Iran is exploiting Iraq’s construction sector

Major industry players in Iraq’s construction sector, including Iranian companies and Iraqi business networks, that exploit the Iraqi construction sector to funnel billions of dollars to Iran. These actors are constructing Iraqi dependence on Iran and depriving Iraqis of jobs.

Iranian Companies in the Iraqi Construction Sector

Some of Iran’s largest holding firms operate in Iraq’s construction and engineering sectors, including Khatam al-Anbia (IRGC), Bonyad Mostazafan, and Tadbir (EIKO) — all sanctioned Iranian entities. Iranian engineering, construction, and general trading companies have been working on megaprojects and other major infrastructure and reconstruction projects in Iraq. Bonyad Mostazafan is deeply involved in the Shatt al-Arab/Arvand Rud River infrastructure megaproject. Iranian companies work on major infrastructure projects within Iraq that comprise an integral part of Tehran’s strategic corridor to the Mediterranean.

Iranian construction companies also work closely with Tehran’s Reconstruction Organization of the Holy Shrines in Iraq (ROHSI), which was designated for abetting IRGC economic activity. Iranian engineers and construction workers build and repair Iraqi hotels and the holy shrine complexes under the auspices of ROHSI.

Kosar Company (also known as Bahjat al-Kawthar Company for Construction and Trading) is controlled by the IRGC and operates as a base for Iranian intelligence in Iraq. It was sanctioned in March 2020 for money laundering and the provision of weapons to Iran-backed militias.

Many smaller Iranian construction companies are active in the Kurdish Region of Iraq, and Iranian and Kurdish officials have recently developed mechanisms to facilitate financial relations related to the construction and engineering industry.

The following major Iranian companies operate in Iraq’s construction industry freely:

Gostaresh Energy Pars, a subsidiary of South Pars, which is owned by the Iranian Oil Ministry, is a construction company involved in gas and other energy projects in Iraq that link to Iran’s cross-country gas pipeline.

Tech East South Company is affiliated with the IRGC. This company has been working on reconstruction projects in Iraq for several years. It has contracts with private and public entities. It is building a hotel in Baghdad and has an Iraqi government contract for work on the Baghdad Airport.

Kayson Inc. is an Iranian general contracting public-limited company providing management, engineering, procurement, construction, financing and investment services. Kayson Inc. has multiple contracts with the Iraqi Ministry of Higher Education and the Ministry of Transportation.

Ayman Sazan Company, or Consulting Engineers for Ayman Saza Fadak, is an Iranian company that specialisefs in reconstruction of holy sites. Linked to Khatam an-Anbiya, it is active in Iraq and Syria, with offices in Baghdad and Karbala. Ali Tabbar is the CEO of the company.

Sina Construction is a company of the Iranian Sina Group, which is controlled by the Mustazafan and operates a number of companies in the Iraqi market.


Iraqi Networks in the Construction Sector working with Iran


The Iraqi construction sector does not stand out for its transparency, and therefore, Iran and affiliated Iraqi actors set up shell companies especially in this industry. New construction and engineering companies based in the Kurdish region and Basra have proliferated. Ownership is often difficult to discern, but it is well known that these companies are controlled by militias and enabled by their pro-Iran allies in Iraqi government positions. They draw many Iranian employees into Iraq who take jobs from locals. The following Iraqi business networks have major stakes in this sector.

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 construction and engineering companies in Iraq such as Tanmiya for Steel, Al-Anmaa Company for Construction, and International Free Company. Shamara has collaborated with Iranian entities on numerous projects. In 2018, a consulting report commissioned by General Electric advised against working with Shamara in light of corrupt dealings.

Khudairi Network

The Khudairi family has massive presence in Iraq’s construction sector with businesses, activities, and interests throughout Europe, Africa, Australia, Jordan and Iraq. A leading associate of this network, Munir Abdel Razzaq al-Wakil, owns Fallujah for Construction, located in Anbar, Iraq.

A number of companies controlled by Faisal Kedairy (also spelled Khudairi) and his associates like Munir al-Wakil, are deeply enmeshed with key companies of the Habib/Asadi network. For example, Munir al-Wakil is a board member of Al-Mamoura for Real Estate Investments, which is part of Aras Habib and Essam al-Asadi’s orbit.

Munir al-Wakil and another owner of Fallujah for Construction, Adnan Hamid Abdul Ali Al-Saadi, both sit on the board of Al-Nukhba for General Contracting and Real Estate, which until recently, was an owner of Aras Habib’s sanctioned Al-Bilad Islamic Bank (Al-Ataa Islamic Bank). Munir al-Wakil presides over the Board at Gulf Insurance Company, where two other Asadis also sit. Gulf Insurance has many state contracts and works with the aforementioned Iranian Sina Construction Company.

Munir al-Wakil is linked directly to the Khudairi Group (which admits that Faisel Kedairy is a relative but denies business ties) through Mohammed Khudairi (son of Aziz Khudairi, the founder and CEO), Executive Vice President and Managing Partner of Khudairi Group. Mohammed leads the Engineering, Procurement, & Construction and the Oilfield Supply and Services business units. Munir al-Wakil and Mohammed Khudairi are connected through dealings with Dar Es Salaam Investment Bank and the aforementioned Al-Nukhba for General Contracting and Real Estate which is owned and managed by Khudairi and Munir al-Wakil.

