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Alias Ahoy! Iran’s Shipping Shell Game in Hong Kong

August 29th, 2011 - 12:38 am

Chalk up another black mark against Iran’s regime… as if any more were needed. To dodge U.S. sanctions imposed in 2008 on its state-owned merchant shipping company and purveyor to Iran’s missile and nuclear programs, the Islamic Republic of Iran Shipping Lines, or IRISL, Iran’s regime has been playing a global shell game. For the past three years IRISL has been camouflaging its ships by reflagging them, renaming them, and creating proliferating sets of shell companies to serve as their nominal owners, with Iran lurking behind them. Despite U.S. sanctions, ships blacklisted by the U.S. for their links to IRISL continue to ply the seas, while IRISL hides behind a morphing network of affiliates, shell companies, and related accretions.

For this activity, described by the U.S. Treasury as a web of “deceit,” Iran has favored a number of hubs, including Malta, Germany, and one of the world’s great port cities — Hong Kong. None of this activity is good, but there is something about Iran’s exploitation of Hong Kong that has been particularly appalling. Hong Kong’s great virtue is that it is a place friendly to business, a testament even today to the benefits of a free market. Say what you will about the shadowy side of China’s growing influence in Hong Kong since Britain turned over the Crown Colony in 1997 (and there is plenty to say), Hong Kong carries on as one of the marvels of the modern world, still a place of energy and enterprise.

Since 2008, Iran has battened onto Hong Kong’s system as a handy place to set up shell companies to try to disguise its connection to 19 IRISL-linked Hong Kong-flagged cargo ships, all blacklisted by the U.S. Treasury . Batches of these Hong Kong shell companies serving as nominal owners of these ships have been exposed by Treasury and added to its Iran sanctions blacklist. Last month, while in Hong Kong, I took a look at some of the documents connected with these 19 Hong Kong-flagged ships. I discovered that since Treasury’s most recent bout of related black-listings, in January, and a superb series of articles early this year on that theme in the South China Morning Post, these ships had come under new ownership by 19 new and obscure Hong Kong-registered companies — all sharing the same Hong Kong address. I went to that address, where the only physical sign of these companies consisted of rows of green file boxes, containing their corporate documents, shelved in the back room of a company that provides corporate secretarial services to a variety of clients.

The paper trail led on, or perhaps I should say it led back, via a web of nested companies, to a company in Iran, by the name of Kish Roaring Ocean Shipping Company. It does not appear on Treasury’s blacklist. Indeed, I could not discover any list on which it does appear, apart from its listing as sole corporate director of a Hong Kong company that in turn serves as sole director of every single one of these 19 companies which according to the Hong Kong Marine Department Shipping Registry had become the owners of those 19 ships. That tale, including the 19 Hong Kong-flagged U.S.-blacklisted IRISL-linked ships (all currently with names starting with the letter “A” — for instance, the Ajax, Apollo, Adrian, Amplify and, I kid you not, the Alias), is the subject of my article in the Asian Wall Street Journal titled “Tehran’s Ghost Fleet” (this is a link that will only work for Wall Street Journal subscribers, but the headline gives the basic idea).

Make of this latest lattice what one will, the entire exercise was a reminder that, according to the U.S. Treasury, Iran in recent years has already exploited Hong Kong as a platform for trying to evade sanctions meant to stop Iran’s pursuit of weapons of mass murder. That problem does not emanate from Hong Kong. It comes from the regime in Iran. Not only does Iran’s regime violently abuse and oppress its own people, train and support terrorists, and gloat over its dreams of “purifying” the human race (starting with Israel) while developing weapons to kill millions. In an opportunistic manner, it also infests systems that were meant for far healthier uses, from the governing boards of major United Nations agencies, to the by-ways of such commerce-friendly polities as Hong Kong. This may not look like a direct threat, but it is corrosive.

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