Iran lays false trail to dodge US sanctions

An Iranian labourer walks on an oil facility platform in the Khark Island, on the shore of the Gulf. (AFP)
Updated 20 March 2019
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Iran lays false trail to dodge US sanctions

  • Supertanker shipped fuel oil under forged Iraqi papers
  • Ship not in Basra port during cited loading period

SINGAPORE: At least two tankers have ferried Iranian fuel oil to Asia in recent months despite U.S. sanctions against such shipments, according to a Reuters analysis of ship-tracking data and port information, as well as interviews with brokers and traders.
The shipments were loaded onto tankers with documents showing the fuel oil was Iraqi. But three Iraqi oil industry sources and Prakash Vakkayil, a manager at UAE shipping services firm Yacht International Co, said the papers were forged.
The people said they did not know who forged the documents, nor when.
The transfers show at least some Iranian fuel oil is being traded despite the reimposition of sanctions in November 2018, as Washington seeks to pressure Iran into abandoning nuclear and missile programmes. They also show how some traders have revived tactics that were used to skirt sanctions against Iran between 2012 and 2016.
"Some buyers...will want Iranian oil regardless of U.S. strategic objectives to deny Tehran oil revenue, and Iran will find a way to keep some volumes flowing," said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit.
While the United States has granted eight countries temporary waivers allowing limited purchases of Iranian crude oil, these exemptions do not cover products refined from crude, including fuel oil, mainly used to power the engines of large ships.
Documents forwarded to Reuters by ship owners say a 300,000 tonne-supertanker, the Grace 1, took on fuel oil at Basra, Iraq, between Dec. 10 and 12, 2018. But Basra port loading schedules reviewed by Reuters do not list the Grace 1 as being in port during those dates.
One Iraqi industry source with knowledge of the port's operations confirmed there were no records of the Grace 1 at Basra during this period.
Reuters examined data from four ship-tracking information providers - Refinitiv, Kpler, IHS Markit and Vessel Finder - to locate the Grace 1 during that time. All four showed that the Grace 1 had its Automatic Identification System (AIS), or transponder, switched off between Nov. 30 and Dec. 14, 2018, meaning its location could not be tracked.
The Grace 1 then re-appeared in waters near Iran's port of Bandar Assaluyeh, fully loaded, data showed. The cargo was transferred onto two smaller ships in UAE waters in January, from where one ship delivered fuel oil to Singapore in February.
Shipping documents showed about 284,000 tonnes of fuel oil were transferred in the cargoes tracked by Reuters, worth about $120 million at current prices.
Officials at Iran's oil ministry declined to comment.
Singapore customs did not respond to requests for comment.
The Grace 1, a Panamanian-flagged tanker, is managed by Singapore-based shipping services firm IShips Management Pte Ltd, according to data. IShips did not respond to several requests for comment via email or phone.
A Reuters reporter visited the office listed on IShips' website but was told by the current tenant that the company had moved out two years earlier.
The ship-tracking data analysed by Reuters showed the Grace 1 emerged from the period when it did not transmit its location almost 500 kilometres south of Iraq. It was close to the Iranian coast with its draught - how deep a vessel sits in water - near maximum, indicating its cargo tanks were filled.
The Grace 1 transferred its cargo to two smaller tankers between Jan. 16 and 22 in waters offshore Fujairah in the UAE, data showed.
One of those vessels, the 130,000 tonne-capacity Kriti Island, offloaded fuel oil into a storage terminal in Singapore around Feb. 5 to 7. Reuters was unable to determine who purchased the fuel oil for storage in Singapore.
The Kriti Island is managed by Greece's Avin International SA.
The tanker was chartered by Singapore-based Blutide Pte for its voyage to Singapore, Avin International's Chief Executive Officer George Mylonas told Reuters. Mylonas confirmed the Kriti Island took on fuel oil from the Grace 1.
There is no indication that Avin International knowingly shipped Iranian fuel oil. Mylonas said his firm had conducted all necessary due diligence to ensure the cargo's legitimate origin.
Mylonas emailed Reuters a copy of a Certificate of Origin (COO) that he said was provided by the charterers – referring to Blutide - showing the Grace 1 loaded fuel oil at Basra on Dec. 10 and 12, 2018.
"The Certificate of Origin and all the information obtained did not reveal any connection with Iran, let alone that the cargo of fuel oil originated" from there, Mylonas wrote.
Mylonas said the Grace 1's owners, managers, shippers, receivers and charterers were screened by Avin International. "There were not circumstances that would make the COO of dubious origin," he said via email.
He said he had been told by the charterers that the Grace 1 only stopped in waters off Iran in late December and early January for "repairs of damaged diesel generators" before sailing to Fujairah.
The document provided by Mylonas says Iraq's state oil marketer SOMO certified the Grace 1 in December loaded a total of 284,261 tonnes of Iraqi fuel oil.
Reuters shared the document with a SOMO official in Iraq who said it was "faked" and "completely wrong". The official declined to be identified by name, citing the marketer's communications policy.
Two other Iraqi oil industry sources with direct knowledge of Basra port and oil industry operations also said the documentation was forged.
The two sources said the document bore the signature of a manager who was not working at Basra port on the stated dates. The document also bears contradictory dates: It indicates a loading period of Dec. 10 and 12, 2018 but a sign-off date for the transaction of Jan. 12, 2018.
Data showed the second tanker into which the Grace 1 transferred cargo was the Marshal Z, also a 130,000-tonne vessel.
It was bound for Singapore in the first half of February but changed course on Feb. 15, parking off western Malaysia. Reuters was unable to determine who owns the Marshal Z, nor who chartered it.
Around Feb. 25, the Marshal Z transferred its cargo to another vessel called the Libya, owned and managed by Tripoli-based General National Maritime Transport Company (GNMTC).
A GNMTC spokesman said the Libya was chartered by Blutide, the same Singapore firm that chartered the Kriti Island.
Blutide registered as a company in Singapore on May 14, 2018. Its sole listed shareholder and only director, Singaporean Basheer Sayeed, said by telephone on Feb. 7 he was retired and not in a position to comment on the company's activity.
The Libya's owner GNMTC "was not aware, at any stage that the cargo is linked in any way to Iran," the company's spokesman said via email.
GNMTC provided Reuters with a copy of a COO that it said was issued by shipping services company Yacht International, based in Fujairah, showing the Marshal Z loaded Iraqi-origin fuel oil during a ship-to-ship transfer in UAE waters on Jan. 23.
However, Yacht International shipping manager Prakash Vakkayil said in an email his firm did not issue the certificate and "considers it to be forged".
The GNMTC spokesman did not respond to follow-up questions from Reuters.


