November 4, 2013 | The Wall Street Journal

Iran’s Worrisome Shipping News

Bravo to the European Union, whose authorities are seeking ways to maintain sanctions on Iran's national cargo fleet. The EU's existing sanctions on the Islamic Republic of Iran Shipping Lines were overturned in September by the EU General Court on grounds that the European Council had not provided enough evidence linking IRISL to Iran's nuclear program, which was the reason given for the EU's blacklisting the shipping group in 2010. European governments are now exploring new grounds for reimposing sanctions, such as IRISL's record of arms smuggling.

But Europe's push to keep pressure on IRISL comes at a delicate moment. The U.S. administration has been trying to deflect tough measures against Tehran for fear of jeopardizing nuclear talks between Iran and the P5+1 bloc of world powers: the U.S., U.K., China, France, Russia and Germany. Following an initial sit-down last month, P5+1 talks are scheduled for a second round beginning on Thursday in Geneva.

Diplomats would be wise to pay more attention to IRISL's record than to the political sensitivities. While demanding its day in court under European law, IRISL has racked up a history on a variety of other fronts in which respect for law hardly figures.

When the U.S. Treasury imposed sanctions on IRISL and 123 of its ships in 2008, the broad reason Treasury gave in a press release was that IRISL was “providing logistical services to Iran's Ministry of Defense and Armed Forces Logistics.” As an example, Treasury cited a case in 2007 in which IRISL had allegedly transported “a shipment of precursor chemicals destined for use in Iran's missile program.”

In the same 2008 press release, Stuart Levey, then Treasury's undersecretary for terrorism and financial intelligence, said that “Not only does IRISL facilitate the transport of cargo for U.N. designated proliferators, it also falsifies documents and uses deceptive schemes to shroud its involvement in illicit commerce.” Mr. Levey also said that “IRISL's actions are part of a broader pattern of deception and fabrication that Iran uses to advance its nuclear and missile programs.”

As U.S. sanctions began to bite, IRISL embarked on a series of maneuvers that Adam Szubin, the director of Treasury's Office of Foreign Assets Control, described in 2011 as “deception, fraud and dangerous activities on behalf of the Government of Iran.” IRISL renamed and reflagged most of its vessels, according to Mr. Szubin, and it shuffled nominal ownership of those ships among shell companies spread around the globe, in places such as Hong Kong, Dubai, Barbados and Malta, according to Treasury documents and shipping registries.

According to an Oct. 2, 2009, U.S. State Department cable marked “secret” and published by WikiLeaks, IRISL was officially privatized in 2008, but the Iranian government “probably still maintains control of a significant number of shares.” The cable noted that, “As a result of its Iranian domestic and government connections, IRISL has long been Iran's preferred maritime carrier for the import of materials for its ballistic missile programs.”

IRISL has also figured in Iran's illicit export of weapons. In 2009, the U.N. Security Council's committee on Iran sanctions reported three cases that year of Iranian arms smuggling aboard ships. The U.N. report described all three cases as “violations” of a U.N. sanctions resolution passed in 2007 forbidding Iran to sell or transfer abroad, directly or indirectly, “any arms or related materiel.” According to the U.N. committee, “all three violations involved the Islamic Republic of Iran Shipping Lines (IRISL).”

Of these cases, the most notorious is that of the Monchegorsk, a Russian-owned, Cypriot-flagged freighter chartered by IRISL. According to the WikiLeaked 2009 State Department cable, IRISL might have more cheaply used one of its own ships for the shipment. “However, IRISL apparently chartered the Monchegorsk not to save money, but to obscure the Iranian origin of the sensitive shipment.”

The dodge failed. En route from Iran to Syria, the Monchegorsk was inspected at sea by a U.S. Navy boarding party. The ship's cargo included containers packed, according to the U.N., with ammunition, mortar components and high explosives. The ship was ordered to Cyprus, where Cypriot authorities impounded the cargo and stored it at a naval base. But in 2011 several of the containers self-detonated, killing 13 people and injuring 61.

The second case involved the Hansa India, a German-owned, German-flagged freighter chartered by IRISL. In October 2009, according to Der Spiegel, U.S. warships halted the vessel in the Gulf of Suez, en route to Malta. According to a U.N. sanctions notice, the ship was carrying containers loaded with bullet casings, “apparently for AK rifles.” The contents were in barrels marked with the Farsi name of Iran's Defense Industries Organization, an entity designated by the U.N. in 2006 as being involved in Iran's nuclear program.

The third case involved another German-owned ship, the Francop, flagged to Antigua and Barbuda, with an arms cargo that the U.N. report described as “shipped by IRISL.” The Francop was boarded near Cyprus in November 2009 by the Israeli navy. Israeli authorities reported finding 500 tons of weaponry aboard, including rockets, grenades, armor-piercing artillery and more than half a million bullets.

IRISL's financial maneuvers have also had their troubling aspects. In 2011, the Manhattan district attorney announced a 317-count indictment against IRISL and a number of its affiliates. As summarized in a report by Andrea Stricker of the Washington-based Institute for Science and International Security, the indictment charges them with “conspiracy to circumvent United States sanctions against Iran by illegally accessing New York banking institutions to send and receive more than $60 million in payments.”

Ms. Stricker adds that Iran has rejected the indictment as “unfairly aimed at harming its economy.” According to a spokesperson at the Manhattan district attorney's office, “The case remains open.”

In March 2011, the U.S. Treasury issued an advisory warning of alleged IRISL abuses meant to hide the group's involvement in shipping transactions. These included “using container prefixes registered to another carrier” and “naming non-existent ocean vessels in shipping documents.”

In a 2012 advisory, Treasury warned that “IRISL has recently been operating vessels despite their flags having been revoked.” Such practice not only reflects efforts to evade sanctions, but also runs counter to basic maritime safety rules. Also in 2012, a report by the U.N. Security Council's Panel of Experts on Iran sanctions concluded that although they had received no recent reports of IRISL smuggling, “it is likely that maritime shipments of prohibited items are continuing.” According to a lawyer for IRISL, Maryam Taher of M Taher & Co. Solicitors, “IRISL has always maintained that it has never knowingly been involved in shipping any illegal material.”

For all of IRISL's wiles, sanctions have had a visible effect on the group's usefulness to the Iranian regime. IRISL ships in recent years have at considerable cost registered under such flags of convenience as Bolivia's, Mongolia's, Tuvalu's and Tanzania's. Due largely to the efforts of the U.S. Treasury, they been kicked off all of them.

Among the more than 120 vessels currently blacklisted by Treasury as linked to IRISL, most are now reflagged back to Iran. And while IRISL's fleet used to sail most of the globe, ship-tracking databases show that IRISL's shipping routes are now largely confined to the Middle East and Asia, with occasional runs to Africa.

None of this has succeeded in stopping Iran's nuclear program. But any easing of EU sanctions on IRISL seems unlikely to help, especially when Iran, for all its current charm offensive, has yet to provide any concrete sign that it has kicked the arms-smuggling and proliferation habit—or, for that matter, backed off from its role as the world's leading state sponsor of terrorism.

According to the Iranian press, IRISL's managing director, Mohammad Hossein Dajmar, celebrated September's EU court annulment of sanctions as a “big success” that “puts the seal of approval on the rightfulness of IRISL and the baselessness of the accusations.” If the EU's earlier accusations couldn't hold up in court, there's every reason for EU authorities to dip into IRISL's long record for some charges that just might.

Ms. Rosett is journalist-in-residence with the Foundation for Defense of Democracies and heads its Investigative Reporting Project.

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