How Hossein Shemkhani, the oil king of Iran, entered the Western financial system
Bloomberg highlights the winding roads along the palm-covered coasts of Dominica, where chains of luxury hotels are being built. A few miles north lies the future site of Portsmouth Harbor, where projects aim to attract luxury cruise ships to this island.
These projects are evidence of a decision Dominica made three decades ago regarding citizenship by investment (CBI) programs. In summary, this small country has been offering its Caribbean passports to foreigners in exchange for significant amounts of money. This program has injected billions of dollars into the country’s economy and provided an easy nationality option to individuals whose wealth origins may raise concerns in the economic community.
Among the eager customers of this program were groups of Iranians willing to spend hundreds of thousands of dollars, including Hossein Shemkhani. He is the mysterious leader of a commercial empire managing significant oil and arms deals for Tehran and Moscow. He also oversees an investment fund under a risk coverage guise that operates in global financial centers.
This information has been provided to Bloomberg by individuals who did not want their names disclosed for security reasons. The Dominican documents received by Shemkhani and his team were part of a series of actions that allowed Iranians to be accepted by Wall Street banks and major Western oil companies for transactions. Shemkhani, whose father is a senior advisor to the Supreme Leader of the Islamic Revolution, has made significant efforts to keep his commercial interests confidential.
The report at hand, based on interviews with over 40 individuals familiar with Shemkhani’s network and the result of a year-long investigation, explains how Shemkhani successfully integrated his affiliated companies into the Western financial system while key entities associated with him were managing Iran’s arms attacks to Russia. In the following sections of this report, you will read how he managed to operate from London to Geneva, Dubai, and Singapore, and had relationships with major players in the global financial world. A lawyer representing Shemkhani, who has consistently challenged Bloomberg’s reports on his commercial affairs, did not respond to specific questions in this report.
Malta and Cyprus are among the countries that sell their citizenship in exchange for investment. In this story, they play a role. In addition, senior officials of the United Arab Emirates are known for a lobbying company located a few blocks away from the US Department of the Treasury in Washington and a clandestine logistics network that moves billions of dollars of oil from Iran and Russia across the world. Part of these relationships were the banking challenges of the first phase of Dominica.
The banking challenges of the first phase of Dominica.
Shemkhani, who was born in Tehran a few years after the Iranian revolution, grew up in the shadow of the Iran-Iraq war. His father held various high-ranking positions in the government, including commander of the Navy of the Revolutionary Guards Corps and Minister of Defense, and later was appointed as the Secretary of the Supreme National Security Council of Iran.
Encouraged by his father, young Shemkhani decided to pursue an independent path in the private sector. After studying in Moscow and Beirut, he returned to Iran, obtained a Master of Business Administration (MBA) degree, and then founded a trading company, Admiral Group, with his brother Hassan, which referenced his father’s naval rank.
Dubai, a city located across the Persian Gulf, has been recognized as a suitable base with a large population of Iranian immigrants and a welcoming commercial approach. However, due to his father’s connections and his own nationality, Shamkhani was known as a political figure with ties to sanctioned entities, which were considered red flags for most major banks.
Dominica, an island about the size of New York City and home to around 70,000 people, offered a solution. Since the early 1990s, this island had one of the most flexible Citizenship by Investment (CBI) programs, generating billions of dollars in revenue. Physical presence in the country is not necessary, and CBI transactions are usually conducted through private intermediaries in Dubai, according to Christian Surak, an economics and political science professor in London and author of the book ‘Golden Passport’.
According to individuals directly knowledgeable about this matter, as well as documents and corporate records observed by Bloomberg, Shamkhani and a few of his close associates were able to obtain Dominica passports by paying fees. Some even changed their names. At that time, this process was entirely legal and done through official documentation from the island.
The red carpet alone was not enough.
Many banks required a second identification source to recognize their customers’ basic principles. Their Iranian passports were clearly not suitable. To alleviate these concerns, Shamkhani and his team used their Dominican documents to obtain additional passports from EU member countries such as Malta and Cyprus.
By having multiple travel documents under aliases and alternative nationalities, the Shamkhani network was able to pass comparative checks in some of the largest international financial transactions. Otherwise, concerns would likely arise due to birthplace, political status, and connections with sanctioned entities.
