Jersey Sanction case study (from 2009 to 2013) – sanction risks lessons learned?

In 2009 we learned that the Sanctioned pariah state of Iran owned and operated a $760 million skyscraper in Manhattan for decades, thanks to front companies in JERSEY. 

The following is an extract from UK Parliament Hansard records [Volume 486: debated on Tuesday 13 January 2009]

Mr. Hague asked the Chancellor of the Exchequer what:

•  Reports he has received on the determination by the US Administration on 17 December 2008 that ASSA CORPORATION is created and controlled by Bank Melli; and
• Whether he has made representations to the relevant Channel Islands authorities on the operations in JERSEY OF ASSA COMPANY LTD and its subsidiaries. (246397)

Ian Pearson responsed

• HM Government are currently liaising with the US Administration on their determination that Assa Corporation is created and controlled by Bank Melli and with the RELEVANT JERSEY AUTHORITIES on this issue.
• THE JERSEY FINANCIAL SERVICES COMMISSION is coordinating the Jersey investigation and focusing on the part played by any Jersey Company which may have conducted business with Assa Corporation, Assa Company Ltd or Bank Melli.

https://hansard.parliament.uk/Commons/2009-01-13/debates/09011371000110/BanksIran

2013

1. The rogue state has owned and operated a $760 million skyscraper in Manhattan for decades, thanks to front companies and offshore tax havens [including JERSEY].
2. Today, the US government finally seized it after a multi-year legal battle.
3. The story starts when Iran and the United States are on better terms, before the 1979 revolution.
4. A charitable trust set up by the Shah of Iran built the 36-story building at 650 Fifth Avenue, just blocks from Rockefeller Center.
5. If you’re wondering why a charitable group decided to construct an office building in one of the world’s most expensive cities, it’s because—then, as now—these government-run institutions, called bonyads in Iran, are often sources of patronage that disguise the state role in the economy.
6. After the Shah was ousted, the new Iranian theocracy smoothly assumed control of his foundation, switching out the directors and renaming it the Alavi Foundation.
7. The building had been financed with a loan from Iran’s largest government-controlled financial institution, Bank Melli.
8. In 1989, the government-controlled foundation, allegedly dodging taxes, transferred 40% of the building to a front company, ASSA CORPORATION, IN THE UK’S JERSEY ISLANDS, and the loan was cancelled.
9. After the US enacted sanctions against working with the Iranian financial system, including Bank Melli, prosecutors successfully sued to seize Assa Corporation’s share of the building.
10. They alleged that Iran disguised some $39 million in rental income through its front company.
11. That money came from blue-chip tenants, including Met Life Insurance, Citibank, and Equity 1.
12. In the course of the investigation, the head of the Alavi Foundation was convicted of obstruction of justice.
13. He attempted to destroy documents that revealed the foundation’s extensive knowledge of Bank Melli and the Iranian government’s control of the building and the foundation itself.
14. Barring a successful appeal, the feds reportedly plan to sell the building and give the proceeds to the victims of terrorist attacks connected to Iran.

https://qz.com/125430/how-iran-built-a-skyscraper-in-the-middle-of-new-york-city-and-held-onto-it-for-decades/