Foreign and Defense Policy, Latin America

Iran-Venezuela money laundering confirmed?

Image Credit: REUTERS

Image Credit: REUTERS

An Iranian man caught by authorities “trying to enter Germany with a check worth about $70 million” is the chairman of a suspicious Venezuelan bank that is wholly owned by Iran’s black-listed Saderat Bank. Even as US diplomats rush to normalize relations with Caracas, this incident is tangible evidence of the money-laundering machine established by Iran in Venezuela.

German authorities confiscated a check for 300 million Venezuelan bolivars (equivalent to about $70 million) that Tahmasb Mazaheri failed to declare as he cleared customs upon arrival at Düsseldorf airport from Turkey on January 21. The incident is being investigated as a money-laundering scheme, according to the German media. Mazaheri has been identified in media reports as the former chief of Iran’s Central Bank, a post that he held since 2008. Few if any of the media reports on the incident disclosed that Mazaheri has been a director of Venezuela’s Banco Internacional de Desarrollo (BID) since its formation in 2007.

In an October 5, 2010 essay in Foreign Policy, I published documents revealing Mazaheri’s association with the suspicious “Venezuelan” bank. I provided the following context and details:

In addition to providing physical cover for Iranian operations, banks and other purportedly commercial ventures established in Venezuela afford Iran access to the international financial sector in violation of several Security Council resolutions intended to deny funds to the country’s illicit nuclear weapons program.  [UNSC] Resolution 1803 (2008) warns governments to “exercise vigilance” against Iranian banks, specifically Bank Saderat, “to avoid such activities contributing to the proliferation of sensitive nuclear activities.” Documents retrieved from Venezuelan government archives show that by 2007, Iran’s Bank Saderat had already incorporated the Banco Internacional de Desarrollo (BID) in Venezuela. All of BID’s founding directors are Iranian, and it appears to operate today as a Venezuelan bank that is actually a wholly-owned front for Saderat. Records of Iranian firms operating in Venezuela reflect dollar-denominated transactions carried out by BID in contravention of U.S. law and U.N. resolutions.

The United Nations had good reason to single out Saderat as a possible conduit for funds used to finance terrorism and nuclear proliferation. In 2006, the U.S. Treasury sanctioned Saderat for serving as a conduit for funds to the Lebanese Shiite terrorist group Hezbollah. Only two months ago [July 2010], the European Union froze BID’s assets for its role in supporting Iran’s “nuclear or ballistic missile activities.” Yet Chávez’s government continues to allow BID to move money through Iranian front companies and Venezuelan partners in order to evade international sanctions.

According to official documents obtained by me from sources within the Venezuelan government, since 2005 Iran has used numerous banks and industrial entities to launder as much as $30 billion in transactions in defiance of US, UN, and European sanctions. There is significant documentation suggesting that Venezuela’s Central Bank and state-run oil company, Petróleos de Venezuela, S.A. (PDVSA), have abetted these illegal transactions.

Two years after I first disclosed these dangerous ties, US diplomats continue to turn a blind eye to this gaping loophole in the international sanctions enforcement. For example, in a written response to a question submitted by Senator Robert Corker (R-TN) on the role of Iran in the Western Hemisphere, Secretary of State John Kerry failed to mention the significant role that Venezuela is playing in helping the Tehran regime evade financial restrictions.

If Secretary Kerry is to make good on his pledge to the Senate to confront this dangerous problem, the career diplomats will have to do a better job.

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