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Archive for the ‘Iran Sanctions’ Category

Dec

2

What Was Your First Clue That Naftiran Might Be Iranian?

Posted by Clif Burns at 9:52 pm on December 2, 2008

Category: Iran Sanctions

ABOVE: Mansoor Rad
Finance Director
Naftiran

Just before Thanksgiving, the Office of Foreign Asset Controls (“OFAC”) designated a Swiss corporation and a U.K. corporation as entities controlled by the Government of Iran. The two companies involved were Naftiran Intertrade Co. (NICO) SARL, located in Pully, Switzerland, and Naftiran Intertrade Company Ltd., located in Jersey, Channel Islands. Both are subsidiaries of Naftiran Intertrade Company, which in turn is a subsidiary of the National Iranian Oil Company, an agency of Iran’s Ministry of Petroleum.

Of course, the Iranian Transaction Regulations prohibit transactions with any entity owned by the Government of Iran, wherever located and whether or not the entity has been specifically identified by OFAC as owned by the Government of Iran. A non-exhaustive list of such entities is contained in Appendix A to the Iranian Transaction Regulations which, prior to these two latest additions, contained only financial institutions. The appendix is described by OFAC as a “tool to assist … in complying” with the regulations. Thus, the addition of the Naftiran subsidiaries to that appendix does not have any substantive effect.

Because Appendix A is not exhaustive, it’s not in fact a particularly useful compliance tool. Failing to find a company on the list doesn’t mean that it isn’t owned by the Iranian Government. Nor does the addition of these two companies to the appendix provide any information that is otherwise difficult to obtain. The first result of a Google search on the term “Naftiran” is a website that readily shows the connection of Naftiran Intertrade to the Government of Iran.

Instead one has to suspect that this latest order is simply a part of the ongoing public relations campaign of the U.S. government against Iran. The designation — and this post — should serve as a reminder, however, that Google is an exporter’s best friend. No exporter should ever deal with a foreign company otherwise unknown to it without conducting due diligence on the Company. Part of that due diligence is a Google (or other Internet) search which would have, in the case of Naftiran, revealed the Iranian connection, even without OFAC’s latest order.

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Oct

22

OFAC Imposes Sanctions on Yet Another Iranian Bank

Posted by Clif Burns at 9:20 pm on October 22, 2008

Banco Internacional de Desarrollo The Office of Foreign Assets Control (“OFAC”) today announced that it was adding the Export Development Bank of Iran (“EDBI”) to its list of Specially Designated Nationals and Blocked Persons. The effect of the designation is to freeze all assets of the bank in the United States now or in the future. According to the press release issued in connection with the designation, the Iranian bank is assisting the Government of Iran in connection with its nuclear proliferation activities.

More interesting than yet another Iranian bank designation was OFAC’s simultaneous designation of EDBI’s Venezuelan subsidiary Banco Internacional de Desarrollo. The name of the Venezuelan subsidiary is perilously similar to the Banco Interamericano de Desarrollo, otherwise known as the Inter-American Development Bank, an international banking organization just blocks away from the Treasury Department in Washington, D.C. To make the situation worse, a Google search on “Banco Internacional de Desarrollo” returns the Banco Interamericano de Desarrollo as its first result.

The possibility of confusion, as well as the desire to avoid about 4 million calls to the OFAC hotline, led OFAC to take a step so far unprecedented on the SDN list: it specifically noted that the designation did not cover the Banco Interamericano de Desarrollo. Here’s the entire designation:

BANCO INTERNACIONAL DE DESARROLLO, C.A., Urb. El Rosal, Avenida Francisco de Miranda, Edificio Dozsa, Piso 8, Caracas C.P. 1060, Venezuela; RIF # J294640109 (Venezuela); SWIFT/BIC IDUNVECA; Banco Internacional de Desarrollo, C.A. is a separate and distinct entity from Banco Interamericano de Desarrollo, known in English as the Inter-American Development Bank (IADB), and from Banco Desarrollo Economico y Social De [sic] Venezuela (BANDES), an entity owned by the Government of Venezuela [NPWMD]

And, as you can see, OFAC also gave a “Get Out of Jail Free” card to the somewhat less similarly named Banco Desarrollo Economico y Social de Venezuela. These preemptive exclusions are, to my knowledge, unprecedented on the SDN list.

