According to available information, the most important source of funds by means of which the mullahs’ regime finances terrorism is through the sale of oil and gas, and petrochemicals. With these sources, the Office of the Supreme Leader (Vali-e-Faqih), Islamic Revolutionary Guards Corps (IRGC) and Ministry of Intelligence and Security (MOIS) have financed war and terror over the past forty years. Commenting on the regime’s revenues in September 2012, Deputy Minister of Oil Planning Mohsen Khojasteh Mehr said that “85% of the country’s foreign exchange earnings and 25% of Iran’s gross national income is earned through the sale of petroleum products.”
It is therefore clear that this is the regime’s main source of foreign currency. The extent of money laundering and plundering is astounding. In this report, we will examine some aspects of it, especially as related to the sale of petrochemical products.
Ali Fallahian, Minister of Intelligence during the Rafsanjani era, said in a televised interview: “At that time, many, especially the Supreme Leader, pressured us until we had become dependent on oil. Ultimately, we decided to make petrochemicals. At that time, we had $16 billion in oil revenues, with plans to reach $16 billion from the petrochemical industry.” Fallahian is referring to his tenure in the Ministry of Intelligence from 1989 to 1997, when the Ministry began to actively engage in economic activities after the war between Iran and Iraq, and, in particular, to earn money through the sale of petrochemical products.
Seyyed Mohammad Hassan Khamenei, the younger brother of Supreme Leader Ali Khamenei, has headed the Office of the Controller for the Oil Ministry for several terms, acting as one of Khamenei’s agents to control the industry and its managers. According to some oil industry managers, Khamenei’s sons are major shareholders in many oil and petrochemical companies, and the industry itself is controlled by relatives and agents of the Supreme Leader.
2. The petrochemical industry’s role in financing terrorism
2.1. A key source:
According to reports from inside the country, the petrochemical industry, which has grown dramatically in the past four decades, has been a crucial asset in securing cash to promote terrorism abroad. One economic expert points to the extent of money laundering done through petrochemical revenues: “All petrochemical export revenues, which are the most important source of trafficking in the country, should be filed according to the Central Bank directive in the same manner as oil revenues, and the currency earned must be sold in the same system as oil revenues. Previously, petrochemicals sold its currency in Dubai, where it paid for legal and illegal imports from Dubai.”
Parameters that make this industry preeminent in circumventing sanctions and money-laundering:
2.1.1. The expansion of the petrochemical industry under the clerical regime: The petrochemical industry has been built up and expanded during the reign of the mullahs, leading to their added control of the industry. According to reports, the Ministry of Intelligence and Security has taken on an active role to expand its economic activities. In subsequent years, whenever infighting between the regime’s gangs has led to disclosures of theft, MOIS elements active in the oil and petrochemical industry are always named.
2.1.2. Privatization of the petrochemical industry:
In 2009, the regime launched a privatization plan for the petrochemical industry, which was removed from the Ministry of Oil. Subsequently, institutions affiliated with the Vali-Faqih such as the HQ for the Execution of Imam Khomeini’s Order [Setad Ejrai-e Farman Imam] (HEIKO), as well as the Revolutionary Guards, gained extensive ownership of and incomes from the industry and from petrochemical refineries.
2.1.3. Variety of products: The variety of products produced in the petrochemical industry makes it more difficult to control the industry’s commerce compared to the more limited number produced by oil and gas. The range of products, over a hundred in number, and consequent number of buyers reduces the possibility of monitoring these deals.
2.1.4. Funneling indirectly to Iran: Most buyers in the petrochemical industry remit funds indirectly to the regime, lowering the likelihood of their monitoring by international organizations. One of the most important channels for funneling funds back to Iran is through the UAE. The following facts highlight this issue:
Ahmad Mahdavi Abhari, Secretary General of the Petrochemical Industry Employers Association, on the sidelines of the General Assembly of the Petrochemical Industry Confederation, explained the foreign exchange received from the export of petrochemical products to China to a Fars News Agency reporter: “The money from petrochemical exports to China comes back to Iran through the Currency Exchanges in Dubai.”
Hamid Hosseini, a member of the Oil, Gas, and Petrochemical Exporters Union, told Ilna news agency about the problems of Iran-China trade relations: “Chinese banks do not use the Iran sanctions as an excuse; they ask, what is the identity of the company that receives the money? Where is it affiliated? Is it on the sanctions list or not? What are the criteria? Therefore, they usually refuse if documents show the money is transferred to Iran. They are willing to send money to Hong Kong, Singapore, the United Arab Emirates and Oman, but they refuse to send money to Iran, so it’s hard to do.”
