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January 13, 2009
Iran's Financial Games and the Pipeline
As the saga of Lloyds TBS’ involvement in illicit banking to help the Iranian regime continues to broaden and ensnare other banks, it is useful to look back over the circumstances that this unveils.
It must be one heck of a case to generate a $350 million settlement and deferred prosecution agreement, as significant admissions of criminal misconduct in stripping the Iran identifiers from bank transactions.
One thing that stands out is that Dubai, again, is the hub, as it was for A.Q. Khan, Dawood Ibrhaim, Viktor Bout and countless other facilitators of both criminal and terrorist networks. Now Dubai is a nice city, but these folks are unlikely to be there for the glittering skyscrapers and or camel races.
Rather, they go there because the regulatory regime is so lax that they know the chances of being detected (or, more importantly, anyone wanting to detect their activities) are essentially nil. It is also an ideal physical location, at the crossroads of several key trading routes.
Now other banks are under investigation, including one for trying to acquire 30,000 metric tons of tungsten – most likely to build missiles, but under the guise of building refrigerators. “That amount would take care of every refrigerator in the Middle East and then some,” Mr. Morgenthau (Manhattan DA) told the Financial Times on Sunday.
“It was not being purchased, we think, for domestic consumption . . . Tungsten was not used for making refrigerators but for long-range missiles. That is our supposition.”
In none of the above cases did Dubai play a significant role in investigating anything. Dubai turns up in other investigations, which led there. This is an interesting circumstance that is not coincidental.
Clearly the banks under investigation for are not the only players in Iran’s efforts to acquire nuclear capabilities, and learned much from the A.Q. Khan experience in building shell companies, false invoices etc.
As the Washington Post reports, the network was broad and deep.
ran in the past two years has acquired numerous banned items – including circuit boards, software and Global Positioning System devices – that are used to make sophisticated versions of the improvised explosive devices, or IEDs, that continue to kill U.S. troops in Iraq, according to documents released by the Justice Department and a new study by a Washington research institute. The deadly trade was briefly disrupted after the moves against Dubai companies in 2006, but it quickly resumed with a few changes in shipping routes and company names, the officials said.
This is the pipeline at its best. One simply has to shift addresses, at least on paper, the companies go again, and the pipeline is unclogged and continues to carry its vital products. The flexibility of the pipeline and its ability to adapt and reroute itself in a very short period of time is one of its greatest strengths.
Iran, with years of experience in the game, is unlikely to be knocked much off its stride in the acquisitions game.
The banking investigations may have more an impact, given the hefty size of the fines and serious investigations that will give other financial institutions pause before taking such a step. It is bit like the “whack-a-mole” game, where one hits one mole, only to see three more pop up in different holes. Until the price for allowing the holes to grow is raised considerably, the moles will just switch to other holes.
FamilySecurityMatters.org Contributing Editor Douglas Farah is an award-winning investigative journalist and Senior Fellow in Financial Investigations and Transparency at the International Assessment and Strategy Center. E-mail him at doug@douglasfarah.com.
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