OFAC has been subject to substantial criticism that it is easier for an SDN to remove itself from the list than for an innocent party with the same or similar name to an SDN to obtain from OFAC an official clarification that the innocent party isn’t on the list. This unusual new designation substantially erodes OFAC’s claim that cases of mistaken identity aren’t its problem.

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Oct

21

On the Internet You Can Be From Anywhere You Want

Posted by Clif Burns at 8:59 pm on October 21, 2008

Category: Iran Sanctions • Syria

Syrian Flag and Chrome Icon Country-based sanctions start to get leaky in the age of the Internet. How does a software download service know whether or not it’s providing a service to an individual in a sanctioned country?

A blogger at PBS’s Mediashift Blog notes that Google has blocked downloads of its new browser Chrome, as well as other Google programs, to residents of Syria and Iran. Well, sorta:

Iranian blogger, Hamid Tehrani, who edits the Iran section for Global Voices, [reports] that Chrome is blocked, along with other Google downloads, in Iran. But it’s relatively easy for Iranian users to get around this obstacle. [Another Iranian blogger reported] in an email (from his Gmail account) that he is still able to access Google services by using a proxy.

“Currently, we are using all of the search engines and portals without any restriction, using the latest versions of Google Earth, Chrome, GTalk and any other downloadable product,” he said. In addition to helping users get around government filtering and censorship, proxies and anonymizers can also fool Google’s servers into thinking that the downloads were going elsewhere rather than to users in Iran.

What’s going on here is that normally each user is assigned an IP address that identifies the user as he or she surfs the Internet. IP addresses are assigned, in part, based on geographical location, and there are blocks of IP addresses that would identify an Internet surfer as Iranian or Syrian (or French, etc.) Google has, apparently, blocked downloads from users with IP addresses allocated to sanctioned countries. An open proxy server, however, can be used by most browsers to connect to the Internet, thereby making the user appear to be coming from the country in which that proxy server is located rather than from the country in which the user is actually located.

The article reports that other web-based service providers have taken alternate approaches to dealing with U.S. sanctions.

Although Yahoo removed Iran from the drop-down list, Iranians were still using Yahoo services, according to Kourosh Ziabari, an Iranian journalist and blogger who wrote about the issue for the citizen journalism site OhMyNews.

“[Iranians are using] Yahoo services, downloading new versions of Messenger, using the different web site parts but not finding the name of their country in the sign-up list,” Ziabari wrote. “In fact, if an Iranian user wanted to sign up for a new account in Yahoo mail, he should have selected the name of the other countries, and then he would proceed.”

Although removing Iran, Cuba, Syria and other sanctioned countries from drop-down lists is certainly a good idea to demonstrate compliance with U.S. economic sanctions, it can hardly be considered sufficient. Websites that provide web services, such as downloads, should also capture IP addresses in order to determine whether a web-based customer is coming from sanctioned country. Arguably, websites that sell non-virtual products (you know, computers, GPS equipment, bricks, etc.) should also capture those addresses. A web-based order from Iran for a shipment to the UAE is a bit of a red flag, n’est-ce pas?

But given the ease of using proxy servers, should websites do more to implement U.S. sanctions? Should Google (and other browser providers) put “kill switches” in downloadable software that would make a direct connection to the Internet, “call home,” and then shut the program down if the home servers indicated the verification connection was coming from a sanctioned country? Or should the program require activation using a code sent to an email address other than a web-based email address? Any other ideas? Or is this just a losing battle that should be abandoned?

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Sep

17

Federal Indictment Targets Mayrow Network Exports to Iran

Posted by Clif Burns at 9:51 pm on September 17, 2008

Category: Anti-Boycott • Criminal Penalties • Iran Sanctions • Sanctions

IED detonator The winner of today’s breathlessly exaggerated headline contest goes to the Bureau of Industry and Security (“BIS”) for this:

COMMERCE DEPARTMENT, GOVERNMENT PARTNERS, BREAK UP IRANIAN RING CHARGED WITH PROCURING IED COMPONENTS

Although this headline conjures up a Eliot Ness raid with the culprits being led off in shackles and at gunpoint never to export again, the reality is a bit more mundane. In fact, the headline refers, in part, to a federal grand jury indictment unsealed in Miami today against eight individuals and eight corporations, all allegedly part of the Mayrow General Trading Company network. The defendants were charged in connection with dual-use exports that wound up in Iran, including exported items which could be used in the manufacture of IEDs deployed against U.S. troops in Iraq.

