Until late 2012, very little was known about Babak Zanjani outside of Iran. The business tycoon and self-proclaimed “Economic Basij” of Iran, has an estimated net worth of $14 billion, making him possibly the richest man in Iran and part of the circle of Iranian tycoons who have made their billions, in part, by aiding key figures within the Iranian government in sanction evasion. Officially, he is involved in a wide range of business interests, including cosmetics, hospitality, construction, and banking. He is also the owner of Iran’s football club, Rah Ahan, and a regular investor in the Iranian cinema. For years, while the Iranian public felt the economic pressures and hardship of the sanctions, Zanjani lived in penthouse apartments in Dubai and Turkey, where he built his wealth by helping the Iranian government sell its oil and repatriate the profits. “This is my work – sanctions-busting operations,” stated Zanjani in the Iranian magazine Aseman. During former President Mahmoud Ahmadinejad’s second term in office, Zanjani amassed his fortune, along with massive amounts of debt, only to be questioned extensively by the Iranian Public media and later on, EU sanctions watch lists.
According to the same interview in Aseman, Zanjani began to build his network in 2010 of 64 different companies spread between Dubai, Malaysia, Tajikistan, and Turkey. Through this network, he managed to sell millions of barrels of oil, reportedly earning $17.5 billion in foreign exchange for Iran’s Oil Ministry, central bank, and Revolutionary Guard. He created his empire through establishing numerous shell companies under the names of friends and family throughout the Middle East. Under the Sorinet Holding, Zanjani controlled oil tanker fleets, various financial institutions, and a Turkish airline, amongst other business ventures, most of which he used for his operations. According to reports from the EU, Zanjani cultivated a method to disguise the oil’s origins in order to sell it on the open market. In total, he claims to have transferred 24 million barrels from tanker to tanker to buyers in India, Malaysia, and Singapore and then laundered the earnings through Malaysia’s First Islamic Bank. However, since 2013 with the onset of a series of targeted sanctions, some specifically naming Zanjani and his corporations, the sales have stopped and the government claims that he owes the Oil Ministry roughly $1.9 billion.
With Iran under the more “moderate” President Hassan Rouhani, that is facing more sophisticated and targeted sanctions, which are pushing the economy into chaos; Zanjani and his operations have come under siege. While the investigations into Zanjani’s empire initially began in September 2013, his arrest came just a day after President Rouhani vowed to “fight financial corruption, especially among ‘privileged figures’ that have taken advantage of economic sanctions.” According to Iran’s state-run Press TV, Supreme Audit Court Chief Amin Hossein Rahimi stated that Zanjani had been tasked by the National Iranian Oil Company with exporting over $3 billion in oil and is currently being accused of withholding millions in oil revenue from the government.
For those familiar with issues related to threat finance and financial crimes, specifically those involving money-laundering and sanction evasion via politically exposed persons (PEPs) and shell companies; the extent of the case against Zanjani is astounding. Numerous questions arise as to how the tycoon was able to escape scrutiny and prosecution for so many years as he built his fortune out of the “small fees” he kept from selling Iranian oil to offshore sources. How is it that no documentation has been found, released or revealed on the informal and under-the-table dealings done between the Iranian government and Zanjani? Particularly since the regime is currently at the forefront of Zanjani’s prosecution? What this lack of evidence highlights is an epidemic rooted within Iranian culture that goes beyond simply the methods and best practices of the Islamic Republic. The substitution of informal, verbal negotiations as qualifiers for sufficient documentation in such matters has always been prevalent in Iran, since the Shah’s regime in the early 1950’s. Now as the country struggles to stay afloat economically due to more pressurized and targeted sanctions, the destruction stemming from decades of informal dealings has just begun. After his arrest, as well as the arrest of Reza Zarrab in Turkey, a group of financial crimes inspectors from Iran traveled to Istanbul to speak with prosecutors and to interrogate Zarrab in order to gain more information on his chief, Mr. B.Z. Zarrab. He complied, giving information on assets being held by Zanjani in Malaysia, Singapore, and Azerbaijan. However, the intelligence gathered was minimal and quite fractured and thus it gave nothing as to the location of Zanjani’s assets nor to the location of the billions laundered over the years into Zanjani’s holdings.