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Web of shell companies veils trade by Iran’s fleet

On Jan. 24, 2009, a rusting freighter flying a Hong Kong flag dropped anchor in the South African port of Durban. The stop was not on the ship’s customary route, and it stayed only an hour, just long enough to pick up its clandestine cargo: a Bladerunner 51 speedboat that could be armed with torpedoes and used as a fast-attack craft in the Persian Gulf.

The name painted on the ship’s side as it left Durban and made for the Iranian port of Bandar Abbas was the Diplomat, and its papers showed that it was owned by a company called Starry Shine Ltd. Both the name and provenance were of recent vintage. Six months earlier, the Diplomat had been the Iran Mufateh, part of a fleet owned by the state-owned Islamic Republic of Iran Shipping Lines, known as Irisl.

Within months of the Durban episode, the U.S. government put out word that Irisl had renamed the ship and set up Starry Shine to evade American export controls aimed at preventing Iran from obtaining military-use technology like the Bladerunner 51.

By that time, though, the freighter had yet another name: the Amplify. Last spotted by an electronic tracking system this April in Karachi, Pakistan, the Amplify was under new management and had a mysterious new owner. But only on paper.

The Mufateh-Diplomat-Amplify is part of a great disappearing act in which Irisl, under pressure from American and other sanctions, has been obscuring the true ownership of its vessels in a web of shell companies stretching across Europe and Asia, a New York Times examination of Irisl’s actions shows.

Formed mostly after the United States blacklisted Irisl and all of its ships in 2008, as confederates of Iran’s nuclear and ballistic-missile programs, the corporations often have English names like System Wise and Great Method, which seem to mock American resolve.

Now, as Iran continues to defy international calls to rein in its nuclear ambitions, the U.N. Security Council is poised to vote, as soon as this week, on sanctions of its own. Several provisions focus on Irisl, which has been determined by the United Nations to have been involved in a plot to smuggle weapons, in violation of an international embargo that prohibits Iran from exporting arms.

But The Times’ examination shows how Iran has used a succession of strategems—changing not just ships’ flags and names but their owners, operators and managers, too—to stay one step ahead of such sanctions. This cat-and-mouse game offers a case study in the difficulties of enforcing sanctions.

"We are dealing with people who are as smart as we are, and of course they can read our list," said Stuart A. Levey, the undersecretary of the Treasury who oversees the sanctions effort and the blacklist of Irisl and its fleet.

That blacklist, The Times found, simply hasn’t kept up.

Of the 123 Irisl ships listed, only 46 are still clearly owned by Irisl or its U.S. listed subsidiaries, according to an analysis of data from IHS Fairplay, formerly Lloyd’s Register-Fairplay, based in Britain, which issues large merchant vessels their unique identifying numbers and tracks them over their lifetime. Four more were scuttled.

The rest—73—are now on record as owned and operated by companies that do not appear on the blacklist. The companies are located far from Iran, in places like Malta, Hong Kong, Cyprus, Germany and the Isle of Man. In all but 10 instances, however, The Times was able to establish definitive links between the ships’ new registered owners and Irisl.

The companies are either run by Irisl officials, set up at their behest or wholly owned by Irisl, corporate records and interviews show. Most of the companies’ ships are operated and managed by three newfound Iranian companies that can be found not at the addresses provided to IHS Fairplay, but at Irisl facilities in Tehran.

The Amplify’s registered owner, for instance, is a Hong Kong corporation called Smart Day Holdings, which in turn lists as directors a company in Samoa and another on the Isle of Man. The Isle of Man company, Shallon, is part of a network set up with the help of Nigel Howard Malpass, a British shipping consultant who serves on the boards of Smart Day and companies connected to 43 other ships previously registered to Irisl, records show.

And the shares of many of those companies are held by yet another Isle of Man company, Woking Ltd., which records show is wholly owned by none other than Irisl.

"I did used to be involved with Irisl," Malpass said in a telephone interview, adding that while he had set up companies at the company’s behest, he had since "disassociated" himself.

Irisl, for its part, has repeatedly denied improperly aiding Iran’s military and nuclear programs. Iran’s Ports and Shipping Organization declined requests for an interview about the company and its transformations.

In recent months, advocacy groups like Iran Watch have raised questions about Irisl, particularly its practice of changing ship names. But The Times’ findings offer a considerably more extensive picture of the way Irisl has adapted to sanctions—one that goes well beyond the knowledge of even the Treasury Department.

Levey acknowledged that his department had been challenged trying to keep up with Irisl. Although the Treasury Department has accounted for some of the ship-name changes since the sanctions were enacted, it has not added new shell companies controlled by Irisl to the blacklist or ships that have been launched since then.

But Levey said that no one should be surprised by what Irisl had done. The findings, he said, "reinforce what we have told governments and the private sector—that the Iranian government engages in deception, so they need to look beyond lists of sanctioned entities to protect themselves from potential illicit transactions."

The U.S. sanctions forbid American banks and companies from entering into transactions involving Irisl, its listed subsidiaries and its ships; they also seek to influence other countries and their companies to shun the company. They are based on a concept called "smart sanctions," tightly focused campaigns that the White House and the Treasury Department believe are more effective than broad trade embargos, which do not single out bad actors.

The proposed U.N. sanctions stop short of barring dealings with Irisl. But American officials involved in drafting them say they take into account Irisl’s shell game.

For example, they expand on a 2008 U.N. provision calling for Irisl ships to be boarded and inspected at sea or in port if there are "reasonable grounds to believe" they are carrying contraband forbidden by Security Council resolutions on Iran. The new proposal calls for inspections of all such ships, whether Irisl is the listed owner or not.

