training for the Taliban. In February 2011, British forces reportedly intercepted in Afghanistan a shipment of 48 122-mm rockets that they claimed had originated from Iran. Spokesmen of the Islamic Republic have consistently denied all these allegations. Such denials, even if we assume their validity, do not preclude the possibility that non-state actors within Iran may be used by the government to provide weapons or training to some factions within the Taliban organization.

From a strategic perspective, the Iranian government looks at the Taliban as a useful enemy that is undermining the interests of its other enemy, namely the United States. Therefore, it should not be surprising at all if the Iranian government supports the Taliban or if it looks the other away as behind-the-scenes support is provided by Iran’s non-state actors to the Taliban.

FATF: Iran, Pakistan, Indonesia fail to criminalize terrorist financing

The world’s leading financial watchdog has added Pakistan and Indonesia to its blacklist of deficient jurisdictions.  Iran was also once again named by FATF for its failure to criminalize the funding of terrorism.  What they all have in common is that none of them has sufficient laws on the books to combat the financing of terrorism or freeze terrorist assets.

Here are some excerpts from FATF’s Feb. 16 statement:

The FATF remains particularly and exceptionally concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran’s previous engagement with the FATF.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones.

The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements. If Iran fails to take concrete steps to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in June 2012…

Indonesia has taken significant steps towards improving its AML/CFT regime, including by enacting AML legislation in 2010 and developing draft comprehensive CFT legislation. Despite Indonesia’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Indonesia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Indonesia should work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) amending and implementing laws or other instruments to fully implement the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Indonesia to address its remaining deficiencies and continue the process of implementing its action plan…

Pakistan has taken significant steps towards improving its AML/CFT regime, including by enhancing the capacity of its FIU, approving an AML/CFT strategy, and by ensuring training is provided to relevant stakeholders. Despite Pakistan’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Pakistan has not made sufficient progress in implementing its action plan, and certain AML/CFT deficiencies remain. Specifically, Pakistan needs to enact legislation to ensure that it meets the FATF standards regarding the terrorist financing offence (SR II) and the ability to identify, freeze, and confiscate terrorist assets (Special Recommendation III). The FATF encourages Pakistan to address the remaining deficiencies and continue to implement its action plan, including by demonstrating effective regulation of money service providers and implementing effective controls for cross-border cash transactions (Special Recommendation VI and Special Recommendation IX).

South Africa is Iran’s lead energy buyer

While the U.S., Canada, Europe, and Australia have joined together in sanctions against Iran, South Africa has not.  In 2010, South Africa bought $22.9 billion in fuel, crude, natural gas, and minerals from Iran.  The quantity easily outstrips purchases by China, the country most often singled out for counterbalancing Western sanctions.  From a Jan. 26 report from the Congressional Research Service using data from the World Trade Atlas:

Source: The World Trade Atlas, adapted by Susan Chesser, Knowledge Services Group, CRS.

The report has been followed by a Feb. 8 Associated Press article about South Africa’s involvement with Iran:

South Africa’s close ties to Iran under scrutiny

JOHANNESBURG — The West’s increasing pressure on Iran has meant scrutiny for South African businesses that operate in the Middle Eastern nation accused of having nuclear ambitions.

South African-Iranian political ties have long been close, and that has meant close business ties. A politically connected South African telecommunications company has been accused of pushing Pretoria to support Iran’s nuclear power program. A South African energy and chemicals company is reviewing its Iranian investments. Iranian oil makes up nearly a third of South Africa’s oil imports…

The only good thing about the data is that Germany has slipped in the rankings of Iran’s biggest customers.

Turkey replaces Iran as Hamas sugar daddy

Hamas, one of the five wealthiest terrorist organizations on earth, isn’t getting as much money from Iran as it once was.  Shia Iran, which funded Hamas partly to prove its anti-Israel credentials to the Sunni world, may now be eclipsed by Turkey, which has its own inferiority complex to overcome.  Recep Erdogan never loses an opportunity to demonstrate Turkish relevance in a predominantly Arab Middle East.

So the multi-million dollar industry that is Hamas will stay in business.  From Haaretz on Jan. 28:

Turkey may provide Hamas with $300 million in annual aid

Hamas has been facing financial difficulties due to late and reduced payments from Iran; Meshal deciding between Qatar and Jordan for new Hamas headquarters, after leaving Syria.

By Zvi Bar’el

Turkey may provide Hamas with $300 million in annual aid, Turkish sources report. The aid would take place of Iranian funding, which has been significantly reduced.

Hamas Prime Minister Ismail Haniyeh reportedly received assurances to this effect during his recent visit to Turkey.

