January 22, 2018 | The Wall Street Journal

Hit Ayatollah Khamenei in His Pocketbook

The Trump administration already has offered rhetorical support to Iran’s antigovernment protesters. Now, nearly a month after the demonstrations began, how can the U.S. provide material help? Follow the money.

Supreme Leader Ayatollah Ali Khamenei’s supporters brag about his modest lifestyle. They fail to mention that he runs a multibillion-dollar corporate conglomerate to fund his political patronage networks. His three most valuable possessions are the Execution of Imam Khomeini’s Order, or EIKO ; the Mostazafan Foundation; and the Astan Quds Razavi. These businesses have an interest in nearly every Iranian industry and are worth approximately $200 billion, according to our estimates.

The entities acquired a considerable share of their assets from the systematic confiscation of private property that followed the Islamic Revolution of 1979. They don’t pay taxes, and only the supreme leader’s office can audit them. They use their political connections to outmaneuver their rivals and to win lucrative government contracts. It is no wonder so many Iranians, deprived of basic necessities, resent their leaders.

A 2013 investigation by Reuters estimated that EIKO was worth around $95 billion, with more than half of its assets in real estate. Established in the late 1980s, its three main holdings are the Tadbir Group, Rey Group and Barkat Foundation. Dozens of subsidiaries and front companies make it hard to ascertain the full extent of the network.

Ayatollah Ruhollah Khomeini, Mr. Khamenei’s predecessor, created the Mostazafan Foundation after the Islamic Revolution. Designed to seize and manage assets owned by the deposed royal family and its associates, the foundation now controls hundreds of companies. A few months ago it published annual financial statements that declared its assets to be around $16 billion—likely a deliberate understatement.

The third entity is Astan Quds Razavi, whose business arm is the Razavi Economic Organization. Astan has tight control over the economy of three southern provinces of Iran, where it owns companies in the lucrative energy and agriculture industries. Its real-estate portfolio is valued at $20 billion, according to BBC Persian, and it owns nearly half of the land in Mashhad, where the recent protests began.

The U.S. Treasury in 2013 enacted sanctions against EIKO and 37 subsidiaries. A Treasury press release said the entity’s goal is “to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators.” The Obama administration lifted the sanctions as part of the 2015 nuclear deal. Never mind that their original designation had nothing to do with Iran’s nuclear program.

Companies owned or controlled by the state, including the Khamenei conglomerate and foundations, were the biggest beneficiaries of the nuclear accord. Since the deal was struck in July 2015, nearly 110 business and investment deals have been signed with Iranian companies. According to Reuters, 90 of those entities are owned or controlled by the state.

A January 2017 investigation by Reuters found that companies controlled by EIKO signed at least five contracts with foreign firms. Those include a $10 billion agreement to build oil refineries with South Korea’s Daewoo Engineering and Construction Co. and Hyundai Engineering and Construction. The Spanish and Danish pharmaceutical companies Chemo Group and Novo Nordisk have also signed deals to work with EIKO.

The Mostazafan Foundation and Astan Quds Razavi have contracts with foreign companies too. Bon Rail, owned by the Mostazafan Foundation, signed a memorandum of understanding with the German firm Deutsche Bahn, to improve its railroad services. The foundation is also involved in a $1.5 billion deal with Daewoo.

While these entities are far from transparent, the U.S. knows enough to target them with sanctions. The Foundation for Defense of Democracies has identified 146 Khamenei-owned companies and 144 executives and board members associated with these companies. The Trump administration can use the Global Magnitsky Human Rights Accountability Act of 2016 to isolate the Khamenei business empire, freeze its assets, and penalize international companies that enrich the Iranian regime.

With President Trump and the Iranian protesters on the same side against the supreme leader and his criminal regime, now is the time to strike.

Mark Dubowitz is the chief executive officer of the Foundation for Defense of Democracies. Follow Mark on Twitter @mdubowitz.

Saeed Ghasseminejad is a research fellow at the Foundation for Defense of Democracies. Follow Saeed on Twitter @SGhasseminejad.

Follow the Foundation for Defense of Democracies on Twitter @FDD. FDD is a Washington-based nonpartisan research institute focusing on national security and foreign policy.


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