Controversial Iranian Companies and the Panama Papers

The excitement surrounding the release of documents that captivated much of the world's media about a month ago has cooled, but the initial wave of the Panama Papers left victims among politicians, wealthy individuals, and powerful figures. Victims such as Sigmundur Gunnlaugsson, the Prime Minister of Iceland, who resigned, and David Cameron, the Prime Minister of the UK, who faced increased pressure. While the Panama Papers generated public disbelief and social and political pressure in more developed democratic countries with independent media, less attention was paid to these documents in underdeveloped countries or those with authoritarian rulers lacking freedom of expression. The documents released from the law firm Mossack Fonseca, known as the Panama Papers, mention 12 current and former heads of state worldwide. They also name over 60 relatives, associates, and acquaintances of political power holders, influential politicians, and heads of various countries, with 140 politicians, senior executives, artists, or famous athletes implicated in allegations of money laundering or tax evasion. Notable figures include Nawaz Sharif, Prime Minister of Pakistan; Petro Poroshenko, Prime Minister of Ukraine; relatives of Bashar al-Assad, President of Syria; associates of Vladimir Putin, President of Russia; the family and associates of Muammar Gaddafi and Hosni Mubarak, former presidents of Libya and Egypt; and relatives of Xi Jinping, President of China, among others. The names of politicians exposed in the Mossack Fonseca documents are not limited to countries with non-democratic political structures; names from powerful figures and politicians in countries like Switzerland and Germany are also included. It is estimated that this volume of information encompasses about 12 million documents. These documents and information were sent anonymously from within the firm to the German-language newspaper Süddeutsche Zeitung without any payment or reward and were subsequently shared with the International Consortium of Investigative Journalists for public awareness. The information primarily relates to issues and crimes such as tax evasion, attempts to conceal wealth, and money laundering, where typically well-known individuals have sought to hide their assets from tax authorities by forming shell companies and utilizing the legal and accounting advice of this firm to evade taxes or launder money from illicit activities such as human trafficking, drug trafficking, arms dealing, and similar activities. What is Iran's share of the Panama Papers? During the peak of the Panama Papers release in mid-April 2016, a report on the website of the International Consortium of Investigative Journalists indicated that Mossack Fonseca had a working relationship with the company Petropars from 1998 to 2011. It is unclear whether this working relationship was within the framework of legal activities utilizing the benefits of registering companies in the world's tax havens or if other operations were involved. This relationship could be assessed in terms of utilizing legal and accounting advice from Petropars for their accounting records and financial operations or for paying less tax to the UK government or circumventing economic sanctions against Iran. The reports and documents published do not specify the type, quality, volume, or value of this working relationship and the services Petropars received from Mossack Fonseca. According to the report from the International Consortium of Investigative Journalists, the closure of one of Mossack Fonseca's offices in London due to its connection with Petropars, which is considered an Iranian company under sanctions, marked the end of this working relationship. In inquiries made by officials from this firm regarding the extent of Petropars' connection with the Iranian government, it is assumed that the benefits derived from Petropars' operations ultimately reached Mahmoud Ahmadinejad, the then-President, thus bringing his name into the discussion, which also echoed in Iranian media. If the mention of the former Iranian president's name is merely to simplify the working relationship of Petropars as a state-owned company with the head of government and eliminate intermediary links in this hierarchy, it does not seem very logical unless the mention of Mahmoud Ahmadinejad in this report is for another reason, with awareness of his effective presence in this context, which has not been claimed until now. The current Iranian government's reaction to the Panama Papers has been one of silence and indifference. Petropars; a controversial birth, an even more controversial life. However, this is not the first time Petropars has made headlines. Since its establishment in 1997, Petropars has always been surrounded by controversies. The company was registered by a decree from the Supreme Economic Council to execute the development plan for Phase 1 of South Pars through a buy-back method and was assigned to a general contractor with Iranian capital. The company was registered in the British Virgin Islands, considered a tax haven, leading to political, economic, and legal controversies from the outset. The Iranian branch of Petropars was later registered as one of the subsidiaries of the Niko Company, which is itself a subsidiary of the National Iranian Oil Company. The composition of Petropars' board of directors at that time also caused trouble, with