REVEALED - How Iran circumvents US sanctions by stashing its vessels in Malta

Malta is at the centre of a network of shell companies which the Islamic Republic of Iran Shipping Lines (IRISL) is using to stash its vessels, in a bid to circumvent international trading bans from the United States and the United Kingdom.

MaltaToday has established that at least 20 companies registered at various Maltese addresses, have principals who were IRISL officials, and are the registered owners of previously IRISL-owned ships, which are now operated and managed by a new private, Iranian company – the Hafiz Darya Shipping Lines (HDS).

This is where IRISL’s container business has ended up since the US and UK slapped it with a trading ban in 2008 and September 2009 respectively, over its alleged role in supplying Iran’s suspect nuclear weapons programme.

The New York Times says that of 123 IRISL ships listed by IHS Fairplay, which tracks merchant vessels with unique identification numbers, only 46 are still clearly owned by IRISL.

73 ships are owned and operated by companies that do not appear on the US blacklist. The companies are located in Malta, Hong Kong, Cyprus, Germany and the Isle of Man. Most of them are run by IRISL officials.

HDS is the ship manager of various Malta-flagged ships that previously belonged to IRISL, but which have now been transferred to the shell companies, with their names changed from their Iranian appellations into English-sounding names.

For example, the M/V Iran Kerman has now changed to Silver Craft, and is owned by Kerman Shipping, registered at 143/1, Tower Road, Sliema.

It is not suggested that the creation of these shell companies and the transfer of ownership is unlawful.

The same Tower Road address houses Royal-Med shipping agency, which is the agent for HDS. Royal-Med was incorporated back in October 2009 – soon after the UK trading ban.

Additionally, Royal-Med’s sole director-shareholder, Adrian Baldacchino, was formerly a shareholder in Maraner Holdings: the company that previously owned IRISL Malta, along with its other shareholder, IRISL Europe.

In comments to MaltaToday, Baldacchino has claimed to be “unaware” that some nine companies, owners of former IRISL vessels, are also registered at the same Sliema address were Royal-Med conducts its business. “Royal-Med and HDS are private entities that have nothing to do with IRISL or Maraner,” Baldacchino stated.

However, Royal-Med’s managing director, Capt. Mansour Eslami, is the former director of IRISL Malta.

MaltaToday has established that the nine companies registered at this Sliema address today have as their director the same person: Ahmad Sarkandi, who was formerly a director of IRISL UK.

Another five companies which are either IRISL-owned or own IRISL ships are registered at 147/1, St Lucy Street, Valletta. Another eight companies that own IRISL ships are registered at 1, Tumas Fenech Street, Qormi.

Altogether, these 20 shell companies are the new owners of various IRISL ships, which have been renamed - sometimes three to four times over - by removing any reference to their Iranian origins. One of them has even been renamed Alias. The Wisconsin Project for Nuclear Arms Control, which has tracked all the ships’ movements from IRISL into smaller shell companies, says the company has managed to subvert the US and UK trading bans.

“Whereas running a compliance check on a transaction involving one of these ships in late 2008 would have raised several red flags, changes made by IRISL since then mean that the same transaction today would probably appear clean,” the Wisconsin Project report said.

“The United States expected such evasive measures from Iran… Unfortunately, there appears to be no sustained U.S. effort to track these changes and to add new vessel names to Treasury’s blacklist.”

In September 2008, the United States blacklisted Iran’s state shipping company and its fleet of 123 vessels because of the company’s alleged role in supplying Iran’s weapon programmes. Additionally, British companies are also not allowed to do business with the shipping line, after a trading ban was passed in 2009 over IRISL’s alleged role in supplying Iran’s suspected nuclear weapons programme.

IRISL has repeatedly denied improperly aiding Iran’s military and nuclear programmes.

Creation of HDS

The US and UK sanctions forbid American and British banks and companies from entering into transactions involving IRISL companies and its ships.

In 2009, shortly after the sanctions, Hafiz Darya Shipping Lines appeared on the scene. It was announced that the ‘mystery’ company would take over IRISL’s container business as part of a government privatisation move.

In December 2009, di-ve.com reported that Royal-Med had been set up as a local agent for HDS, “which is filling in the void created by the US and Britain sanctions on the state-owned IRISL.” It also quoted the IRISL Malta representative Mansour Eslami saying that Royal Med was the agent for HDS.

In an investigation carried out by the New York Times, HDS was not found to be located at the address it gave to IHS Fairplay. The New York Times said HDS operated out of the third floor of IRISL’s main headquarters in Aseman Tower, in Tehran.

Sanctions against Iran

Iran is subject to three sets of United Nations sanctions targeting its arms trade and nuclear industry. Other unilateral sanctions imposed by the United States, and by European countries, have focused on cutting off the flow of Western goods to the Iranian market.

In October 2009, a German ship leased to the company was stopped and searched in Malta where customs officials discovered caches of ammunition en route to Syria in violation of UN sanctions. It is also alleged to have smuggled in materials for Iran’s suspected nuclear weapons programme. US troops boarded the German-owned freighter and found eight containers full of ammunition, allegedly headed to Syria from Iran.

The operation was carried out on the freighter Hansa India in the Gulf of Suez, where seven containers full of 7.62 millimeter ammunition suitable for Kalashnikov rifles were discovered. An eighth container was full of cartridges suitable for the manufacture of additional rounds.

Investigators suspect the arms were part of an Iranian shipment bound for either the Syrian army or for Hezbollah, the militant Islamist group.

According to Leonhardt & Blumberg, the German company that owns the freighter, the ship has for years been under charter to the state-owned shipping company Islamic Republic of Iran Shipping Lines.

Following an intervention by the German government, the US allowed the ship to continue on to its destination in Malta, where the containers were secured.