M o n e y, P ow e r & P o l i c y              The Iran-Venezuela                Axis of Scam        Stripping, nesting an...
practice. Since 2006, Iranian military advisers   years, several Iranian-owned and controlled fac-have been embedded with ...
Money, Power & Policythis kind most often reach their destinations         which the bank intentionally participated in ai...
StriPPing, neSting and other ScaMS   T     he Venezuelan Interior Minister, Tarek El         Aissami, is of Syrian origin....
Money, Power & Policyis because Venezuela is not currently the subject     The result is that it seems to be no one’s job ...
Upcoming SlideShare
Loading in …5
×

Morgenthau iran venezuela axis

570 views
536 views

Published on

Published in: Business, News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
570
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Morgenthau iran venezuela axis

  1. 1. M o n e y, P ow e r & P o l i c y The Iran-Venezuela Axis of Scam Stripping, nesting and other scams add up to an unconventional, and dangerous, threat Robert M. Morgenthau A dangerous strategic intimacy is blos- During a 2007 state visit to Tehran by Presi- soming between two countries we dent Hugo Chávez, Venezuela and Iran declared might once have considered unlikely themselves to be an “axis of unity” against the bedfellows: the Islamic Republic of Iran United States. Many observers took this to be and the Bolivarian Republic of Venezuela. an act of mostly empty political theater. It is This relationship has moved well beyond its turning out to be nothing of the sort. 2005–06 courtship phase into a cozy finan- Some aspects of the growing Iranian-Ven- cial, political and military partnership based ezuelan relationship are open for all to see. essentially on shared anti-Americanism and President Chávez has personally helped initiate the presence of certain complementary assets. relationships between Iran and Nicaragua, Bo- For Iran, Venezuela’s established financial sys- livia and Ecuador, opening the way for Iranian tem can help it end-run UN Security Council President Mahmoud Ahmadinejad’s recent sanctions, and its geographic location is ideal visits to Latin America. In June, while tens of for building and storing weapons of mass de- thousands lined the streets of Tehran and other struction far away from the prying eyes of the Iranian cities to protest, at considerable risk to International Atomic Energy Agency and the life and limb, the fraudulent re-election of Pres- international community generally. For Ven- ident Ahmadinejad, Chávez publicly offered ezuela, Iran provides political leverage against him support. the United States by burnishing Caracas’s Iranian investments inside of Venezuela pretensions to leadership of Latin America’s are on the rise, and prospects for nuclear co- anti-U.S. regimes and terrorist organizations. operation between the states are no secret ei- Iran also offers a source of military training ther. Several “memoranda of understanding” and doctrine. between the two governments pledge joint technology development, military coopera- Robert M. Morgenthau has been District Attor- tion, banking and finance links, cooperation ney for New York County since 1975, and previous- over oil, gas and mineral exploration and re- ly served as United States Attorney for the Southern fining, and joint agricultural research. Some District of New York. of these pledges have migrated from paper to 50 The AmericAn inTeresT
  2. 2. practice. Since 2006, Iranian military advisers years, several Iranian-owned and controlled fac-have been embedded with Venezuelan troops. tories have sprung up in remote, interior partsAsymmetric warfare, taught to members of of Venezuela. The lack of infrastructure in andIran’s Revolutionary Guard, Hizballah and around these sites is offset by their remote loca-Hamas, has replaced U.S. Army field manu- tions, making them ideal locations for the illicitals as standard Venezuelan military doctrine. production of weapons and weapons materiel.This development appears to have been assist- Though we still lack much hard evidence ofed by key figures among Chávez’s intimates what goes on at these sites, their location andwho are strong supporters of Hizballah and secretive nature merit attention.the Iranian-Hizballah fundamentalist agen- That is so especially in light of a Decemberda. (See profile on p. 53.) 2008 incident in which Turkish authorities The gravest dangers, however, may yet re- detained an Iranian vessel bound for Venezu-main hidden. According to a December 2008 ela after discovering lab equipment capable ofCarnegie Endowment report, Venezuela has an producing explosives packed inside 22 con-estimated 50,000 tons of un-mined uranium. tainers marked “tractor parts.” The contain-Venezuela could be mining and to some degree ers also allegedly contained barrels labeledprocessing uranium for Iran on Venezuelan soil. with “danger” signs. It is safe to assume thatMy office has learned that, over the past three this was a lucky catch, and that shipments of WinTer (JAnuAry/FebruAry) 2010 51