Al-Handal Group

Deutsche Bank made massive money transfers to Iraqi banks (many of which have been or are currently designated for sanctions). The funds are believed to have reached ISIS and other armed groups in Iraq.

The second largest bank involved in these transfers was the Ashur International Bank for Investment at a sum of over $15 million.

The Al-Handal Group and Sama El Hoda for General Trading and Contracting own Ashur International Bank for Investment. The Al-Handal Group is an Emirati company based in Dubai (49% owned by Iraqis) with subsidiaries throughout Iraq, Jordan, Turkey, and Cyprus, working on reconstruction, rehabilitation, and modernization projects. In addition to Ashur International Islamic Bank and its Trust International Islamic Bank, the Handal Group owns Eber Al-Madoun, a construction and contracting company operating within and outside of Iraq.

Iraqi Islamic Bank for Investment and Development, partially owned and controlled by Humam Thamer Kadhim Al-Attar, received $43 million from Deutsche Bank. Other owners of this bank are Fawz Al Khaleeg for Electronic Trading and General Trading and individuals who represent contracting companies that operate in Iraq’s construction sector.

Aras Habib and Essam al-Asadi

Of the Iraqi oligrachs and networks, Aras Habib and Essam al-Asadi are seemingly the most entrenched in the construction sector. Essam al-Asadi, Chairman of the Board of Baghdad Soft Drinks, is notorious for his involvement in massive corruption scandals and for his strategic financial links to Nuri al-Maliki. He is accused of embezzling billions of dollars through reconstruction projects won by his many companies in the oil, hotel, and construction industries.

Essam al-Asadi and his cousin Sami al-Asadi, together with associates from the Muften Network (see below), own SMS-I Operations and Logistics. Sami al-Asadi owns additional companies in the security, minerals, oil and shipping, and financial brokerage sectors, a number of which are currently under US Department of Justice investigation for corruption.

Sami al-Asadi’s other construction and contracting companies include: Al Sharyan for Trading and General Transport, Al Alam International for General Contracting, Barakat al-Taqwaa General Trading and General Transport Co.

Essam al-Asadi’s Mabrouk Contracting Company is involved in corruption scandals involving state contracts but still operates despite his record of ineptitude and corruption. Al-Essam General Trading belongs to his Al-Essam Group, a group of commercial businesses offering automotive and security services, construction, IT solutions and communications.

Al-Khazer for Production and Trading of Construction Materials is another construction company in the Habib/Asadi orbit. It is linked to the aforementioned Dar Es Salaam Investment Bank, which is partially owned by Mohammed Khudairi of the Khudairi Group. This Bank is also an owner of the aforementioned Al-Nukhba for General Contracting and Real Estate (see above), which is owned and managed by Khudairi and Munir al-Wakil. Northern Soft Drinks (is also a major shareholder of Al-Khazer for Production. It is linked to companies involved in sanctions circumvention operations such as the Iraqi Land Transport Co.

Ibdaa Al-Sharq Al-Awsat General Contracting and Investment and Union Middle East Contracting are both (nearly 100%) subsidiaries of Iraqi Middle East Investment Bank, which is owned by Namarq al-Asadi and has been at the center of exposes on currency auctions.

Another bank with assets in the construction sector tied to the Asadis is Elaf Islamic Bank. (Ashur International Islamic Bank, owned by the Al-Handal Group, is a private subsidiary of Elaf Islamic Bank.) Elaf Islamic Bank is owned by Saif al-Din Saad Hashem (goes by Saif Badir), Sami al-Asadi, and Emad Qassim Salman. Al-Muhja Company for General Contracts is one of the bank’s subsidiaries. Al-Muhja Company for General Contracts specialises in building projects like water stations, sewage stations, and supplying materials.

Muften Network

The Muftens’ Iraqi Union Bank was previously banned from currency auctions for a $6 billion transfer to the owner of Al-Huda Bank, Hamad Musawi. Iraqi Union Bank was has also been involved in fraud through the Central Bank of Iraq’s currency auctions. One of the Muften’s many companies is United Iraqi Trading, which is based in Dubai and operates in Iraq’s building materials, iron and steel, and integrated oil and gas sectors.

Abu Rami Network

United Bank for Investment, owned by Nasser Jaafar al-Lami (also known as Abu Rami) and another Iraqi currently under US sanctions, was exposed in September 2020 for its role in supporting Iran-backed militias in Iraq and exploiting Iraq’s problematic daily currency auctions and for its fraudulent transactions with Deutsche Bank. United Investment Bank is partially owned and managed by actors in the Iraqi construction industry, such as Aswaar El Zawraa for Construction, Trade and Transportation.

Conclusion

Iran faces few difficulties if any in exploiting Iraq’s construction sector. Iranian companies, engineers, and builders flourish as Iraq is in a seemingly perpetual state of reconstruction that requires heavy industry and related services. Iraqi oligarchs, banks, and companies with documented records of abetting Hezbollah and the IRGC carry on unimpeded. The few Iraqis and companies that are designated for sanctions such as Al-Bilad Islamic Bank (Al-Ataa Islamic Bank) continue to perform well in the Iraqi market. Many key players in the Iraqi construction sector are close allies of former Iraqi PM Nouri al-Maliki, one of Iran’s most valuable assets in Iraq.


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