2.1.5. Discounted sales to affiliates of the regime: According to reports, one of the ways to make money through petrochemicals is to sell low-priced products to affiliate marketers in intermediary countries. The regime officially announces an offer to sell petrochemicals. After several official announcements at a high price, as the deadline approaches and there is apparently no purchaser inside Iran, the broker’s is then free to open the market outside of Iran. The products will be made available to a broker affiliated with the Revolutionary Guards or other organs affiliated with the Supreme Leader. The broker buys the goods at a very low price from the regime’s agents, and then sells at the international free market price. The intermediary then withdraws his cut of the proceeds and transfers the remaining cash to secret accounts affiliated with the Vali-Faqih and Revolutionary Guards.
2.1.6. Exports at low prices to certain countries and companies: Another method involves selling petrochemical products at a very low price to companies that are willing to circumvent sanctions. Iran’s petrochemical products are shipped to Turkey, Afghanistan and China at lower than domestic prices. For example, several million tons of polyethylene is produced in Iran, but laws limit sales for domestic use to domestic customers. The remainder is then sold at a low price abroad, so low in fact that it is worth going and buying Iranian petrochemical products back from China and returning them to Iran for domestic consumption.
2.1.7. Abuse of the variance between the official and free market currency rates: One practice involves purchasing the raw materials used in the production of petrochemical products at the official currency rate, and selling the products produced at a foreign exchange price. On the one hand, this practice reduces the market value of the raw materials used. On the other, after the materials are sold, the foreign currency acquired will be sold in the domestic market of Iran at a free market price. As there is always a difference of at least 10-20% between the official and free market foreign exchange rates (such as the dollar), it results in huge profits. One official has stated that petrochemicals will return the resulting currency to the free market in Iran.
2.2. MOIS history of money-laundering and theft through petrochemicals
Based on a report from inside Iran, Saeed Emami (former deputy Intelligence Minister who masterminded numerous assassination of dissidents, known as the chain murders in the late 1990s in Iran and abroad and was killed in 1998 by the mullahs to keep the details of these murders hidden) procured cash and expenses necessary for exporting terrorism abroad through the sale of petrochemical and oil derivative products. It is worth reminding that terrorist activities of the regime following the ceasefire in the Iran-Iraq war dramatically increased especially in Europe and their cost was provided for through such activities
The following are but two of the examples in the public media of the role and relationship of the Ministry of Intelligence and its managers in cases exposed as a result of the infighting within the regime:
Mohammad Saeedi, a member of the regime’s nuclear team in the JCPOA talks, was previously in the Ministry of Intelligence, where he was a close friend of Saeed Emami and participated in oil deals. A site affiliated with one of the regime’s factions wrote: “Saeedi was born in 1961 in Arak. In the early days after the Islamic Revolution’s victory, he was active in the Islamic Revolutionary Committee in Tehran and distributed newspapers. When the Ministry of Intelligence was formed, he was attracted to it. During Ali Fallahian’s tenure, when the serial murders occurred, his name was on the list of the masterminds and overseers of those murders. With the support of senior MOIS officials, Saeedi apparently had to inevitably leave the Ministry in order to avoid arrest and detention.” Before coming to the Atomic Energy Organization of Iran, Saeedi was for a while “the Ministry of Oil’s liaison with the Ministry of Intelligence” during the tenure of Gholamreza Aghazadeh at the Ministry of Oil.
The names of various individuals who were members of the Ministry of Intelligence have been mentioned in cases of oil-related thievery which circumvented the sanctions. Among them is the multi-billion-dollar case of Babak Zanjani, in relation to which Hamid Fallah Heravi was charged. The site Ayandeh wrote in late December 2013: “Hamid Fallah Heravi, a former security executive who launched a career in finance after being expelled from a security organization, contacted Babak Zanjani and became his connection to many institutions and authorities.” In court, Hamid Fallah Heravi said that he had introduced Babak Zanjani to the Ministry of Intelligence and several other government agencies.
2.3. Production and revenues:
In order to clarify the extent of the petrochemical industries’ impact on the regime’s economy, we have summarized the industry’s current returns. Although there is no complete, accurate reporting of the regime’s proceeds from petrochemicals, existing reports reveal the following:
Marzieh Shahdai, managing director of the National Petrochemical Industries Company, said net sales were about $15 billion in 2016. Revenues came from sales of 28 million tons of petrochemical products. About two-thirds of the profits were from foreign sales and one third from domestic. In the same year, the total production was about 50 million tons.
