Viktor Bout associates exploited flaws in international law, UN study finds

July 18, 2012

The Guardian on July 17, 2012 released the following:

“Two of the convicted arms dealer’s lieutenants nearly set up fresh gunrunning ring despite being under government watch

[By] Karen McVeigh in New York

Former associates of convicted international arms dealer Viktor Bout exploited loopholes to set up a global trafficking ring with their sights set on selling weapons to war-torn countries like Sudan, Somalia, Iran and possibly Syria, an investigation has revealed.

The report, by Kathi Lynn Austin, a former UN arms investigator and executive director of Conflict Awareness Project (Cap) shows how close two of Bout’s lieutenants came to establishing a fresh gunrunning network in the wake of his conviction last year, despite being under US government watch or subject to US sanctions.

At a press conference on Tuesday at the UN in New York, where representatives from 190 countries are midway through negotiations over the first Arms Trade Treaty, Austin said: “These brokers go to extreme lengths to reap profits form conflict, atrocity and UN sanctions-busting. As we speak, gunrunners are out there exploiting every loophole in a global arms trade that is out of control.”

The six-week investigation describes how “classic techniques” of illicit arms brokers were used including flags of convenience, money laundering and establishing multiple layers of “shell companies” to evade detection and accountability.

The investigation also uncovered new techniques, including a switch away from a previous reliance on aging Russian aircraft to predominately western passenger planes.

The men at the heart of the investigation are two Russians, Sergei Denisenko and Andrei Kosolapov, former associates of Bout, whose gunrunning networks enabled the flow of arms into African conflict including the Democratic Republic of Congo, Angola, and Sudan.

It shows how, even with Bout in prison and US sanctions against them, they were able to circumvent laws and set up US business partners. Denisenko is on the US Special Designated Nationals (SDN) List enforced by the department of treasury, because of his past trafficking activities in Liberia, according to the report.

His SDN listing prohibits US companied dealing with him. Kosolapov is on the US Visas Viper list, a watch list used internationally by the state department to track known or suspected terrorists, according to the report titled Viktor Bout’s Gunrunning Sucessors: A Lethal Game of Catch Me if you Can.

Their plan was to lease a US-registered plane that could be used for arms transfers while flying under a Mauritian aviation certificate.

The report found that the Denisenko-Kosolapov partnership engaged a number of subcompanies and business partners including US, UK, Finnish and Mauritian companies.

One aircraft was located in Bangor, Maine. Human rights advocacy group Human Rights First said the report demonstrated gaps in implementation and enforcement of US sanction regimes.

Sadia Hameed, of Human Rights First, said: “Countries that may have more robust regulations, like the United States, are still unable to singlehandedly prevent illicit arms trafficking operations.”

She said more could have been done by the US to share information with their embassy in Mauritius about Denisenkio and Kosolapov and that it should do more to ensure SDN guidelines are followed by US companies.

“The fact that through Kathi Lynn Austin’s investigations she was able to uncover that they very nearly aquired a US-registered plane and that that plane was intended to service whatever the forward activities of the network were, points out gaps in due diligence of sanctions.”

A US company illegally provided parts and maintenance for the aircraft leased by the pair, according to the report and US pilots were lined up to fly it, which is also illegal.

In early July, the Mauritius Department of Civil Aviation denied the Denisenko-Kosalopov operations application for an Air Operation Certificate – which any plane needs to be able to fly, effectively stopping the operation.

“The multi-jurisdictional nature of arms trafficking rings is why we need a strong arms control, “said Austin. “The Mauritian government said, ‘How were we to know that this US individual was on a designated list?’ A strong arms control treaty would identify who the criminals are and who the traders are.”

In a statement, a spokesman for the US treasury department said: “Sergei (or Serguei) Denissenko was sanctioned by OFAC (Office of Foreign Assets Control) for being involved in two of Bout’s front companies – San Air General Trading FZE (Ajman, UAE; Richardson, Texas) and also with Centrafricain Airlines. US firms are prohibited from doing business with him as with any other sanctioned parties. OFAC does not have an Andrei Kosolapov on its SDN list.”

Campaigners for arms control expressed concern that, after an opening week characterised by delays, international delegates still do not have the basis for negotiations on most of the key elements of the treaty. The optimistic view is that there will be a negotiating text by Wednesday.