In addition to Shamkhani, other Iranian nationals who obtained Dominican passports include ship captain Alireza Darkhshan, known as Captain D, who has close ties with Milos Group Limited, Mehdiar Zare Mojtahedi, a senior manager at Ocean Leonid Investments Risk Coverage Fund, and Hossein Ghorbanizadeh, a senior associate at Golden Nest Group, who has helped Shamkhani in establishing global banking relationships.
According to data obtained from the Government Accountability Project in 2009, Dominica citizenship was acquired. He also appears as a Dominican national in the commercial registry of Turkey. Company documents show Zare and Ghurbanizadeh as Dominican citizens in Britain. In all three cases, there were no references to Iran in the documents reviewed by Bloomberg.
Details related to citizenship have been increasingly hidden in recent years as the Dominican government has refrained from disclosing the names of foreign recipients in its official gazette. Transparency in this area ended in 2019 when opposition politicians accused the Prime Minister, Roosevelt Skerrit, who has been in power since 2004, of personally benefiting from the sale of these passports. He defended this program as robust and very transparent.
Some foreign banks have cut ties with Dominica to reduce their relationship risks, according to Lennox Linton, a local legislator who raised concerns about the CBI. In July 2023, Britain canceled visa-free travel for individuals holding Dominica passports, raising alarms in the CBI industry. Meanwhile, the European Parliament is discussing ending such programs, citing reasons like fraud and weak oversight.
This program should be banned, said Sophie in ‘t Veld, a former member of the European Parliament from the Netherlands for 20 years, calling it a red carpet to Europe.
Representatives from Dominica, Cyprus, and Malta did not respond to requests for comments, and the victims’ advocates also remained silent. Dakshan and Zare also refrained from commenting. Dominica’s program acted as a launching pad for Shemkhani and his associates to turn the Admiral Group into a multi-billion dollar empire with dozens of companies.
However, the second phase required Emirati diplomats, Washington lobbyists, and Iranian agents to maintain the operations of these companies.
Shahmehreh, known as the global oil queen of Iran, and the secretive trading networks of the merchant Hector are recognized as Iran’s global oil queen.
Britain is seeking the closure of an Iranian oil-related company in London.
Oil prices reflect traders’ numbness towards US sanctions.
The Shahmehreh Oil Risk Coverage Fund manages millions of dollars from London.
The Dubai International Financial Center has suspended activities of companies related to Shahmehreh Oil Iran.
The covert oil transportation center that delivers Iranian crude oil to China.
US investigations into JPMorgan’s relationship with the Shahmehreh Oil Risk Coverage Fund of Iran.
The Shahmehreh Oil Risk Coverage Fund of Iran is preparing to close its London office.
Iranian oil trader Hector plays a key role in selling arms to Russia.
Luxury real estate
In the past decade, the commercial empire of Shamkhani has become a significant player in global commodity markets. Billions of dollars of oil wealth flow through his network every year, disappearing into offshore company accounts and luxury real estate among thousands of bank accounts.
In Dubai, he could leverage his family connections for business needs, while interacting with bankers, models, and musicians under the alias Hector in the city’s financial districts.
But in January 2020, his business activities were shocked when the United States sanctioned his father. This event acted as a warning signal for Shemkhani and his colleagues.
On one hand, his family had practically benefited from Trump administration’s maximum pressure strategy against the Tehran regime, as this strategy placed Iran’s strategic industries more than ever in the hands of politically connected elites. According to Ali Vaez, Iran program director at the Crisis Group in Washington, this issue has led to allegations of corruption and mismanagement by some Iranians who believe the country’s oil revenues should be allocated to support a broader population, especially during economic crises and fuel shortages.
Vaez said the Shemkhanis are prominent examples of businessmen who have thrived under sanctions and do not want these sanctions to be lifted.
At the same time, young Shemkhani did not want to face problems arising from individual sanctions or executive actions against his networks.
Between 2022 and early 2024, his business was doing well.
Market disruptions following Russia’s attack on Ukraine created an opportunity for companies like those managed by Shamkhani, which had strong government connections and higher risk tolerance. However, these conditions also brought about increased scrutiny. A coalition of governments including the United States, Britain, the European Union, and Japan designed a price ceiling policy to punish commercial companies supporting Vladimir Putin’s war machine.