US eases restrictions on China’s Huawei to keep networks, phones operating

Updated 42 min 2 sec ago
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US eases restrictions on China’s Huawei to keep networks, phones operating

  • The company is still prohibited from buying American parts and components to manufacture new products without license approvals
  • Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms
WASHINGTON: The US government on Monday temporarily eased some trade restrictions imposed last week on China’s Huawei, a move that sought to minimize disruption for the telecom company’s customers around the world.
The US Commerce Department will allow Huawei Technologies Co. Ltd. to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.
The company is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.
The US government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.
The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, US Secretary of Commerce Wilbur Ross said in a statement.
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.
The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.
“The goal seems to be to prevent Internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”
Huawei, the world’s largest telecommunications equipment maker, declined to comment.
The Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.
On Thursday, the US Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.
The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed US goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.
Reuters reported Friday that the department was considering a temporary easing, citing a government spokeswoman.
The temporary license also allows disclosures of security vulnerabilities and for Huawei to engage in the development of standards for future 5G networks.
Reuters reported Sunday that Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, citing a source familiar with the matter.
Google did not immediately respond to a request for comment on the new authorization.
Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms including Qualcomm Inc. , Intel Corp. and Micron Technology Inc.
“I think this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology are around the globe and if the US imposes restrictions, that has impacts.”
Jacobson said the effort to keep existing networks operating appeared aimed at telecom providers in Europe and other countries where Huawei equipment is pervasive.
The move also could assist mobile service providers in thinly populated areas of the United States, such as Wyoming and eastern Oregon, that purchased network equipment from Huawei in recent years.
John Neuffer, the president of the Semiconductor Industry Association, which represents US chipmakers and designers, said in a statement that the association wants the government would ease the restrictions further.
“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances US security goals but does not undermine the industry’s ability to compete globally and remain technology leaders.
A report on Monday on the potential impact of stringent export controls on technologies found that US firms could lose up to $56.3 billion in export sales over five years.
The report, from the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.
Wolf, the former Commerce official, said the Huawei reprieve was similar to action taken by the department in July to prevent systems from crashing after the US banned China’s ZTE Corp, a smaller Huawei rival, from buying American-made components in April.
The US trade ban on ZTE wreaked havoc at wireless carriers in Europe and South Asia, sources told Reuters at the time.
The ban on ZTE was lifted July 13 after the company struck an agreement with the Commerce Department that included a $1 billion fine plus $400 million in escrow and replacement of its board of directors and senior management. ZTE, which had ceased major operations as a result of the ban, then resumed business.
(Reporting by Karen Freifeld in New York and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon; Editing by Lisa Shumaker and Cynthia Osterman)