  3. 3. Money, Power & Policythis kind most often reach their destinations which the bank intentionally participated in ain Venezuela. systematic process of altering wire transfer in- The Venezuelan government has even made formation to hide the identity of its clients. Thisreference to these activities, but in a way de- process allowed the illegal transfer of more thansigned to mask their likely purpose. Thus in $300 million of Iranian cash despite economicearly September in Tehran, Chávez was quoted sanctions prohibiting Iranian access to the U.S.as saying that with Iran’s help he plans to build financial system. We are currently investigatinga “nuclear village” in Venezuela. Supporting similar misconduct by other banks.Iran’s claims that its nuclear ambitions are for As to the second case, in April we an-peaceful purposes, Chávez stated, just a few nounced the indictment of a Chinese companyweeks before the revelations about Iran’s secret called Limmt and its manager, Li Fang Wei, anuclear complex near Qom, that “there is not a rogue provider of metal alloys and minerals tosingle proof that Iran is building a . . . nuclear the global market. Limmt’s business includesbomb.” selling high-strength metals and sophisticated military materials, many of which are bannedM y office has taken a particular interest in the banking and financial connectionsbetween Iran and Venezuela, for this sort of from export to Iran under international agree- ments. Limmt was also banned by the U.S. Treasury Department’s Office of Foreign As-cooperation constitutes the basic infrastructure sets Control (OFAC) from engaging in trans-for dealings in nuclear technology as well as the actions with or through the U.S. financial sys-narco-terrorist activities in which the Venezu- tem for its role in the proliferation of weaponselan government is clearly implicated.1 To that of mass destruction to Iran. Our investigationend, my office has publicly announced during revealed that, despite sanctions, Li and Limmtthe past year two investigations that highlight used aliases and shell companies to deceiveIranian efforts to procure weapons materials banks into processing payments related to thedespite U.S. and international economic sanc- shipment of banned missile, nuclear and “dual-tions designed to prevent Iran from develop- use” materials to subsidiary organizations of theing long-range missile capacity and nuclear Iranian Defense Industries Organization.technology for military purposes. Our efforts Our investigation pertains only to U.S.uncovered a pervasive system of deceitful and banks, but it should be noted that Limmt pur-fraudulent practices employed by Iranian enti- chased and re-sold to Iran most banned mate-ties to move money all over the world without rials in euros and processed the sales throughdetection, including through banks located in European banks. We have no jurisdiction overthe jurisdiction I am responsible for protecting, such activities.Manhattan. The tactics used in these cases are These two cases hardly exhaust the list ofinstructive and should send signals to law en- dangerous activities likely going on. Basedforcement, intelligence agencies and military on information developed by my office, thecommands throughout the world about thestyle and level of deception the Iranians are em- 1The U.S. Government Accountability Officeploying to advance their interests. The Iranian (GAO) recently published a study examininggovernment is going to such lengths for a pur- the issue of illicit drugs transiting Venezuela,pose as simple as it is obvious: to pay for ma- reporting a high level of corruption within theterials necessary to develop nuclear weapons, government, military and law enforcement thatlong-range missiles and sophisticated roadside has enabled Venezuela to become a major trans-bombs without being detected. shipment route for trafficking cocaine out of As to the first case, in January 2009 my office Colombia. Intelligence gathered by my officeand the U.S. Department of Justice announced strongly supports the conclusion that Hizballahdeferred prosecution agreements with the UK supporters in South America are trafficking inbank Lloyds TSB. From 2001 to 2004, Lloyds, narcotics. The GAO study also confirms allega-on behalf of Iranian banks and their customers, tions of Venezuelan support for the Revolution-engaged in a practice known as “stripping”, in ary Armed Forces of Columbia (FARC).52 The AmericAn inTeresT
  4. 4. StriPPing, neSting and other ScaMS T he Venezuelan Interior Minister, Tarek El Aissami, is of Syrian origin. El Aissami, who at one time headed Onidex, the Venezu- elan passport and naturalization agency inside the Interior Ministry, is suspected of having issued passports to members of Hamas and Hizballah. El Aissami and others affiliated with Hizballah may also have recruited young Venezuelan Arabs for training in Hizballah camps in Southern Lebanon. Onidex is now headed by a close friend of El Aissami, named Dante Rafael Rivas Quijada; the two at- tended the same university and the friend is also reported to have ties to Hizballah. In June 2008, a Venezuelan national of Lebanese origin, Ghazi Nasr al Din, was added to the Treasury Department’s Office of Foreign Assets Control (OFAC) list of specially designated global terrorists and is barred from accessing U.S. financial institutions and the U.S. banking system. He is a Venezu- ela-based Hizballah supporter who served in the Venezuelan Embassy in Damas cus and was later appointed to the Venezuelan Embassy in Beirut, where he currently serves as the Embassy’s Director of Political Affairs.Iranians, with Venezuelan help, are now en- that BID has several correspondent bankinggaged in similar schemes to bust economic and relationships with both Venezuelan banks andanti-proliferation sanctions. Note that in Janu- banks in Panama, a nation with a long-standingary 2008 the Iranian government opened