From the beginning, though, Irisl has sought to outmaneuver its pursuers.

Just days after the United Nations enacted the 2008 inspection provision, for instance, an Irisl cargo ship suspected of carrying weapons to Syria narrowly won a chase to avoid being inspected by NATO officers, according to an account by government officials of the episode, which was previously unreported.

In that instance, an Irisl cargo ship apparently bound for Turkey made a high-speed, high-seas dash up the Mediterranean to the port of Latakia, Syria, to avoid inspection after a NATO ship, which had been tipped off that the vessel might be carrying weapons, questioned its cargo.

Next, Iran began using chartered ships from other countries, ones less likely to raise red flags. But that tactic ultimately backfired when the non-Iranian crews cooperated with requests to inspect the cargo. In three boardings, two by the U.S. Navy and one by Israeli commandos, authorities said they had discovered a virtual arms bazaar, including thousands of Katyusha rockets, grenades and mortar shells, believed to be intended for Hezbollah. By the time the United States placed Irisl’s fleet on its sanctions list, in fall 2008, the company had begun its corporate camouflage. The first step, records show, was to replace the ships’ Iranian flags, primarily with those of Germany, Hong Kong and Malta. Over time, almost all got new, innocuous-sounding English names, like the Bluebell and the Angel. One simply became the Alias.

Then, with the sanctions in place, three new Iranian companies suddenly appeared on the scene: Hafiz Darya Shipping Lines, Sapid Shipping and Soroush Sarzamin Asatir.

In January 2009, it was announced that Hafiz Darya had taken over Irisl’s container ship business in what the shipping trade media reported as a murky deal. Irisl officials, while providing no financial or other details of the deal, insisted that Hafiz Darya was an independent entity, and that the move had been part of a larger government privatization effort.

Virtually overnight, Hafiz Darya took Irisl’s spot as the world’s 23rd largest container shipper, while Irisl disappeared from the top 100. Sapid, for its part, took over the operation of 39 blacklisted bulk carrier and general cargo ships, records show. In paperwork they filed with IHS Fairplay, the ship-tracking group, Hafiz Darya and Sapid listed separate addresses in Tehran.

Visits to both places yielded no sign of them, though the address provided by Hafiz Darya was home to the " Irisl Club"—a closed-off compound of gardens, reception halls and restaurants for Irisl company use. However, both Hafiz Darya and Sapid were discovered to be working out of the third floor of Irisl’s Aseman Tower headquarters in uptown Tehran. The address provided by Soroush, which manages the ships that Sapid now operates, turned out to be the Irisl Maritime Institute, also in Tehran.

Location isn’t the only thing the new companies share with Irisl.

In a phone call to Sapid, the company identified Gholamhossein Golparvar as its managing director. Golparvar was quoted as recently as this Jan. 17 in the Iranian news media as Irisl’s commercial director.

Likewise, some of Hafiz Darya’s senior officials also came from Irisl. Akbar Malekfar, for instance, was identified by the company as the head of its Asia Middle East division. He is also one of Irisl’s general managers, according to the state-owned company’s Web site.

Together, Hafiz Darya, Sapid, and Soroush operate or manage 46 of the blacklisted ships that have been transferred to new registered owners, records show. And as was the case with the Diplomat-turned-Amplify, the corporate reports of those new owners always lead back to Irisl.

The owners of two ships, the Acena and the Lancelin, for instance, are two companies in Cyprus, where records show that Irisl is the sole shareholder. The companies’ directors are Mohammad Hadi Pajand, who works for Irisl in London, and Ahmad Sarkandi, an Irisl official implicated by the United States in the smuggling of the British-designed powerboat, the Bladerunner 51.

Irisl’s maneuvering may help it with a continuing problem. Britain, home to some of the world’s largest shipping insurers, placed its own sanctions on Irisl last fall. As a result, policies were canceled for many Irisl-owned ships.

But the British sanctions, as well as a subsequent ban enacted by the ship insurance center of Bermuda, only cover Irisl, not subsidiaries or related entities. And records show that British and Bermudan companies still insure at least 10 ships owned by Irisl subsidiaries that are on the American blacklist. (It is unclear who is insuring some of the ships owned by less transparent Irisl-linked companies.)

As difficult as it is to keep track of ships that are on the blacklist, ships that have never been listed present an even greater challenge. Irisl has taken great care to hide its connections to vessels that have been launched since the blacklist was issued.

Early this year, for instance, five corporate transactions were recorded in Malta in which the ownership of five ships changed hands.

All the ships—the Baani, Haami, Shaadi, Aali and Baaghi—had been completed and inspected in either 2009 or 2010, with a building price of $29 million apiece, according to IHS Fairplay. In each case, IHS Fairplay records show that the vessels came out of the shipyards and into the ownership hands of Maltese shipping companies named Petsworth, Quinns, Reigate, Oxted and New Haven.

Still, buried deep within Maltese corporate records was the fact that Irisl owned the stock in those companies. In the five simultaneous transactions on Jan. 26, Irisl attempted to sever even that link, transferring its shares in each company to three Iranians.

It turns out, though, that two of those Iranians, who together, records show, now own the majority of stock, are Irisl officials. The records also offer an additional detail that raises questions about whether these were truly arm’s-length transactions:

In each case, the price per share was 2.33 euros, or $3.28 at the time, meaning that Irisl effectively sold companies that owned ships with a combined value of $145 million for a total of $8,200.

William Yong contributed reporting from Tehran, Kitty Bennett from St. Petersburg, Fla., and Stefan Pauly from Berlin.


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