U.S. blacklists global network of Iranian 'front' companies

WASHINGTON Tue Jun 4, 2013 1:57pm EDT

Under Secretary of the Treasury for Terrorism and Financial Intelligence David S. Cohen speaks during a news conference at the Conrad B. Duberstein U.S. Bankruptcy Courthouse in New York December 11, 2012. REUTERS/Joshua Lott

Under Secretary of the Treasury for Terrorism and Financial Intelligence David S. Cohen speaks during a news conference at the Conrad B. Duberstein U.S. Bankruptcy Courthouse in New York December 11, 2012.

Credit: Reuters/Joshua Lott

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WASHINGTON (Reuters) - A global network of private companies were blacklisted by the United States on Tuesday for providing revenue to the Iranian government's leadership and helping it evade the pinch from international sanctions on Tehran's nuclear program, the U.S. Treasury Department said.

The move targets 37 companies spread across the world, from Iran to Croatia, Germany and South Africa, and is the fourth action the United States has taken in the past week to sanction Iran's government and industries over its atomic program.

The sanctions prohibit U.S. citizens and companies from dealing with the firms. Any foreign financial institutions dealing with them risk getting cut off from the U.S. financial system.

The Treasury Department said the companies are governed by the Execution of Imam Khomeini's Order, or EIKO - a program set up by Iran's leadership to manage its commercial holdings - and earn tens of billions of dollars in profits. Ayatollah Ruhollah Khomeini was a leader of the 1979 revolution that established the Islamic Republic of Iran.

The companies take advantage of preferential loan rates from Iranian banks and sell and manage real estate holdings, including properties confiscated from Iranians who do not live in the country full-time, the Treasury Department said.

It said the firms have business links to Iran's government but usually have non-Iranian or Iranian expatriate owners to get around restrictions on the government's ability to do business in Europe and other parts of the world.

"While the Iranian government's leadership works to hide billions of dollars in corporate profits earned at the expense of the Iranian people, Treasury will continue exposing and acting against the regime's attempts to evade our sanctions and escape international isolation," Under Secretary of the Treasury David Cohen said in a statement announcing the sanctions.


The United States and other Western powers believe Iran's nuclear program is aimed at developing atomic weapons. Tehran denies the charge, saying it is strictly for power generation and medical purposes.

Sanctions imposed by the United States and European Union halved Iran's oil exports last year, depriving the government of billions of dollars in revenue, increasing already high inflation and hitting the value of the rial currency. But there is little evidence they have slowed the nuclear program.

"Each passing month shows important results obtained through sanctions. Yet, the Iranian regime is still able to fund nuclear enrichment in ways that bear no relationship to a peaceful program," Senator Mike Crapo, the top Republican on the U.S. Senate Banking Committee, said on Tuesday during a hearing examining the sanctions.

China and Russia are expected this week to join four Western powers in voicing deep concerns about Iran's atomic activities, and pressing it to cooperate with a stalled inquiry by the U.N. nuclear agency.

Cohen said the sanctions have had an impact on Iran's leadership, as Iranian officials sought relief from sanctions during recent negotiations with officials from the six world powers in Almaty, Kazakhstan.

"They would not have done so had the impact of sanctions not affected their calculus," Cohen said during the hearing.

But Wendy Sherman, the State Department's under secretary for political affairs, said it was ultimately Iran's Supreme Leader Ayatollah Ali Khamenei who decided whether to stop Iran's nuclear program.

"He is the sole decision-maker when it comes to the strategic calculation about whether to really deal in these negotiations," Sherman said during the hearing. "We don't think he has made that calculation yet; we think we're getting closer to the potential for him doing so."

The United States has said it supports further sanctions on Iran's government and industries but not sanctions on Iran's natural gas exports.

Sherman told lawmakers a classified briefing report from last December showed natural gas sanctions would cause disruptions to the gas supplies of U.S. partners in the region, including Turkey, but would not significantly impact Iran's revenue.

(Editing by Philip Barbara and Paul Simao)

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Comments (13)
TruthFair wrote:

Jun 04, 2013 11:55am EDT  --  Report as abuse
FatherJames wrote:
Once upon a time American administrations of both parties promised that North Korea would never be allowed to develop nuclear weapons. Then one day they had nuclear weapons. We were told that the government could do nothing about it… because they had nuclear weapons…

The last few administrations of both parties have promised that Iran will never be permitted to develop nuclear weapons. Familiar melody…

When a government feels pressure to do something, but really is afraid to… rather hand the problem to future administrations… the answer is imposing sanctions. Makes it look like you are doing something impressive when you really aren’t.

From 1965-1980, tiny Rhodesia was under UN sanctions. A small, landlocked country… seemed the perfect target for sanctions. The British government that called for them proclaimed that sanctions would cause Rhodesia to fall in “weeks, rather than months…”

The Communist Bloc countries, which screamed loudest for sanctions, were the first to break them. TVs from Poland, 9mm ammuntion from the Czechs… and so on. The Japanese provided electronics and vehicles, the Dutch security systems… the French…

Iraq is a very large country with a lot of oil and good friends in Moscow and Beijing. While adjusting to sanctions a major pain, it is not anything that they can’t get around. They have a large population and a large coastline.

While the fanatics who run the government are unpopular with growing numbers of Iranian citizens, their grip on power is firm. These “leaders” marched a generation of their own children into Iraqi minefields to clear the way for their tanks. If they are determined to develop nuclear weapons, they will.

Meanwhile our own leaders cry out for us to “give sanctions a chance…” Rhodesia taught them nothing…

Jun 04, 2013 12:15pm EDT  --  Report as abuse
MikeBarnett wrote:
This allows other countries to make profits on trade while the US reduces it economic possibilities. The US already has sanctions on about 50% of the world, so US leaders lie about “unfair” trade practices. The US is its worst enemy in international commerce.

Jun 04, 2013 12:56pm EDT  --  Report as abuse
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