The State Oil Marketing Organization (SOMO), Iraq’s national company charged with the exclusive authority to supervise the trade, sale, and export of the country’s oil is central to Iran’s exploitation of the Iraqi economy. SOMO is one of the main arteries for illicitly funneling Iraqi’s wealth to Iran. In January 2020, leaked documents published in the media showed clear evidence of SOMO’s coordination with the Central Bank of Iraq and private banks (either owned or controlled by Iran or Iraqis with strong ties to Iran) to illicitly import Iranian oil derivatives and transfer massive funds gained through Iraq’s daily currency auctions to Iran. The sums shown in the documents totaled over 21 billion dollars during the years 2010-2017.

When the Inspector General’s office announced a plan to combat corruption and recover public funds, SOMO officials were summoned by the Iraqi Parliament to testify on abuse of public funds and widespread corruption that resulted in at least $250 million over the period of 2015-2017. After being summoned to answer for these losses, the Director General of SOMO was caught trying to buy off a major political party to halt the numerous investigations into the agency’s wrongdoing. Iraqi parliamentarians were threatened by militias. The leaked documents represent only a small part of SOMO’s recent and known fraudulent activity, but the Inspector General and others have bent to pressure.

A Taste of SOMO’s Other Corruption Scandals – AISSOT and Iraqi Land Transport Company

In Iraq, it is common knowledge that the overwhelming majority of stolen oil from Basra is blended and sold together with Iranian oil before being transited through the ports of the UAE. Iran-backed militias with close ties to the Iraqi authorities including ministries, political parties, police, and customs officials are directly involved in smuggling oil from Basra to the UAE. Prominent Iraqi figures facilitate Basra’s lawlessness in the oil industry.

A directive from the Iraqi Oil Ministry to increase oil-blending operations on behalf of Iran and export Iranian oil from Khor al-Zubair Port was communicated within the oil sector. Two oil and shipping companies operating in Basra, Al-Iraqia Shipping Services and Oil Trading Company and Iraqi Land Transport Company (AISSOT) are integral to this activity. AISSOT, a joint venture owned by Iraqi Oil Tankers Co and Arab Maritime Petroleum Transport Co, (the latter, a pan-Arab company of oil producers), charters vessels from Greek shipping tycoon Evangelos Marinakis, whose ships are known to be used for illegal activity.

AISSOT’s ships have been delivering heavy oil from Basra to Iranian ships and blending it with Iranian light oil in Iranian waters. Iranian ships are receiving 1/4 of Iraqi heavy oil, mixing it with 3/4 of its higher quality light oil, and receiving Iraqi documentation to disguise and sell Iranian oil as Iraqi oil.

In addition to AISSOT’s participation in illegal blending operations originating in Basra, in a separate incident, it was revealed that AISSOT was coordinating with the Iraqi Company for Transport and SOMO to illicitly sell Iraqi oil to Singapore. International press agencies published shipping documents, showing that SOMO sold oil to Singapore on two tankers (DALIHU & SKSSALUDA) with the Iraqi Company for Transportation and AISSOT. SOMO claims the documents must be forged, but multiple sources confirm SOMO’s role in the black market sales.

The month after these illicit sales were revealed, in April 2020, the SKSSALUDA received a new name, Sama, and was later sold to a Singaporean company incorporated that same month. The tanker formerly known as SKSSALUDA now sails under the name Zarby and has been in the waters off Venezuela and Malaysia making suspicious ship-to-ship transfers with Greek vessels.

Finally, AISSOT is linked to the infamous seizure of the Grace 1, an affair that highlighted Iranian sanctions circumvention operations directed by the IRGC. Front companies in Lebanon were buying and selling oil tankers in order to secretly transfer oil from Iran to Syria. The uncovered tankers were involved in offloading the oil from the Grace 1.

The Grace 1 offloaded cargo to a smaller tanker chartered by a Singaporean company, Blutide, in waters offshore of Fujairah. The owner of Blutide, Basheer Sayeed, is the former CEO of Singaporean company Chemoil Adani and former COO for Gulf Petrol Supplies LLC, a Fujairah National Group Company in the UAE. In both of these roles, he worked with Praveen Jaiswal, the current Director of Bunkering at AISSOT’s main offices in the UAE. Jaiswal and Sayeed continue to work together in sanctions-skirting operations.

Iraqi Land Transport Company and Muften Network

The Iraqi Land Transport Company, which was involved with AISSOT and SOMO in these illicit oil sales, is part of the Muften Group. The Muften brothers and their network are linked to a number of entities involved in moving Iraqi funds to the IRGC and Lebanese Hezbollah.

