The sanctions-busters funding Iran Bankers are fuelling terror

Nefarious activities like these doubtless explain why the Islamic Republic is so worried about Trump’s second presidency. “I think they’re scared,” says Behnam Ben Taleblu, director of the Iran programme at the Foundation for Defense of Democracies in Washington. “Iran tried to kill Trump and failed,” he continues, referring to an alleged plot on US soil. “And it knows that after the inauguration, it can expect a return to the policy of “maximum pressure” Trump applied in his first term — with potentially devastating political and economic consequences.”

Certainly, the numbers show the relatively easy ride Iran has enjoyed under President Biden. Four years of Democratic rule has seen Iranian oil exports more than treble, from 400,000 barrels a day in 2020 to an average of over 1.5 million barrels a day this year.

Yet as my documents show, sanctions-busting was happening even while Trump first occupied the White House.

The first batch relates to five vessels used to carry Iranian oil, and owned by the Greek shipping magnate George Gialozoglou and firms controlled by his family. In August 2020, the US authorities intercepted four of Gialozoglou’s ships, operated by his International Marine Services firm, as they sailed to Venezuela. The Department of Justice said they were carrying almost 1.2 million barrels, then worth some $50 million, and described the operation as “the successful disruption of a multimillion dollar fuel shipment by the IRGC, a designated foreign terrorist organization”.

After the cargoes were impounded, Gialozoglou said he had believed they were “legitimate” — and that being caught in breach of US sanctions was a “nightmare”. He added that he had no intention of flouting the rules, and had allowed the US to seize the oil because he did not wish to break the law.

Earlier this year, meanwhile, I revealed a further, earlier oil shipment, this time from 2019. Made by the Victor 1, which had been leased from another Gialazoglou company, its organisers produced a fake manifest suggesting it had been loaded in Iraq. Genuine documents instead prove it came from Bandar Abbas in Iran, even as crew members disabled the ship’s transponder to stop it being tracked.

When I approached Gialozoglou about this shipment, his lawyer said he couldn’t comment. Yet he later became embroiled in a legal dispute with Ceto, the Gulf-based firm that had leased the ship. Documents filed by Ceto, in the High Court in London, claim Gialazoglou had been aware his vessel was handling Iranian oil, and had asked for a $1 million bonus for doing so. He and his lawyers deny this, and the case has not yet been tried.

However that story ends, a new batch of documents also sheds light on how bankers may facilitate the global trade in Iranian oil too.

They suggest that payments totalling millions of dollars, relating both to the Victor 1 and the four vessels whose cargoes were seized, were handled by Eurobank Ergasias. Headquartered in Athens, this is one Greece’s biggest banks, with assets worth $100 billion.

I asked the bank whether it had been aware that the payments it handled related to Iranian oil, what due diligence checks it had carried out, and whether it had continued to do business with Gialozoglou after his ships were seized. Its spokesman declined to answer, saying “it is our policy” not to comment on specific customer relationships. The bank, he went on, was committed to upholding “all applicable legal and regulatory standards” and had “rigorous compliance frameworks” to ensure all transactions were “monitored”.

Nor is Eurobank Ergasias the only bank involved here. The documents cover several other transactions over the period 2019-23, each worth millions of dollars and involving everything from the lease of a drilling rig to shipments of Iranian oil products from Bandar Abbas. The specifics encompass a complex mix of energy firms and financial institutions: but many are ultimately linked to Kuwait Finance House (KFH), part-owned by the Kuwaiti government and one of the world’s leading Islamic banks. I approached Kuwait Finance House, as well as the other institutions and banks named in the documents, attaching the relevant papers in my emails. None of them replied.

In theory, of course, the Americans have various ways to tackle sanction busters. Beyond seizing the relevant vessels or their cargoes — as they did to those Venezuela-bound ships in 2020 — they can also impose what’s known as “secondary sanctions”. This means slapping sanctions on any firm or individual trading oil with Iran, freezing their assets in the US and fining or charging any American citizen doing business with them.

In theory, again, the rules here are strict: a sanctions expert tells me that merely pricing deals involving Iranian oil in US dollars could make an overseas company or bank “easy prey” if Trump chose to reinstate his “maximum pressure” campaign.

Yet as the documents vividly show, the gap between theory and practice is vast. Quite aside from industry ruses — fake manifests and muddled webs of ownership — International Marine Services has never been subject to US sanctions. Neither has Eurobank Ergasias, something also true of the other entities mentioned in the documents.

Not that the situation is hopeless. In recent months, the Biden administration has tried to prevent Iran from selling black gold. In October, for instance, it sanctioned 10 overseas transport and energy firms, based in countries including the UAE and Liberia. Earlier this month, it placed a further 35 “entities and vessels” on its sanctions list.

Trump, for his part, is again promising to get tough. Sources close to him reportedly say that this time, he plans to “bankrupt Iran as soon as possible”.

Success here could have broad repercussions. The elimination of Hezbollah’s leadership in Lebanon, and the degradation of its military assets by Israeli airstrikes, has already precipitated the fall of Assad in Syria. Without a crucial ally in the region, that leaves the Iranian regime weaker and more vulnerable than it’s been for decades — and this, say British Foreign Office sources, at a time when its internal popularity is at an all-time low. With stakes like these, no wonder Ben Taleblu argues that, had Trump’s maximum pressure strategy been rigorously enforced during the Biden era, the Middle East would not now be embroiled in the wars that started on October 7 last year.

Yet while Republicans are sure to take the Iranian threat more seriously than their Democratic forebears, actually stopping the flow of illicit oil won’t be easy. “This involves more than just consumers,” says Norman Roule, a 35-year CIA veteran and now senior adviser to the campaigning think tank United Against a Nuclear Iran. “It requires clear and stringent standards to ensure international banks aren’t facilitating financial transfers associated with illegal oil sales.”

For that to happen, Roule adds, the US should immediately judge any transaction with Iran as dubious — even as Washington must also push other governments to take their responsibilities seriously. Maximum pressure, it seems, will involve a joint effort.

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David Rose is UnHerd‘s Investigations Editor.

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