Biden Greenlights South Korean Release of Funds to Politically Connected Iranian Firm

The Treasury Department on January 6 issued a special license to authorize the South Korean government to pay $63 million that it owed to the Entekhab Group, an Iranian consumer electronics company. However, a closer look at the Iranian counterparty shows potential connections to the Islamic Revolutionary Guard Corps (IRGC), a military force that Washington has sanctioned due to its terrorism, human rights abuses, and nuclear proliferation.

The Biden administration’s authorization, which came after meetings between U.S. Special Envoy for Iran Robert Malley and South Korea’s First Vice Foreign Minister Choi Jong-kun, constituted a goodwill gesture to Tehran as part of ongoing nuclear negotiations in Vienna. One of Tehran’s demands in the talks was the release of more than $7 billion in frozen Iranian assets held in South Korea.

The $63 million payment stemmed from an investor-state dispute settlement arbitration launched by Entekhab against South Korea’s government in 2015. Seoul had failed to return a down payment Entekhab made in 2010 as part of an unsuccessful bid to acquire Daewoo Electronics, a South Korean home appliance company.

Entekhab is part of the business empire of the Dayyani family, which has business interests in various sectors of the Iranian economy, including oil, gas, petrochemical products, real estate, construction, and steel. However, the family’s crown jewel is its control over Iran’s home appliance market. According to Iranian media reports, the Dayyani family controls 40 percent of this market.

Basij News Agency calls the CEO of the Entekhab Group, Mohammad Reza Dayyani, a Basiji entrepreneur — that is, he is a member of the Basij, which is a branch of the IRGC and the primary organization that Tehran deploys to repress urban protests, often through force. The United States has designated the IRGC and Basij as Specially Designated Global Terrorist entities and has added the IRGC to the State Department’s Foreign Terrorist Organization list.

Dayyani enjoys exceptional support in the office of Iran’s supreme leader, Ayatollah Ali Khamenei. In 2021, Dayyani co-signed a letter to Khamenei asking the regime to ban the importation of Samsung and LG home appliance products to Iran. The two companies had a significant presence in Iran’s market but left the country after the Trump administration reintroduced the sanctions Washington had lifted as part of the 2015 nuclear deal. Their absence benefited Iranian producers, who now want to make sure LG and Samsung will not return.

In the letter, Dayyani and his colleagues called themselves soldiers of the Islamic Revolution who reside on the front line of the U.S. economic war against Iran. They would defend the Islamic Republic’s achievements, the authors added, to their last drop of blood.

Khamenei responded by ordering the ban, an unprecedented step against private companies.

The case of the Entekhab Group and Dayyani shows the danger of doing business with Iran and the importance of enforcing enhanced standards for compliance with sanctions, Know Your Customer rules, and safeguards against terror finance. By greenlighting South Korea’s transfer of funds to Iran, the Biden administration may be setting a dangerous precedent and weakening enforcement of Washington’s IRGC-related sanctions.

President Joe Biden may decide to declare Tehran fully open for business as a result of nuclear negotiations. Private companies, however, should think twice before engaging in such dealings. The next U.S. administration may reverse course and reimpose sanctions. Private firms could be held accountable if they provide material support to entities clearly involved in gross human rights violations, terrorism, or money laundering.

Saeed Ghasseminejad is a senior advisor on Iran and financial economics at the Foundation for Defense of Democracies (FDD), where he contributes to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). For more analysis from Saeed, the Iran Program, and CEFP, please subscribe HERE. Follow Saeed on Twitter @SGhasseminejad. Follow FDD on Twitter @FDD and @FDD_Iran and @FDD_CEFP. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.