The following year, 2017, exports produced about $ 11.7 billion in revenues from sales of about 21.7 million tons of petrochemical products. If we compare those figures with net foreign and domestic sales in 2016, net domestic and foreign sales in 2017 totaled $18 billion.
Relative to higher oil prices, the price of petroleum and petrochemical products, and the income they generate for the regime, are also changing. The chart shows the volume and value of petrochemical exports based on the official reports of the regime.
2.4. Major petrochemical companies and their managers
Some of the most important companies and authorities related to agencies affiliated with the Supreme Leader or IRGC, who play a decisive role in the petrochemical industry are:
2.4.1. Petrochemical companies affiliated with EIKO: The Execution of Imam Khomeini’s Order (EIKO) was established in May 1989 by Khomeini, and remains under the direct supervision of the Supreme Leader. According to reports from inside Iran, the children of Ali Khamenei play an important role in its administration. According to the mullahs’ law, the headquarters does not pay taxes and is not subject to an audit. In 2014, Reuters reported the results of a six-month investigation into the headquarters, announcing $95 billion in assets belonging to Khamenei. Mohammad Mokhber Dezfuli has been president since 2007; he is a close relative of Ali Khamenei.
To make the most of its money, in 1999 EIKO set up an entity known as the Tadbir Economic Development Group. The group’s chair is the former Oil Minister during Ahmadinejad’s tenure (2007-09), Gholamhossein Nozari, who has been among the regime’s top oil industry managers for about three decades. Tadbir Economic Development Group consists of six holding companies, the largest of which is the Tadbir Energy Development Group, which operates in the oil, gas and petrochemical fields.
In 2009, when oil and petrochemical refineries were privatized, EIKO and Tadbir Economic Development Group purchased many petrochemical companies at prices much lower than their real values. The oil, gas and petrochemical companies of this headquarters include:
Tadbir Energy Development Group, which is a stockholder in the following companies:
o Persia Oil & Gas Development Company – 100%
o Pars Oil Company (Public Joint Stock) – 75%
o Bahman GNU (Private Joint Stock) – 80%
o Ghaed Basir Petrochemical Company (Public Joint Stock) – 80%
o North Drilling Company (Public Joint Stock) – 10%
o Tadbir Drilling Development Company (Private Joint Stock) – 100%
o Ray Niro Engineering Co. (Private Joint Stock) – 100%
o Abadan Power Generation Company (Public Joint Stock) – 75%
o Chemistry Directors Chemicals (Private Joint Stock) – 100%
o Tadbir Parsian Refining Corp. (Private Joint Stock) – 80%
o Pars Bazargan Company (Private Joint-stock Company)
The Persian Oil & Gas Development Company, one of the most important of these companies, has major oil extraction projects under its control, including the Yaran Oil Field. The head of this company is Seyyed Jafar Hejazi, who was a Revolutionary Guard and commander of the South Khatam-al-Anbia camp during the war between Iran and Iraq, and subsequently governor of Khuzestan province.
In addition to major oil projects such as the Yaran field, EIKO has also invested in profitable petrochemical projects. The governor of Hormozgan commented on two such projects: “Two major economic projects of the Hormuz refinery and the Pak Petrochemical Complex in Bandar Abbas will be constructed by the Execution of Imam Khomeini’s Order in Hormozgan.”
2.4.2. Parsian Oil and Gas Group: The Parsian Oil and Gas Group was established in 2007. In 2015, with an income of over 18 thousand billion tomans (equivalent to $6 b based on the exchange rate of 3,000 tomans/USD), Parsian was recognized as the ninth most lucrative Iranian company based on annual income. The Parsian Oil and Gas Group claims to be a private company, but is affiliated with the Ghadir Investment Company, one of Iran’s largest investment companies, which in turn is affiliated with the Vali-e-Faqih. The chairman of Ghadir Investment Company since December 2017, Mohammad Talebi, was previously a senior executive of EIKO and head of the Central Bank Deposit Guarantee Fund.
Oil and Petrochemical companies of the Parsian Oil and Gas Development Group include:
18.104.22.168. Tabriz Oil Refining Company
22.214.171.124. Shiraz Oil Refining Company
126.96.36.199. Pardis Petrochemical Company (the largest producer of Urea fertilizer in the Middle East)
188.8.131.52. Zagros Petrochemical Company (the world’s largest methanol producer)
184.108.40.206. Kermanshah Petrochemical Company
220.127.116.11. Shiraz Petrochemical Company
18.104.22.168. Tabriz Petrochemical Company
22.214.171.124. Khorasan Petrochemical Company
126.96.36.199. Kian Petrochemical Company
188.8.131.52. Pars Petrochemical Company
184.108.40.206. International Trade Petrochemical Company
2.4.3. Armed Forces Social Security Agency (an IRGC affiliate): The Ministry of Defense, which is controlled by the Revolutionary Guards, is an important part of the petrochemical industry. The Armed Forces Social Security Agency (SATA) is a subsidiary of the Ministry of Defense.