Haniyeh was warmly received earlier this month by Turkish Prime Minister Recep Tayyip Erdogan and was cheered when he visited the Turkish parliament. Turkey supports reconciliation between Fatah and Hamas and Turkish sources report that the Erdogan government has promised to seriously aid the reconciliation process.

According to Turkish sources, Haniyeh laid out in detail for Erdogan the financial difficulties Hamas is currently facing, after payments from Iran, that had totaled $250-$300 annually, did not arrive on time and were cut significantly. This led to Hamas not being able to pay the salaries of employees.

The same sources reported that Hamas politburo chief Khaled Meshal has left Syria for good and is considering putting the organization’s headquarters in Qatar or Jordan.

On Saturday, President Shimon Peres accused Turkey of funding Hamas.

Meshal is expected to meet on Sunday with Jordan’s King Abdullah in Amman but it was publicly announced that the visit does not have “political implications and does not signal a change in Jordan’s political agenda”. Abdullah, who visited the U.S. last week and met with U.S. President Barack Obama, was told in the strongest terms that the U.S. viewed gravely the possibility that Hamas would put its headquarters in Jordan.

At the same time, Iran invited Haniyeh on an official visit to Iran, without setting a date. It is unclear if Iran intends to support Haniyeh as a replacement for Meshal – if Meshal in fact retires from the organization’s leadership – just as Haniyeh has not made if he will visit Iran. Within Hamas, discussions have been held recently on the group’s future international ties, the purpose of which is to determine whether Hamas will return to the “Arab bosom”, meaning that it would disengage from Iran and embrace ties with countries like Egypt, Saudi Arabia, Qatar and Jordan, or whether it will try to have it both ways without cutting ties with Iran.

2011: Iran’s nuclear march unfazed by sanctions

In its November report, the International Atomic Energy Agency revealed that:

• The Iranian military has procured nuclear and dual-use material and equipment
• Iran has acquired information on how to create nuclear weapons through a secret network
• Iran has tested nuclear weapon components

The advance in Iranian efforts to use nuclear program for military purposes strongly suggests that the sanctions regime is not having the impact necessary to stop their acquisition of the bomb.  Sanctions may have damaged their economy and currency, but that is irrelevant because Iran has shown that it will continue funding its nuclear program regardless of economic conditions.

Pres. Obama’s decision to appoint lightweight David Cohen as undersecretary of Terrorism and Financial Intelligence indicated a lack of seriousness about enforcing serious sanctions against Iran to bankrupt its nuclear program.  In 2011, Cohen has succeeded mostly in alienating the U.S. Senate by stabbing New Jersey Democrat Bob Menendez in the back.  If only we would treat our foreign enemies that way.

Obama’s flawed sanctions chief ends Arab trip

David S. Cohen, a former Clinton lawyer who Pres. Obama entrusted with a sanctions regime that is supposed to provide for the nuclear containment of Iran, is wrapping up a four-day trip to Saudi Arabia and Bahrain.

The State Department says that Mr. Cohen was conferring with officials in those countries about sanctions against the Central Bank of Iran and against Bashar al-Assad’s regime in Syria.

Surprisingly, although Bahrain shockingly has no legal means of freezing assets in its own country, there is no indication that Mr. Cohen addressed this shortcoming with officials in Manama.

Mr. Cohen has consistently misled the American public about the level of Saudi cooperation in combating terrorist financing.  Consequently, it will be difficult to judge the truthfulness of whatever statements are released at the conclusion of this trip.

Moreover, after Mr. Cohen back-stabbed U.S. Sen. Bob Menendez (D-NJ) during backdoor negotiations on Iran sanctions, one wonders what would make Arab officials trust Mr. Cohen.

Seeking cooperation on sanctions is a good objective, but sending a flawed messenger indicates Pres. Obama’s lack of seriousness about sanctions against Syria and Iran.

Pres. Obama angers Congress on Iran sanctions

Democrats aren’t the only ones angry at the lack of Obama administration cooperation on the sanctions regime against Iran.  When several executive branch officials, including Deputy Treasury Secretary Neal Wolin, skipped a November hearing on Iran sanctions, Rep. Jason Chaffetz (R-UT) was peeved:

But this still isn’t nearly as bad as how the administration watered down a recent amendment on Iran sanctions behind closed doors, then had the audacity to oppose the final amendment for being too punitive.

For an administration that has opted for sanctions (or as Obama officials call it, “pressure”) rather than force, it’s a wonder why Congress must consistently drag administration officials kicking and screaming to adopt real sanctions targeted specifically at Iran’s central bank or its energy sector.