the reputation as a money laundering safe haven.International Development Bank in Caracas This scheme is known as “nesting.”under the Spanish name Banco Internacional Nested accounts occur when a foreign finan-de Desarrollo C.A. (BID), an independent sub- cial institution gains access to the U.S. financialsidiary of Export Development Bank of Iran system by operating through a U.S. correspon-(EDBI). In October 2008, OFAC imposed dent account belonging to another foreign fi-economic sanctions against these two Iranian nancial institution. For example, BID, which isbanks for providing or attempting to provide prohibited from establishing a relationship withfinancial services to Iran’s Ministry of Defense a U.S. bank, could instead establish a relation-and its Armed Forces Logistics, the two Iranian ship with a Venezuelan or Panamanian bankmilitary entities tasked with advancing Iran’s that has a relationship with a U.S. bank. If thenuclear ambitions. U.S. bank is unaware that its foreign correspon- The ostensible reason for opening Iran’s BID dent financial institution customer is providingin Caracas was to expand economic ties with such access to a sanctioned third-party foreignVenezuela. Our sources and experience lead us financial institution, this third-party financialto suspect that Iran is seeking to diversify its institution can effectively gain anonymous ac-foothold into the Venezuelan banking system cess to the U.S. financial system.for purposes of further “sanctions-busting.” OFAC sanctions alone have no chance ofDespite being designated by OFAC, we believe preventing this stratagem from working. This WinTer (JAnuAry/FebruAry) 2010 53
  5. 5. Money, Power & Policyis because Venezuela is not currently the subject The result is that it seems to be no one’s job toof a U.S. or international economic sanctions see the whole picture, and no one, short of theprogram that significantly restricts the ability President himself, appears to have the author-of Venezuelan banks to conduct business with ity to order coordinated, whole-of-governmentthe United States, including accessing U.S. action.banks to clear international U.S. dollar transac- I fear that we are entering a period in whichtions. As matters stand now, U.S. banks pro- the toxic fruits of the Iran-Venezuela bondcessing wire transfers from Venezuelan banks will ripen, and that we are far from preparedrely almost exclusively on the Venezuelan bank for the consequences of that harvest. We over-to ensure the funds are being transferred for le- look creeping Iranian influence in the West-gitimate purposes. I have little faith that this is ern Hemisphere at our peril, and we assumeeffectively being done, and the Iranians, aware that President Chávez is bluffing at risk to ourof this vulnerability, appear to be taking advan- reputation and safety. Both he and Presidenttage of it. Ahmadinejad often come across to us as buf- foonish characters, inviting of ridicule. TheyI n my view, the opening of Venezuela’s banks to the Iranian government helps guaranteethe continued development of its nuclear and are not. My office and other law enforcement agen- cies are doing what we can, but we can play onlylong-range missile technology. The presence of a small role in ensuring that money laundering,mysterious manufacturing plants controlled by terror financing and sanctions violations are notIran and located deep in the interior of Ven- ignored, and that criminals and the banks nowezuela is also cause for concern, as is the appar- aiding Iran will be discovered and prosecuted.ent cooperation between Tehran and Caracas Certainly, stopping the flow of illicit funds cor-in assisting narco-terrorist operations in Latin relates directly with curbing wrongful conduct,America and the Middle East. The Iranian- but law enforcement in the United States aloneVenezuelan relationship is making both coun- is not enough to counter the threat effective-tries more dangerous adversaries of the United ly. Our law enforcement efforts must grow toStates, and I am not persuaded that the prob- include allies and friends in Europe, Asia andlem has attracted sufficient concerted attention Latin America itself. For example, Brazil, whosefrom the U.S. government. constitution prohibits nuclear weapons, can One reason for this is that the Iranian-Ven- play a significant role in influencing Presidentezuelan axis spreads across an unusual number Chávez. Together we must consider ways toof organizational “seams”: between Western monitor and sanction Venezuela’s banking sys-Hemisphere and Southwest Asian bureaus tem if it aids Iranian circumvention of Securityand offices in the State and Defense Depart- Council sanctions.ments and the U.S. intelligence community; Above all, we must make our own govern-between various law enforcement, diplomatic ment work more effectively to recognize andand military functions among the Justice, confront this challenge. Failure to act will leaveTreasury, Homeland Security, State, Defense open a window for money laundering by theand Commerce Departments; and between Iranian government, for narcotics organizationsFederal, state and local jurisdictions as well. with ties to the Chávez regime, and for the ter-These organizational seams are mirrored (and rorist organizations that Iran supports openly.more) with respect to congressional oversight. That is a window we must shut. If you give to a thief, he cannot steal from you, and he is then no longer a thief. —William Saroyan54 The AmericAn inTeresT

×