Iranian state shipping routes are continuing to evade U.S. sanctions by operating via a complex network of companies and subsidiaries registered in Hong Kong, dozens of which are traceable to a purported individual in Shanghai named on publicly available records as Shen Yong, a recent RFA investigation has revealed.
RFA had earlier linked Shen Yong to four shipping companies — Reach, Delight, Gracious and Noble — registered in Hong Kong that were named as having done business with the Islamic Republic of Iran Shipping Lines (IRISL), using company records in Hong Kong.
Further investigations have shown that Shen Yong is named on the records of some 37 companies registered in Hong Kong, which between them control at least 10 ocean-going container vessels and five oil tankers. Most are connected in some way with IRISL.
IRISL has previously been accused of transporting ballistic missiles to Iran and materials associated with nuclear proliferation, and is a frequent target of U.S. sanctions.
Corporate records show that IRISL first started setting up Hong Kong-registered companies in 2008, using a complex network of holding companies, or shell companies.
Such companies rarely hold any assets or conduct any business; their main purpose is to act as a shareholder for another company, and can be effectively used in multiple layers across different geographical locations to obscure the true owners of a business.
The first IRISL-linked companies start appearing in Hong Kong’s companies registry in 2008, gradually increasing as Iran was sanctioned by the United Nations in 2010, and accelerating after 2016 with the establishment of at least 10 new companies in Hong Kong, despite the country’s signing of a nuclear non-proliferation agreement.
U.N. resolutions require all member states to freeze the assets belonging to IRISL or its agents, as well as those of any entities, funds or economic resources owned or controlled by the company.
No enforcement by Hong Kong
But the resolution was clearly not implemented in Hong Kong, where at least 11 IRISL-linked companies continued to operate in the city under the period covered by U.N. sanctions.
US political risk management consultant Ross Feingold said the United States could feel let down by Hong Kong’s inaction on sanctions.
“What view will the U.S. take of Hong Kong’s [lack of] action on sanctions? They will think it hasn’t done enough,” Feingold said.
He said Washington may not be able to rely on the city’s cooperation in future, given worsening relations between the U.S. and China.
“Whether or not Hong Kong cooperates with the U.S. is now subject to political factors,” he said.
The Hong Kong government’s Commerce and Economic Development Bureau told RFA that the Hong Kong government has been in strict compliance with U.N. Security Council sanctions, and has implemented them according to instructions from Chinese Ministry of Foreign Affairs in Beijing.
While the Hong Kong authorities did delist 19 IRISL vessels that had been registered in the city in 2012, they appear not to have moved against the companies that controlled them.
Robert Clifton Burns, a former associate professor of law at the Georgetown University Law Center who specializes in economic sanctions, said that U.N. sanctions placed member states under a legal obligation to seize or freeze assets linked to sanctioned parties.
“[If] somebody in … a member state that has a blocking obligation comes into possession or control of property or funds of the blocked person, then they are required to … put it into a blocked account,” he said.
“The example I always used to give was … if Osama Bin Laden walked into a McDonalds … and ordered a hamburger you couldn’t give him the hamburger … and if he gave you the U.S.$5 to pay for the hamburger you couldn’t give him the U.S.$5 back,” he said.
Even under unilateral U.S. sanctions, Burns said, secondary sanctions affect even businesses outside of the U.S.
“There doesn’t have to be any U.S. nexus for a transaction,” he said. “If the foreign bank engages in providing certain types of
financing to Iran’s automotive and petroleum sector, and provides it in certain amounts, then they would be subject to U.S. sanctions, even though there would be no other U.S. link to it.”
In 2018, when the U.S. pulled out of the Iran nuclear non-proliferation agreement, a number of IRISL affiliates in Hong Kong changed shareholders, listing the Cyprus-registered Montenavo and Santarosa shipping companies as their shareholders for the first time.
A search of Cypriot company records has revealed that both companies are controlled by the same shareholder, a Shanghai-based individual named as ChengCheng Dai.
One of them, an IRISL subsidiary called Ideal Success Investment Ltd. lists its shareholders and directors as Ahmad Sarkandi and Ghasem Nabipour, both of whom were targeted by U.S. sanctions at the time the company was set up in 2008, according to a recent search of the Hong Kong companies registry.
ChengCheng Dai is shown has having received her shares from an Iranian individual, Fateh Tamiji in September 2018, a former CEO of ROD Ship Management, an IRISL subsidiary that has previously been the target of U.S. sanctions for shipping arms.
Few details are available regarding ChengCheng Dai. Her date of birth is given as 1992, and her address is listed as Chunlei Village, Heqing, Shanghai.
An e-mail sent to IRISL requesting further information had met with no reply at the time of writing.
Recent media reports suggest China and Iran are currently in talks over a comprehensive bilateral cooperation agreement that will see China continue to import Iranian oil, as well as becoming a major investor and partner in Iranian security and governance.
According to Feingold, China is keen to ensure its imports of Iranian oil continue, while Iran is hungry for China’s technology exports.
“China doesn’t really need to pay much attention to U.S. sanctions,” he said. “It’s just going to carry on with its trade relations.”
Source » Reported by Jack Davies for RFA’s Khmer Service, and by Chan Jeun-lam and Gigi Lee for RFA’s Cantonese Service. Translated and edited by Luisetta Mudie. – RFA