In 2010, the government announced that “the shares of six power and petrochemical plants were transferred to the Armed Forces Social Security Agency (SATA) based on the government’s most recent decision.” It said that as a result, twenty three percent (after the deduction of preferred shares) of Maroun Petrochemical shares, forty percent of Pars Petrochemical shares, forty-nine percent (after the deduction of preferred shares) of Pardis Petrochemical shares, 100 percent (after the deduction of preferential shares) of Gilan Combined Cycle Power plant, and one hundred percent of the shares of Bushehr Petrochemical had been transferred to the Armed Forces Pension Fund ( Armed Forces Social Security Agency), in accordance with the net value of net assets method, as an agreed price and after the approval of the price in the hand over delegation.
2.4.4. Persian Gulf Petrochemical Company: The Persian Gulf Petrochemical Company is the largest petrochemical holding in Iran; it includes 15 petrochemical companies. Established in 1991 (under another name), it was a subsidiary of Iran National Petrochemical Company. With the government’s approval in 2009, however, the Persian Gulf Petrochemical Company (Public Joint Stock) became a holding company with the transfer of shares of these petrochemical companies:
Rah Avaran, Mobin, Noori (Borzouyeh), Bandar Imam, Bou Ali Sina, Fajr, Non-industrial operations, Petrochemical trading, Development Management, International Petrochemical Company, Khuzestan, Pars, Pazargad Non-Industrial Operations, Arvand, and Tondgouyan Company owned by National Petrochemical Company.
According to a research report, the holding company holds 34% of the country’s petrochemical industry. In 2016, it produced about 19.6 million tons of petrochemicals worth more than $10 billion.
The current managing director is Jafar Rabiei, an agent close to Khamenei and the Revolutionary Guards. He became the managing director of Persian Gulf holding on March 9, 2017. Jafar Rabiie was the managing director of Sata Corporation. He was transferred to Persian Gulf Petrochemicals from September 2013 to March 2018. He is a member of the board of directors of Kowsar, run by senior members of the Revolutionary Guards Corps.
2.4.5. Petrochemical Commerce Company (PCC): The Petrochemical Commerce Company monopolizes the sale of major petrochemical products in Iran. It was established in July 2000 by the National Petrochemical Company of Iran for the export and import of petrochemical products. Since November 2009, in line with the privatization plan, the Petrochemical Commerce Company has changed from a public to private structure (with 52 percent of its shares transferred to the Iran Investment Company), and changed its commerce to investment, trade and finance. As a result, the company is increasingly controlled by Khamenei’s agents. The Iran Investment Company is in the hands of the Motalefeh band of the Khamenei faction. According to reports, Khamenei’s children control the company’s revenues. Mohsen Ahmadian, who is called the “king of the petrochemical industry,” meaning the biggest thief in the industry, was the manager of the company’s exports for a long time and controlled sales.
2.4.6. Iran Investment Company: Run by the Motalefeh band of the Khamenei faction, Iran Investment Company is the main shareholder of the Petrochemical Commerce Company, with 52% of its shares. The chairman of the board of directors is Alinaghi Khamoushi, a notorious crook associated with Ali Khamenei.
The company was established in 2006. In 2011, it grew abnormally and suddenly, and with earnings of approximately 3,000 billion tomans, was ranked 26th in Iranian companies. Iran Investment Company now owns many companies in the petrochemical industries, such as: Iranians Petrochemical Investment Company, Pardis Nakhl Barani Company, Jam Energy Group, Iran Offshore Company, Karoon Petrochemical Company, Shiraz Petrochemical Company, Takht Jamshid Petrochemical, Kermanshah Petrochemical Industries, Zagros Petrochemical, Ilam Petrochemical, Oroumiyeh Petrochemical, Fasa Petrochemical, Jahrom Petrochemical, Gachsaran Petrochemical, Lordegan Petrochemical, Sadaf Asalouyeh Petrochemical and Darab Petrochemical, and Petrochemical Transport Company.
2.4.7. Other Petrochemical Shareholders: As outlined above, the majority of the petrochemical industry is controlled by Khamenei and the Revolutionary Guards. Other companies and agencies not named are also controlled by government-affiliated organizations, that serve the institutions of the Vali-Faqih and IRGC in other forms. Some petrochemical experts have estimated that 90% of the petrochemical industry is controlled by the Vali-e-Faqih and its agents.