The Arms Trade Treaty faces opposition from Egypt, Syria, Algeria, Iran, Cuba and North Korea. However, Russia, China, the UK, France and the US have issued some joint statements in support. The US would like to see ammunition removed from the treaty and wants to water down the rule on human rights.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional global criminal news, please read The Global Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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May 17, 2011 OFAC Actions: Iran Weapons of Mass Destruction Proliferators (NPWMD) Added to OFAC’s SDN List

May 17, 2011

As of today, OFAC has added IRAN / NPWMDs to the Specially Designated Nationals List (SDN List):

BANK OF INDUSTRY AND MINE (OF IRAN) (a.k.a. BANK SANAD VA MADAN; a.k.a. “BIM”), PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran] 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] -to- BANK OF INDUSTRY AND MINE (OF IRAN) (a.k.a. BANK SANAD VA MADAN; a.k.a. “BIM”), PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]

BANK SANAD VA MADAN (a.k.a. BANK OF INDUSTRY AND MINE (OF IRAN); a.k.a. “BIM”), PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] -to- BANK SANAD VA MADAN (a.k.a. BANK OF INDUSTRY AND MINE (OF IRAN); a.k.a. “BIM”), PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]

BIM (a.k.a. BANK OF INDUSTRY AND MINE (OF IRAN); a.k.a. BANK SANAD VA MADAN), PO Box 15875-4456, Firouzeh Tower, No 1655 ValiAsr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] -to- BIM (a.k.a. BANK OF INDUSTRY AND MINE (OF IRAN); a.k.a. BANK SANAD VA MADAN), PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]

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“5/17/2011
WASHINGTON – The U.S. Department of the Treasury today announced the designation of Bank of Industry and Mine (BIM), an Iranian state-owned bank used by the Government of Iran to evade U.S. and international sanctions against Iranian financial institutions involved in facilitating transactions in support of Iran’s proliferation activities.

Owned entirely by the Government of Iran, BIM was designated today pursuant to Executive Order (E.O.) 13382 for providing financial services to Bank Mellat and Europaisch Iranische Handelsbank (EIH), two Iranian banks previously designated by Treasury in connection with Iran’s proliferation activities.

E.O. 13382 is aimed at freezing the assets of proliferators of weapons of mass destruction (WMD) and their supporters, thereby isolating them from the U.S. financial and commercial systems.

“Iran has a well-established practice of migrating illicit financial activities from one bank to another to facilitate transactions for sanctioned banks,” said Acting Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “The sophisticated nature of this scheme illustrates the disruptive impact of sanctions on Iran’s efforts to sustain its proliferation activities.”

Following the adoption of United Nations Security Council Resolution 1929, the European Union implemented sanctions targeting Iran’s nuclear and missile proliferation activities, including prohibiting 18 Iranian banks from conducting transactions in Europe. In the weeks following the EU’s action, BIM allowed EIH to transfer deposits it held for many of those designated banks to an account at BIM in Iran. BIM then used this account as a conduit for payments and transactions into Europe by some of these EU-sanctioned banks, including Bank Mellat and Bank Saderat.

Since July 2010, BIM has participated in this scheme devised by EIH to circumvent international banking sanctions by transferring funds from Bank Mellat’s account at BIM to EIH’s account at BIM. EIH then disbursed euro-denominated payments to Bank Mellat’s customers in Europe.

In August 2010, Treasury issued the Iranian Financial Sanctions Regulations to implement the financial provisions of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. Under these regulations, Treasury may prohibit, or impose strict conditions on, foreign financial institutions’ access to the U.S. financial system for facilitating significant transactions or providing significant financial services for a financial institution designated by the U.S. – such as BIM – in connection with Iran’s WMD proliferation or support for international terrorism. BIM is the twenty-first Iranian state-owned bank designated by Treasury.

“Treasury will remain relentless in our efforts to counter Iran’s abuse of the international financial system,” Cohen continued.

Background on EIH and Bank Mellat:

BIM is the majority owner of EIH, headquartered in Hamburg, Germany and designated by Treasury in September 2010 pursuant to E.O. 13382 for providing financial services to Bank Mellat, Persia International Bank, the Export Development Bank of Iran and Post Bank of Iran – all designated by Treasury pursuant to E.O. 13382. EIH is one of the few remaining banks in Europe actively facilitating business with Iranian banks, handling billions of dollars worth of transactions on their behalf. When facilitating financial services for Iranian WMD proliferators, EIH actively obscured the Iranian involvement in the process. In addition to owning a majority interest of EIH, BIM takes credit for the 2008 opening of EIH’s branch in Tehran.

Treasury designated Bank Mellat in October 2007 as a supporter of the Atomic Energy Organization of Iran (AEOI) and Novin Energy Company, both designated pursuant to E.O. 13382 and by the United Nations and European Union. The AEOI, which reports directly to the Iranian president, is Iran’s main organization for research and development of nuclear technology, and manages fissile material production programs. Novin Energy has transferred millions of dollars on behalf of AEOI to entities associated with Iran’s nuclear program.

Identifying Information:

Entity: Bank of Industry and Mine (Of Iran)
AKA: Bank Sanad Va Madan
AKA: BIM
Address: PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran
Alt. Address: No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, Tehran, Iran​”

See OFAC’s Press Release here.

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Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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