The October 7, 2023 attacks on Israel and the subsequent invasion of Gaza by Israel also drew global attention to the financial support of proxy groups by Iran. Among them were oil trading companies that annually generate about $35 billion in revenue for the Islamic Republic. Shamkhani, with intertwined roots in Tehran and education in Moscow, held a prominent position in both worlds. By April 2024, pressure on him had increased. The United States had sanctioned nearly twelve ships linked to his network, while fearing further actions, he withdrew large sums from his risk coverage fund and invested it in luxury real estate, mainly in exclusive projects in Dubai’s islands.
According to a real estate database of Dubai properties compiled by the non-profit research organization based in Washington, C4ADS, at least two villas on the private Jumeirah Bay Island, locally known as Billionaires’ Island, have been purchased by members of the Shamkhani network.
Emirati friends
While the Biden administration was expected to increase sanctions on Iran, Shamkhani benefited from the support of the United Arab Emirates, a influential member of OPEC and a longstanding defense partner of Washington in the Middle East. In private discussions with American counterparts, some Emirati officials, including Yousef Al Otaiba, an influential envoy in Washington, have expressed their opposition to sanctions targeting Shamkhani. The reason for this is Shamkhani’s constructive role in improving relations between Tehran and Abu Dhabi, which has helped reduce Houthi attacks on Emirati soil, according to individuals directly informed about this matter.
In addition, some officials in the Biden administration have privately admitted that keeping oil prices low and preventing a trade war with China takes priority over dealing with market whales like Iran’s oil minister. Even when there is political will, policymakers acknowledge that significant successes in imposing sanctions can make their job harder, as the collapse of major companies under the control of the oil minister inevitably leads to the emergence of dozens of smaller companies that may be even harder to control, according to informed sources.
In response to Bloomberg News questions, a UAE official said that the country fully adheres to UN sanctions and has clear and powerful processes to deal with sanctioned entities, which their government has employed regarding some companies.
Lobbying in Washington
Meanwhile, the oil minister launched a campaign to make his influence effective and paid the cost to communicate with Western officials in the hope that some of his commercial companies would prevent the regulatory consequences, according to individuals directly informed about the matter.
He visited well-known government relations firms like Corvus based in Washington to receive guidance on exerting pressure on rival traders while maintaining his own companies, according to individuals familiar with the matter.
The Middle East office of this lobbyist is located in the Dubai Free Zone, one of the most sanctioned areas in the world, allowing the company to interact closely with some market players involved in sensitive shipments.
Corvus’s market insights have enabled the company to hold meetings with U.S. officials seeking fresh information on the Emirates. Such discussions have the potential to influence decisions of the Foreign Assets Control Office while Corvus discloses its dealings on behalf of a range of clients from the Saudi government to the commodities giant Mercuria Energy Group Ltd, its connection to the Shamkhani network under the Foreign Agents Registration Act remains undisclosed.
The requirements for disclosing information for companies supporting foreign citizens are generally less strict compared to those representing foreign governments, although this depends on the nature of the work. According to informed sources, Corvis has met with officials from the US Treasury Department to discuss circumventing sanctions in Dubai and at the same time downplay the role of some network companies.
This action raises questions about how potential lobbying by Iranians connected to politics is being hidden or layered through private companies. According to Gabriel Noronha, a former State Department official studying foreign influence, spokespeople from the US Treasury Department and the Department of Justice refrained from commenting. Representatives of Corvis also did not provide any comments.
There are signs of a shift in the tide indicating a change in the stance against Shamkhani. In recent weeks, several companies in his network have been suspended in the Dubai International Financial Center, and his risk coverage fund is under investigation by the US Treasury Department, as reported by Bloomberg.
At the end of last month, Ocean Leonid company announced to its employees that the London operations of the company will go through a dissolution process.
In recent months, the US Department of the Treasury has increased its sanctions on some ships and companies in the Shemkhani network, while refraining from imposing individual sanctions, according to informed sources.
Of course, the future government of Donald Trump also exists. The President-elect of the United States has promised to completely stop the export of oil from the Islamic Republic, and has chosen Mike Pompeo and Senator Marco Rubio as key figures against Iran in his cabinet. Our sanctions are not extensive enough, they need to be. John Bolton, former National Security Advisor in the first Trump administration, said, ‘You need comprehensive sanctions that say anyone who trades with Iranian oil is a sanctioned entity.’
A joint effort from Jim Weiss, Arkhan Ersi, Jack Wittles, Yongcheng from China, and Tiwa Adbayo.
Persian
مشاهده این مقاله به زبان فارسی