None of the eight individuals or corporations are located in the United States. Whether Britain, Germany, Iran and Malaysia, where the defendants are located, will permit the extradition and prosecution of the individual defendants is a close question, particularly if the defendants’ only contacts with the United States were the purchase of U.S.-origin goods and if the exports to Iran did not break the laws of their countries of residence. (For those individuals located in Iran, of course, it’s not even a close question, and these individuals will be subject to prosecution only if they decide to visit, say, Disneyland or the Grand Canyon or travel to a country that will allow rendition or extradition.)

In addition, the Commerce Department release indicated that 75 companies and individuals had been added to the Entity List in connection with the Mayrow network exports. (The State Department release on the indictment, however, states that there were 100 additions to the Entity List). All exports of U.S.-origin goods to companies and individuals on the Entity List will require a license from the Department of Commerce. Naturally such licenses will generally be denied.

As of this writing, however, the BIS website doesn’t indicate any additions to the Entity List, but it can reasonably be assumed that these additions will appear sooner rather than later. Unlike indictments of foreigners over which the U.S. has precarious criminal jurisdiction, putting members of the network involved in these exports on the Entity List is much more likely to be effective in shutting down the troublesome exports. Once these additions are made, I’ll post a link identifying the companies and individuals involved.

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Sep

9

Mistrial Declared in Night Vision Export Trial

Posted by Clif Burns at 7:51 pm on September 9, 2008

Category: Arms Export • Criminal Penalties • Iran Sanctions

ABOVE: Shahrazad Mir Gholikhan

In yet another strange turn of events in one of the stranger export prosecutions to wend it’s way through the federal courts, a federal district court in Fort Lauderdale declared a mistrial in the prosecution of Shahrazad Mir Gholikhan for her involvement in a plan to export 3,500 night vision goggles to the Iranian military. According to an article in the South Florida Sun-Sentinel, one juror held out for acquittal after eight hours of deliberations. The prosecution announced that it intended to retry Ms.Gholikhan in October.

The case started when Ms. Gholikhan and her ex-husband Mahmoud Seif traveled to Austria to pick up a pair of night vision goggles in order to re-export them to the Iranian military. She and Seif were arrested by the Austrian authorities, convicted, and sentenced to fifty days jail time in Austria, after which they were returned to Iran. In the meantime, a grand jury indicted Gholikhan and Seif for conspiring to export 3,500 Generation III night vision goggles to Iran.

Since the U.S. and Iran do not have extradition treaties, Ms. Gholikhan could have remained safely in Iran but instead came to the United States in December 2007 to enter a plea agreement under which she would plead guilty to one count and be sentenced to time served in the Austrian jail. After the plea was entered, prosecutors said that a mistake had been made in the sentencing guidelines calculation. As a result, Gholikhan was sentenced to 29 months in jail. Gholikhan then moved to withdraw the plea. Even though that motion was opposed by prosecutors, the judge granted the motion and the case was set for trial on all seven counts of the grand jury indictment.

The trial, which began on September 3, focused on the prosecution’s claims that Gholikhan sent faxes and made phone calls about the night vision goggles before the Vienna meeting under the alias Farideh Fahimi. This was to counter the defense’s claim that Gholikhan only acted as a translator for his husband and was not substantially involved in the planned exports. The Sun-Sentinel article described the thrust of the prosecution’s argument as follows:

Prosecutor Michael Walleisa said Gholikhan’s phone records corresponded to calls placed by Fahimi and faxes sent from Fahimi came from Gholikhan’s fax number.

In his closing argument, Walleisa repeated Fahimi’s words on one of the recorded phone calls: “In this line of work, everyone has two or three names, none of which is their real name.”

Gholikan’s new trial is set for October 14.

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Archive for the ‘Iran Sanctions’ Category

What Was Your First Clue That Naftiran Might Be Iranian?

OFAC Imposes Sanctions on Yet Another Iranian Bank

On the Internet You Can Be From Anywhere You Want

Federal Indictment Targets Mayrow Network Exports to Iran

Mistrial Declared in Night Vision Export Trial

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