On June 4, the United States sanctioned a major network of front companies for hiding assets on behalf of Iranian leaders. The Treasury targeted The Execution of Imam Khomeini’s Order and 37 ostensibly private businesses under it. Many are front companies involved in real estate, construction, banking, and other sectors of Iran’s economy. “While the Iranian government’s leadership works to hide billions of dollars in corporate profits earned at the expense of the Iranian people, Treasury will continue exposing and acting against the regime’s attempts to evade our sanctions and escape international isolation,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. The Obama administration has implemented four rounds of sanctions in the past week alone. The following are excerpts from the press release, including a link to the full text at the end.
The Execution of Imam Khomeini’s Order (EIKO), through two main subsidiaries, oversees a labyrinth of 37 ostensibly private businesses, many of which are front companies. The purpose of this network is to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators. EIKO and its subsidiaries – one that manages and controls EIKO’s international front companies, and another that manages billions of dollars in investments – work on behalf of the Iranian Government and operate in various sectors of the Iranian economy and around the world, generating billions of dollars in profits for the Iranian regime each year…
EIKO has made tens of billions of dollars in profit for the Iranian regime each year through the exploitation of favorable loan rates from Iranian banks and the sale and management of real estate holdings, including selling property donated to EIKO. EIKO has also confiscated properties in Iran that were owned by Iranians not living in Iran full-time. In addition to generating revenue for the Iranian leadership, EIKO has been tasked with assisting the Iranian Government’s circumvention of U.S. and international sanctions. Because of this unique mission, EIKO has received all of the funding it needs to facilitate transactions through its access to the Iranian leadership. The following companies are all part of this elaborate scheme:
Tosee Eqtesad Ayandehsazan Company (TEACO)
In June 2010, Tosee Eqtesad Ayandehsazan Company (TEACO) was created as part of the Iranian strategy to circumvent U.S. and international sanctions. EIKO uses TEACO as the primary mechanism to transact, manage, and control all of the international companies under EIKO’s control. To maintain the appearance of being a private company, TEACO is ostensibly owned by private Iranian businessmen and investors; however TEACO’s board members were all chosen by EIKO. TEACO acts on behalf of EIKO. As of September 2011, EIKO negotiated business deals using TEACO subsidiaries. For example, EIKO used an Iranian subsidiary of TEACO to negotiate a deal with a European company to build a factory in Iran. In these business deals, the TEACO subsidiary directly negotiated with the foreign company. If the foreign company did not move forward with the deal due to sanctions issues, the TEACO subsidiary would have TEACO take over the negotiations, rather than EIKO, because TEACO was less visibly connected to the Government of Iran...
Tadbir Economic Development Company (Tadbir Group)
Tadbir Group, an investment company subordinate to EIKO, manages billions of dollars in investments, including on behalf of Iranian leadership figures. Tadbir Group is one of the main holding companies belonging to EIKO. Its subsidiaries include Tadbir Investment Company, Modaber (Tadbir Industrial Holding Company), Tadbir Construction Development Company and Tadbir Energy Development Group. The Tadbir Group has used its subsidiaries to make significant investments in the Iranian economy, including an investment of over $100 million in Amin Investment Bank, and controls the Pardis Investment Company and Mellat Insurance Company in Iran.
Rey Investment Company
As of late December 2010, Rey Investment Company was worth approximately $40 billion. Rey Investment Company was formerly run by Ayatollah Mohammad Mohammadi Reyshahri, who previously served as the Iranian Minister of Intelligence and Security. Rey Investment Company collected and invested donations obtained from Iranian Shi’a shrines. However, amidst allegations of mismanagement and embezzlement of shrine donations from the company, the Iranian Government cut off its funding to the point of nearly bankrupting the company. In mid-to-late 2010, Reyshahri was removed and control of Rey Investment Company was transferred to EIKO and its director. EIKO subsequently appointed a new Managing Director of Rey Investment Company.
Reyco GmbH
Reyco was a German subsidiary of Rey Investment Company, although there were no public ties between Reyco and Rey Investment Company, TEACO, or the Iranian Government. Reyco owned MCS Engineering and MCS International. Reyco had the appearance of being a purely German company to circumvent sanctions restricting an Iranian Government-controlled entity’s ability to do business in Europe. Reyco was eventually transferred to the control of TEACO from Rey Investment Company, and TEACO planned to use Reyco to purchase a bank for Iran in Germany.
MCS International GmbH (Mannesman Cylinder Systems)
Reyco subsidiary MCS International is a German company ostensibly owned by German nationals or Iranian expatriates with dual Iranian-European citizenship to conceal its ties to the Iranian Government, EIKO, TEACO, and Rey Investment Company. MCS International was audited by TEACO in October 2010 and determined to be in poor financial standing. However, EIKO management rescued MCS International from bankruptcy and insisted on keeping the company open because it viewed MCS International as key to facilitating business in Europe. EIKO management viewed MCS International as being too important to EIKO’s international plans to allow it to go bankrupt and believed that it would be easier to rescue MCS International from bankruptcy than to create or acquire new foreign companies on behalf of EIKO due to U.S. and international sanctions. EIKO subsequently ordered that responsibility for MCS International be transferred from EIKO-controlled TEACO to Iranian businessmen, who were sent to oversee the company. Following this transfer, the two individuals owned the shares for MCS International, but answered directly to EIKO...
U.S. persons are generally prohibited from engaging in any transactions with the entities listed today, and any assets those entities may have subject to U.S. jurisdiction are frozen.