3. Companies and individuals involved in laundering petrochemical revenues
Petrochemical companies which obtain foreign currency and dollars through the sale of their products to foreign companies transfer this money through intermediary companies and sarrafis (exchanges) to Iran. Also, there are some individuals and companies which are involved in holding exhibitions and the sale of petrochemical products and act as intermediary for the sale of such products. There are many such companies. Some of them are as follows:
3.1 Saman Bank: This bank is actively involved in the transfer of proceeds from the sale of Petrochemical products and oil derivatives to Iran. It has ties with different companies in the Petrochemical industry. A number of such companies are: Persian Gulf Petrochemical Company (affiliated with the IRGC), Parsian Oil and Gas (HQ for the Execution of Imam Khomeini’s Order (HEIKO), Jam Petrochemical Company, Petro Pars, and Zagros Petrochemical Company. In 2017, Saman Bank transferred $50 million plus for Zargros and Jam Petrochemical companies. Based on reports received, in order to continue its activities while sanctions were in place, Saman Bank declared that its principal area of activity is pharmaceutical and food products.
3.2 Sardarlou Money Exchange (Sarrafi): This is an old Money Exchange in Tehran and active in the transfer of the revenues from Petrochemical sales. The manager of the exchange is named Mohammad Sardarlou. The manager for the Tehran branch is a person named Saber Fath-ali. Zargros Petrochemical Company works with this exchange. The exchange has contracts with seven banks to transfer money, including the exchanges for the Melli Bank, Tourism Bank, Shahr Bank, Tejarat Bank and Sepehr Bank. This Exchange also works with a number of subsidiaries of Persian Gulf Petrochemical Holding Company.
3.3 Amin Exchange: This Exchange also worked with Petrochemical companies, but because of the recent sanctions, its activities have been restricted in the past two months. Its Director General is a person named Assad-Beigi. It works with the Exchange affiliated with the Saman Bank, Ansar Bank (affiliated with the IRGC), the Central Bank and Mellat Bank.
3.4 Beauty Sky Company. Alireza Elahi is its Director General, the address of the Tehran branch of the company is: Vali-nejad street, Bldg. No. 7, Unit No. 1. Alireza Elahi and the Beauty Sky has the exclusive representation of 14 international petrochemical exhibitions and is one of the largest intermediaries of selling Iran’s Petrochemical products outside the country. It is also in touch with all major petrochemical companies in Iran and has close ties with Reza Nowruz-zadeh, Director General of Iran’s National Petrochemical Industries.
3.5 Mohammad MohebAli: Mohammad Reza Nematzadeh was the oil ministry’s deputy for Petrochemical industries from 1997 to 2005 (During Mohammad Khatami’s presidency). As such, he had a great deal of influence in the petrochemical industry. He is involved in the directorship of 19 major oil and petrochemical companies. Using his government portfolio, he has involved his children and relatives in the petrochemical industry. One such individual is Mohammad MohebAli, who is in charge of holding international oil and petrochemical exhibitions.
4.1. The petrochemical industry, i.e. its refineries and centers, was mainly established during the reign of the clerics, and serves as a main source to finance the Vali-Faqih, Revolutionary Guards, Ministry of Intelligence and other repressive forces of the regime. According to sources within the regime, the industry has been a major source of foreign currency for terrorist operations and warfare since the beginning of the clerical rule, especially during the Khamenei era. Due to the wide range of petrochemical products, petrochemical sales are one of the most recognized and easiest methods of money laundering for the regime.
4.2. The majority of the industry is owned by the Vali-Faqih, Revolutionary Guards and Intelligence Ministry. Some of the most important holdings and largest companies related to the Vali-Faqih and the IRGC have been cited in this report, and control most of the industry.
4.3. The mullahs’ regime launders money through the sale of petrochemical products, the profits of which are returned via the networks of companies and currency exchanges affiliated with the IRGC.
4.4. Terrorism is financed by means of various methods and tactics of theft and plunder of the oil, gas and petrochemical industries. Some practices, such as takeovers of petrochemical companies and refineries, purchases of oil at the domestic price for sale at the free market price, sales to affiliates of the regime, etc., have been cited in this report.
4.5. The sum of revenues obtained by the Vali-Faqih and the Revolutionary Guards through the oil, gas, and petrochemical industries amounts to tens of billions of dollars, with petrochemical products accounting for roughly a quarter of that income. Sanctions on the activities of Vali-Faqih and IRGC affiliated companies in the petrochemical industry will close one of the most important channels for financing domestic repression and foreign terrorism.
Source » ncr-iran