July 25, 2019 | Policy Brief

Khamenei’s New Appointment Tests White House Sanctions Policy

July 25, 2019 | Policy Brief

Khamenei’s New Appointment Tests White House Sanctions Policy

Iran’s Supreme Leader Ali Khamenei appointed Parviz Fattah on Monday to lead the Mostazafan Foundation (Bonyad-e Mostazafan), one of the main pillars of the Supreme Leader’s business empire. Fattah’s appointment by Khamenei closely follows a new executive order (E.O. 13876) signed by President Donald Trump imposing sanctions on any “person appointed by the Supreme Leader of Iran … as the head of any entity located in Iran.”

Technically, the new executive order makes no distinction between officials appointed before or after it was signed. Still, the appointment of Fattah offers an opportunity to show that the U.S. is committed to enforcing it.

Fattah’s employment record reads as a veritable who’s who of sanctioned entities. These reportedly included: the Islamic Revolutionary Guards Corps (IRGC), the Ministry of Defense, Imam Hussein University, Khatam al-Anbiya Construction Base, and the IRGC Cooperative Foundation (Bonyad Taavon Sepah). Fattah also served as Minister of Energy during the first term of President Mahmoud Ahmadinejad (2005 – 2009). In 2015, Khamenei appointed Fattah to lead a charity known as the Imam Khomeini Relief Foundation.

In December 2010, the U.S. Treasury Department designated Fattah pursuant to a nonproliferation-related executive order and has since updated his listing. However, additional designations under a different authority could further stigmatize Fattah, as well as guard against premature sanctions relief should a future U.S. administration make the mistake of inking a nuclear-only deal with Iran. Moreover, Fattah’s designation under E.O. 13876 would be a shot across the bow for Iran’s Supreme Leader and his multi-billion dollar business empire.

The Iranian press describe the Mostazafan Foundation as “a social welfare institution that controls manufacturing and industrial companies whose profits are used to promote the living standards of the disabled and poor individuals.” More accurately, the U.S. Treasury Department describes such foundations, or bonyads, as “opaque, quasi-official organizations controlled by key current and past government officials and clerics. Bonyads receive benefits from the Iranian government but are not required to have their budgets publicly approved. They account for a significant portion of Iran’s non-petroleum economy.”

While entities like the Mostazafan Foundation serve as an illicit source of wealth, influence, and power for Khamenei at home, they can also pose a proliferation risk by conducting business deals abroad through companies they own or control. The British government has alleged that Mostazafan in the late 1990s procured technology with potential weapons of mass destruction-related applications, while Germany warned exporters that trade with Mostazafan posed end-user concerns.

By wielding E.O. 13876 against Fattah, the Trump administration can capitalize on Khamenei’s latest appointment. The administration should also consider the application of this executive order to other recent Khamenei appointees, including the new commander of the IRGC, two new deputies to that same force, a new chief of the Basij paramilitary, and a new deputy chief of staff for the Iranian armed forces. Fattah’s replacement at the Imam Khomeini Relief Foundation could also be designated. Moreover, in keeping with its maximum pressure campaign, the U.S. should consider designating the Mostazafan Foundation pursuant to anti-corruption provisions of the Global Magnitsky Act.

Behnam Ben Taleblu is a senior fellow at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


Iran Iran Global Threat Network Iran Nuclear Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance