EXCLUSIVE-Glencore, Trafigura deals with Iran may have skirted sanctions -UN

Wed May 22, 2013 6:02pm EDT

* Glencore's aluminum chief to depart, reason unclear

* Iran violates sanctions using front firms, false papers -report

* It says Iran relies on foreign technology for missile program (Adds details from U.N. experts report)

By Louis Charbonneau and Michelle Nichols

UNITED NATIONS, May 22 (Reuters) - Metals swap deals with Iran by Switzerland-based commodities giants Glencore Xstrata and Trafigura could have been a way of skirting international sanctions against Tehran over its nuclear program, according to a confidential U.N. Panel of Experts report seen by Reuters on Wednesday.

Reuters reported on March 1 that Glencore had supplied thousands of tons of alumina to an Iranian firm that has provided aluminum to Iran's nuclear program, an allegation Glencore confirmed as accurate. Afterward, Trafigura acknowledged it had also traded with the same Iranian firm.

Swiss authorities said at the time that they saw no evidence of U.N. or Swiss sanctions violations by Glencore, but the U.N. experts, who monitor compliance with the Iran sanctions regime, raised the possibility that the swap deals were a means of flouting restrictions on trade with Iran.

"If confirmed, such transactions may reflect an avenue for procurement of a raw material in a manner that circumvents sanctions," the 49-page report said in reference to the media reports on the swap deals. "The companies involved have stated that they have halted those transactions."

Reuters has sought comment from both companies regarding the report, which was delivered to the U.N. Security Council's Iran sanctions committee earlier this month.

Reuters reported on Tuesday that Glencore's head of aluminum, Gary Fegel, is set to leave the company, the first high-profile departure since the commodity trading giant closed its purchase of miner Xstrata this month. The timing and reason for his exit after 12 years at Glencore are unclear.

The experts' annual report said they have found evidence that Tehran routinely attempts to flout the sanctions applied against Iran over its nuclear program, which Western powers and their allies suspect is aimed at producing weapons but the Iranians say is for peaceful electricity generation.

"Iran continues to seek items for its prohibited activities from abroad by using multiple and increasingly complex procurement methods, including front companies, intermediaries, false documentation, and new routes," the experts said.

"These require additional vigilance and expertise on the part of states in order to identify suspicious transactions," it said.

The panel listed 11 violations by Iran since June 2012 and said it has at least six ongoing investigations into possible sanctions violations, including the export of machine tools reported by Spain and the export of technical equipment for use in satellite technology reported by Germany.

The United States reported transfers and attempted transfers of items linked to Iran's nuclear program, including vacuum equipment for test stands, pressure transducers, vacuum pumps and materials for fabrication of centrifuge machine components like magnetic tape, marching steel and aluminum alloys.

The United States also reported a violation involving the transfer of specialized metals to several entities in Iran associated with the ballistic missile program.

The experts said Iran had not demonstrated any significant new missile capabilities in the past year, but had continued to violate Security Council resolution by launching missiles.

"Despite at least the partial success in making its ballistic missile program indigenous, Iran remains reliant on foreign suppliers for technology, some components and raw materials," the panel said.

"Preventing supply of these items is critical for international efforts to slow Iran's prohibited ballistic missiles activities," it said, while noting that "no significant new missile capabilities" had been demonstrated by Iran. (Additional reporting by Emma Farge; Editing by Stacey Joyce and Paul Simao)