The Case for Suspending the Visa Waiver Program for Iranians
An Iranian court recently sentenced to death Babak Zanjani and his associate, Mehdi Shamszadeh, for their alleged role in embezzling billions of dollars of Oil Ministry revenues while running overseas networks of front companies designed to circumvent international sanctions. Zanjani’s case highlights the key role played in sanctions evasion by Iranian nationals who are also passport holders of Visa Waiver Program (VWP) member countries. It thus makes a strong case for the United States to retain exceptions legislated last December to the program for Iranian dual nationals, despite White House opposition.
Both Zanjani and Shamszadeh held passports from visa-waiver countries, and these documents may have facilitated their fraudulent activities overseas. Iranian news outlets allege that Zanjani is a dual Iranian-Danish national, and published a scanned image of his passport. Corporate filings from British companies linked to Shamszadeh show that he acquired British nationality in 2011, likely as a result of applying to the UK visa investor program.
Their dual nationality is not a coincidence. Tehran, after all, has long relied on Iranian nationals who are dual passport holders to pursue illegal activities including terrorism, illicit finance and procurement of technology for its ballistic-missile and nuclear-weapons programs. Clearly, not every dual national is an Iranian agent. But countless agents of the Iranian regime were dual passport holders.
The European Union and the United States sanctioned Zanjani, respectively, in December 2012 and April 2013, for “moving billions of dollars on behalf of the Iranian regime, including tens of millions of dollars to an Islamic Revolutionary Guards Corps (IRGC) company.” Shamszadeh, by contrast, eluded Western sanctions but earned the media spotlight when multiple reports in Turkey linked him to sanctions evasion, naming him as an associate of Zanjani.
According to Turkish media, in October 2015, Iran’s Oil Ministry sued the low-cost Turkish airline Onur Air, claiming it is a hidden asset of Zanjani. Corporate filings from the Turkish company registry list Shams as one of Onur Air’s shareholders, which is consistent with reports from September 2013 alleging that Shams—who acquired Onur Air in May 2013 for $250 million—had bought the airline on behalf of Zanjani. With Zanjani under sanctions and the international community tightening measures against Iran’s economy, this alleged scheme would have been exceedingly difficult had these men not been European passport holders. That is especially true for Shamszadeh.
Shamszadeh is the former commercial director for the Islamic Republic of Iran’s Shipping Lines (IRISL). The U.S. Treasury sanctioned IRISL in 2008 for facilitating shipments of military-related cargo destined for Iran’s Ministry of Defense Armed Forces and Logistics. EU and UN sanctions also hit IRISL in 2010, all but paralyzing its activities.
Shamszadeh moved to London in 2005 to run IRISL’s local subsidiaries (which Treasury also sanctioned three years later), but he resigned both positions within months of arriving in the UK, before sanctions were imposed. Shamszadeh likely bought into the UK investor visa program, which allows foreign nationals to obtain a path to citizenship in exchange for investment.
Once Shamszadeh acquired British nationality, he shortened his name to Shams—likely to obfuscate his real identity. He no longer was an Iranian national formerly employed by a UN sanctioned proliferator, but a London-based British businessman with an Arab-sounding name, who was keen on investing in the then-booming Turkish economy.
Zanjani and Shamszadeh are not exceptions. Numerous other Iranian dual nationals living abroad are managing regime assets. In many such cases, the U.S., UN, and European Union have sanctioned either the individuals themselves or the companies they managed.
Mannesman Cylinder Systems, for example, was a German gas-cylinder factory sanctioned by the U.S. Treasury in June 2013. At the time, it belonged to Execution of Imam Khomeini’s Order, or EIKO. EIKO is the supreme leader’s holding company, which Treasury also sanctioned in 2013 (and which under the nuclear deal, has been delisted). EIKO took over the German factory in 2011 from Rey Investment Company, an Iranian religious foundation, after Rey’s mismanagement brought MCS to the brink of bankruptcy.