Zanjani, Iranian ‘Sanctions Broker,’ Arrested

Babak Zanjani, Iranian billionaire “sanctions broker” was arrested in Tehran today. Mohsen Ej’ie, Iran’s Prosecutor General confirmed Zanjani’s arrest. (Fars News Agency, 30 December)



On Saturday, President Hassan Rouhani ordered the investigation of “sanctions profiteers” in Iran. The term, or “sanctions brokers,” is referred to people or organizations that take advantage of the special concessions and privileges given to them to defy trade sanctions, but in the process enrich themselves normally through corruption or illegitimate income.


The specific charges against Zanjani have not been disclosed. A majlis investigating committee reported this week that he owes billions of dollars to the Ministry of Oil. Zanjani was involved in “oil-for-cash” schemes, selling Iranian crude in black markets for cash.

Zanjani was also implicated by Reza Zarrab, the Iranian sanctions broker who was arrested last week in Istanbul, as his “boss” and contact in Tehran. The two reportedly were involved in “gas-for-gold’ scheme that is in the heart of the current government corruption scandal in Turkey.



File photo: Babak Zanjani (BBC)



To read about Zanjani’s debts to Oil Ministry, please click here.


To read about Rouhani’s investigation order, please click here.

To read an account of “gas-for-gold” scheme, please click here.

Rouhani Orders Investigation of Sanctions Profiteers in Iran

In a letter to Vice President Esshaq Jahangiri, Iranian President Hassan Rouhani has ordered an immediate investigation by government agencies for identifying and punishing sanctions profiteers.

“To take the country’s economy out of recession and create an economic boom, it is vital to ensure transparent and secure environment for economic activities. It is necessary to take immediate measures to identify and punish those who by taking advantage of special (anti-sanctions) concessions and privileges that have been granted them to enrich themselves through corruption and illegitimate income,” wrote Rouhani in his letter. (Mehr News Agency, 28 December)

“Cases of abuse, especially regarding the sanctions, should be prioritized, and a report should be presented within a month,” Rouhani added in his letter.

To defy sanctions, the Iranian government had devised schemes to receive payments for its oil and gas exports. It allowed “private” companies, usually fronts for IRGC and the Quds Force, to sell as much as 20% of oil exports in black market. The experience, however, created “sanctions brokers,” like the notorious Babak Zanjani, to misuse their government-backed access to illicit money transfers to amass personal fortunes in shortest time. Zanjani, who entered the oil “business” in 2012, after the sanctions were imposed, boasted to reporters that he was now worth $10 billion.

Another case was the now-infamous “gas-for-gold” scheme, where Iran sent gas and oil to Turkey in return for gold bullions. The Iranian sanctions broker involved in that scheme, Reza Zarrab, was arrested in Istanbul last week and claimed that Babak Zanjani was his ‘boss” and contact in Tehran. The case has now directly involved Iran in the growing government corruption scandal in Turkey.

For an account of “gas-for-gold” scheme and Zanjani and Zarrab operations, please read our post here.

UPDATE: For a Central Bank of Iran report on Zanjani, please click here.

File photo: Iranian President Hassan Rouhani (IRNA)  

Growing Corruption Scandal in Turkey Involves Iran – ‘Gas for Gold’

The growing government corruption scandal in Turkey has led to resignations of three key ministers and calls for the resignation of Prime Minister Erdogan, who on Wednesday replaced half his cabinet.

The scandal partly involves suspects with close ties to Iran. An Iranian businessman living in Turkey, Reza Zarrab (aka Riza Sarraf) was arrested last week in Istanbul and charged with money laundering and bribing Turkish officials. Zarrab is believed to have facilitated the payments for oil and gas imports from Iran with gold bullions worth tens of billions of dollars sent via couriers to Tehran in a scheme to circumvent sanctions. In the process, Zarrab is believed to have bribed senior Turkish officials to enable his operations. The sums of “commission” bribes are said to be in tens of millions of dollars.

The so-called “gas-for-gold” scheme was designed to circumvent the sanctions that were limiting financial transactions with Iran. This is how the scheme was designed: Iran exported oil and gas to Turkey. The Turkish government opened an account at Istanbul’s Halkbank to pay for Iranian imports. Zarrab forms Safir Gold Company in Turkey. The company opens a bank account at Halkbank. The Iran funds were then transferred through intra-bank transactions to Zarrab’s company account. Zarrab uses the funds to procure gold bullions globally and imports them through his Turkish-registered company to Turkey. He then sends the gold through couriers either directly or through Dubai to Tehran. The Turkish media repots that some $13 billion worth of gold was sent to Iran through the “gas-for-gold” scheme.

To facilitate his operations, Zarrab has reportedly bribed sons of three key ministers, those of finance, interior and environment, handsomely. The son of finance minister is said to have received $50 million in little more than a year. The sons have all been arrested on bribery charges. Suleyman Aslan, the CEO of Halkbank, was also arrested on bribery charges. The police found $4.5 million in cash hidden in shoeboxes during the search of his house. (balkaneu.com/Trend/Haberturk, 19-24 December)

Meanwhile, Zarrab reportedly has told Turkish prosecutors that his “boss” and contact in Tehran was Babak Zanjani, the controversial Iranian businessman and head of the Sorinet Group business conglomerate. (Haberturk, 21 December)

Zanjani became notoriously famous as the most successful “sanctions broker,” selling Iranian crude oil in the black market. He obtained the oil through an arrangement with Iran’s Ministry of Oil, which had allocated 20% of Iran’s oil exports to be handled by “private” firms. In Zanjani’s case, his private firm was reportedly a front company for IRGC’s Quds Force that had obtained a large allocation for private oil export from the oil ministry. In the process, Zanjani became a billionaire barely a year after the inception of oil sanctions in 2012, and was now identified by Zarrab as the boss in “gas-for-gold” scheme in Turkey.

On Thursday, Zanjani denied involvement in Turkey's corruption scandal or “gas-for-gold” scheme, saying he had met Zarrab only few times, adding, “I was not aware of his activities.”

"We (Zanjani and Zarrab) did not carry out any common business," Zanjani said. “If Zarrab had done any illegal business, I would not be responsible for that.” (Trend, 26 December)

In January 2013, Turkish police inspecting a private jet at Istanbul airport found 320 gold bars worth some $30 million. Turkish media had identified Zanjani as the passenger on board, ready to depart for Dubai. A man named Zarrab (aka Sarraf) would then intervene with the police and the aircraft is allowed to take off. This is the same Zarrab involved in the current scandal. A number of senior Istanbul police officials have now been arrested on charges of bribery and corruption. (balkaneu.com/23 December)

Meanwhile in Tehran, 12 MPs asked the Judiciary officials to detain and question Zanjani in relations to the growing scandal in Turkey. Zarrab remains under custody in Istanbul. The prosecutors, as part of their on-going investigations, have confiscated his yachts and other high-value possessions. Zarrab, 29, set up his Safir Gold Company only in 2012, and within a year his company boasted the control of 46% of all Turkish gold exports. Previously, Zarrab was an employee at Al Nafees Exchange and Al Salam Exchange Center in Dubai. He is now married to the famous Turkish singer Embru Gundes. (Haberturk, 21 December)

UPDATE: To read about President Rouhani's order for immediate investigations of "sanctions profiteers," please click here.

UPDATE: To read a report by the Central Bank of Iran on Zanjani, please click here.