the name of Behzad Nabavi, a senior member of the Mojahedin of the Islamic Revolution Organization, who was the deputy speaker of the sixth parliament and previously served as the Minister of Heavy Industries under Mir-Hossein Mousavi, raising sensitivities. The presence of Masoud Karbasian, the current head of Iran's Customs, who was the deputy to Zanganeh in the Ministry of Oil at that time and had political ties to the Mojahedin of the Islamic Revolution Organization, also heightened sensitivities. The entry of Asghar Fakhriyeh Kashan, the currency deputy of the Central Bank during the presidency of Hossein Adel, as chairman and CEO of Petropars turned the board of directors of this oil company into a target for political criticism and accusations, as Fakhriyeh Kashan was considered close to Nabavi, who had replaced Mansour Rezvani, the former CEO of Petropars. The presence of Akbar Turkan on the board of Petropars and his chairmanship also fueled these political sensitivities. Ultimately, the legal case against Petropars and the involvement of its board members in this judicial case at the end of 2001 and early 2002 led to the departure of Nabavi and Karbasian from the board of Petropars. As Hamid Reza Mohammadi, the then-head of the Special Court for Economic Crimes, stated in interviews with the media in December 2002, security measures were issued for 11 defendants in the Petropars case, consisting of board members of this company. Their charges included collusion in government transactions, failure to comply with the law prohibiting government employees from holding more than one government job, and according to the then-head of the Special Court for Economic Crimes, the Petropars case consisted of four thousand pages. Mohammadi explained to ISNA that Petropars was established just a month after the board members of the National Iranian Oil Company registered this contract under the name of Petropars based on the approval of the South Pars Phase 1 contract and the Economic Council's permission. However, as Bijan Namdar Zanganeh later explained in a June 2010 interview, the Petropars officials were all acquitted of the charges in court after several years. According to Zanganeh, the case took a year and a half, and the original case circulated in the judiciary for eight years until a verdict of acquittal was finally issued for the defendants. The Minister of Oil during the presidencies of Mohammad Khatami and Hassan Rouhani expressed criticism of the accusations made by Mahmoud Ahmadinejad's team against him and other Petropars managers, lamenting, "They said the establishment of Petropars was treason, but now in the ninth government, they praise the actions in South Pars and say Petropars is a document of honor." However, that case and those accusations were not the last controversies surrounding Petropars, and with the Panama Papers, the name Petropars resurfaced, although it should be emphasized that the quality of Petropars' working relationship with Mossack Fonseca and the type of services it received from this firm remain unclear. Among the documents released known as the Panama Papers, besides the name Petropars, which was the most prominent Iranian company in these documents, there are other names of institutions or owners and managers of companies that may be Iranian based on evidence and indications. These companies and institutions, however, have not had details published regarding their cooperation with Mossack Fonseca, and it is unclear what services these companies were purchasing from Mossack Fonseca. Therefore, it cannot be definitively and assuredly accused that these companies or their owners are involved in money laundering, tax evasion, or concealment. However, the evidence and legal form of these companies classically indicate that they have conditions and situations similar to all companies and institutions operating in non-transparent sectors of the economy or have requests in line with tax evasion, concealment, and ultimately money laundering. For example, most of them are companies affiliated with a group that are interlinked as shareholders, a method typically used for tax evasion or concealing the true income and capital levels of wealthy owners. In this common approach, multiple registered companies serve merely as a superficial and cover-up facade for economic activity, designed to conceal the name of the capitalist or the main activity of the company. The names of several companies and institutions that are partners and collaborators with Mossack Fonseca, which may be Iranian based on their names or the names of their owners and shareholders, are listed in the tables below. In these tables, details and information, albeit limited, from the mentioned companies that could be traced and compiled from the Panama Papers are also visible along with the names of the companies and institutions. Mossack Fonseca has emphasized in a statement that it has not engaged in any illegal activities or violations of regulations, but the release of the Panama Papers is considered shocking and disappointing because, despite efforts for legislation and usual strictness in the international banking system, it has not diminished the prevalence of corruption in the international arena. As Foreign Policy magazine states, these documents necessitate a political will at the international level to combat corruption, although this political will seems impossible with corrupt powerful figures.