A key Muften associate, Mohamed Abdul Hussein Gaafar is the Chairman of the Board and CEO of the Iraqi Land Transport Company. He is also an owner of Iraqi Company for General Transportation and Oil Production (ICGTOP), which is linked to Aras Habib’s Bilad Islamic Bank (al-Ataa Bank). He’s also an owner of Union Bank of Iraq, which is involved in other SOMO-Central Bank of Iraq rackets.

Additional owners of the Iraqi Land Transport Company include ICGTOP and Babylon Bank, which is central to the networks of the notorious Essam al-Asadi and Aras Habib. Habib and his Al-Bilad Islamic Bank, (which changed its name to al-Ataa) are under sanctions for facilitating transfers between the IRGC and Lebanese Hezbollah.

The Muften Group’s companies are clearly intertwined with Habib and Al-Asadi, through their joint ownership and partnership in Baghdad Soft Drinks Co. (Pepsi Cola Baghdad), Iraq’s distributor of Pepsi Cola products, to name just one major link.

The Muften Group has many other general trading and contracting companies operating in the oil and gas sector, in addition to its many oil and gas companies: Gate Basra Oil Services, Iraqi Gate Oil Services, South Babylon Oil Services, Khor al-Zuber Company for Oil Services, Al Muften Company of Navigation and Marine Services, and Green Valley Corporation for Navigation and Marine Services.

Muften Group’s direct involvement in black oil sales comes as no surprise to observers of the Iraqi oil and shipping industry. This network, together with Essam al-Asadi’s, is known to have been working directly with Former Prime Minister Nouri al-Maliki in various Iraqi sectors to provide cash flow to the IRGC and Hezbollah.

Afaq Umm Qasr Marine Services Company – An Iraqi Cartel controlled by Nouri al-Maliki, Essam al-Asadi, and the Muften Group

Afaq Umm Qasr Marine Services Company (Afaq) is effectively an Iraqi cartel controlled by Nouri al-Malki, Essam al-Asadi, and Muften Group. It is under investigation by the US Department of Justice for bribery and corruption. Afaq is a vast network for organized corruption. It consists of shell companies, oligarchs, and Iraqi government officials linked to al-Maliki. Afaq companies work with foreign entities doing business in Iraq. They close exclusive contracts and take a cut of profits in return for paying off Iraqi politicians. Afaq has been described as the “corporate arm” of Maliki’s administration and his ongoing economic activity.

Together with Sami al-Asadi, nephew of Iraq’s former acting Interior Minister, Adnan al-Asadi, Essam al-Asadi has accessed state contracts. Essam al-Asadi and Sami al-Asadi own and control SMS-I Operations and Logistics, which is central to both the Afaq and Kataib Hezbollah economic activities. Essam al-Asadi and Sami al-Asadi own many other companies in the oil and shipping, financial brokerage, security, construction, and tourism sectors.

According to reporting from an investigative journalist with the Accountability Project, the Muften Group is also central to the Afaq network and leadership. The Muften Group’s companies are closely intertwined with many of the over 80 companies that operate in Afaq’s deeply corrupt web of businesses.

Shamara Holding Group

Ali Fadhel Hussein Shamara is a powerful Iraqi magnate who controls Shamara Holding Group, a Jordanian offshore company with offices in Amman, Baghdad, and Dubai. It operates multiple engineering companies in Iraq. It also has five companies operating in the Iraqi energy sector: International Free Company (IFC), AEPL-OASIS Limited, Ramz Al Hadara Company, Hydro-Carbon Company, and IFFCO – SHAMARA LIMITED (ISL).

Shamara has collaborated with Iranian entities, hiring Iran’s MAPNA on numerous projects. In 2018, a consulting report commissioned by General Electric advised against working with Shamara in light of his corrupt dealings. Although Shamara Holding Group is apparently not directly connected to Afaq, Ali Shamara is a close associate of Maliki and known to be involved in his economic activity.

The specific schemes detailed here – including the critical role played by SOMO and other Iranian assets like the networks of Asadi and Muften – are just the tip of the iceberg. Iran’s use of the Iraqi oil sector, enabled by willing cooperation of Iraqi state agencies and oligarchs, to circumvent sanctions deprives Iraqis of revenue from their country’s natural resources. When will Iraqis be free to harness their wealth to build a strong economy and fulfill their potential? The US Department of Justice, though investigating some of Iran’s Iraqi assets, cannot be trusted to deliver justice to Iraqis when a return to the JCPOA -at any cost- is at the top of the US foreign policy agenda. US administrations are leaving Iraqi activists to face down Iranian domination of the Iraqi economy and Iraqi future. International companies doing business with these networks are enabling Iran’s militias in Iraq to commit atrocious human rights abuses and prevent Iraq from achieving stability.