The July 14 nuclear deal reached between the regime in Iran and major world powers has yet to be implemented, but a conglomerate controlled by the mullahs’ Supreme Leader Ali Khamenei stands to benefit financially.
“Khamenei has yet to publicly back the accord, which lifts some sanctions on Iran in return for limits on its nuclear program. But he does stand to benefit, thanks to his close control of one of the most powerful and secretive organizations in Iran — ‘Setad Ejraiye Farmane Hazrate Emam,’ or Setad,” Reuters reported on Tuesday.
The deal, which is likely to go into effect after clearing a major Congressional hurdle last week, lifts U.S. secondary sanctions on Setad and about 40 firms it owns or has a stake in, according to a Reuters tally based on annexes to the deal.
“The delisting of Setad — which has little connection to Iran’s nuclear program but is close to Iran’s ruling elite — feeds into U.S. Republicans’ criticism that the deal will empower Iran’s hardliners and help fund its regional ambitions,” the report said.
“Former U.S. officials say Setad was just one of a slew of entities sanctioned because they were considered part of the Iranian government. One former official said Setad was also targeted because the United States saw it as close to Khamenei and believed that the sanctions might induce him to back serious nuclear negotiations.”
“With stakes in nearly every sector of Iran’s economy, Setad built its empire on the systematic seizure of thousands of properties belonging to religious minorities, business people, and Iranians living abroad, according to a 2013 Reuters investigation, which estimated the network’s holdings at about $95 billion.”
“Iranians who said their family properties were seized by Setad described in interviews in 2013 how men showed up and threatened to use violence if the owners didn’t leave the premises at once.”
Through Setad, Khamenei has access to resources that allow him to bypass rivals and other branches of government, Reuters said.
“The entities being delisted represent a significant portion of Setad’s holdings, though dozens of Setad-linked companies were never directly named by the U.S. Treasury and may not have been affected at all by the sanctions.”
“The nuclear deal, reached in Vienna in July, would remove Setad from Treasury’s Specially Designated Nationals (SDN) list, enabling the conglomerate to open bank accounts abroad and procure financing for partnerships.”
“The secondary sanctions have barred foreign banks that wish to operate in the United States from dealing with Setad. American banks, companies, and individuals will still be barred from dealing with Setad, also called EIKO, under U.S. primary sanctions.”
Setad’s removal from the sanctions list has raised concerns among some U.S. lawmakers.
“It allows the Ayatollah’s shady conglomerate to jeopardize the global financial system,” said Republican Senator Cory Gardner, who sits on the Senate Foreign Relations Committee.
“These are bad actors who are now receiving the benefit of the bargain from the United States.”
Setad was originally sanctioned by the U.S. Treasury in June 2013. The conglomerate “produces billions of dollars in profits for the Iranian regime each year,” said David Cohen, then the Treasury’s under secretary for terrorism and financial intelligence, at a Senate banking committee hearing that year.
Setad, Cohen said at the time, controls “massive off-the-books investments” hidden from the Iranian people and regulators.
All entities sanctioned for being part of the Iranian government are being taken off the SDN list as part of the nuclear deal, also called the Joint Comprehensive Plan of Action (JCPOA), though U.S. persons and entities will still be banned from dealing with them.
The U.S. Treasury said in a statement to Reuters that Setad would only be delisted when Tehran shows it has fulfilled its commitments under the nuclear deal.
“This relief is similar to the relief we are providing to other economic actors in Iran as agreed to under the JCPOA,” Treasury said.
The 2013 Reuters investigation found that Khamenei exerts exclusive control over Setad’s economic empire. “He chooses its executives and oversaw the creation of a body of legal rulings that safeguarded Setad’s asset acquisitions since its inception in 1989,” Reuters said.
“Setad’s current value and its holdings in the delisted entities could not be determined, because many websites with that data have been taken down since the Reuters investigation.”
“While most of Setad’s holdings are in Iran, it has some global reach. The Setad-linked entities being removed from U.S. secondary sanctions include firms based in South Africa and Germany.”
“Already, one Setad firm appears to be moving to take advantage of the deal. Ghadir Investment Company, which the U.S. Treasury identified as a Setad-linked firm, signed a 500 million euro ($565 million) contract with the engineering unit of Finmeccanica, a spokesman for the Italian defense group said in August.”
“Though the deal itself would likely have been legal prior to Ghadir’s removal from the sanctions list, sanctions experts said, the nuclear deal made it easier to procure financing,” Reuters added.
