Last week, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated four individuals and six entities pursuant to Executive Order (“E.O”) 13582 alleging that they provided support to the Syrian Government. In the case of one designee, George Haswani, the alleged support to the Government of Syria stems from his being accused of serving as a middleman for oil purchases between that government and the Islamic State of Iraq and the Levant (“ISIL”), also commonly known as ISIS.
In addition to Haswani, OFAC also designated the following persons: HESCO Engineering and Construction Company (“HESCO”), Mudalal Khuri, Kirsan Ilyumzhinov, Russian Financial Alliance Bank (“RFA Bank”), Nicos Nicolaou, Primax Business Consultants Limited (“Primax”), Hudsotrade Limited (“Hudsotrade”), Ezegoo Investments Ltd., and Kremsont Commercial Inc. (“Kremsont”). As a result of the designations, virtually all transactions between U.S. persons and these parties are prohibited, and the assets of these parties that are within, or come within, U.S. jurisdiction are to be blocked and reported to OFAC. This is because, in addition to imposing a trade and investment embargo on Syria, E.O. 13582 also targets the Government of Syria, and those parties providing support to the Government of Syria, as well as those owned or controlled by such parties.
While the designation of Kirsan Ilyumzhinov–the longtime World Chess Federation President–is garnering the most media attention, it is Haswani’s case that may be the most interesting. As noted above, Haswani–whose company, HESCO, has also been designated–has been accused of serving as a middleman in oil sales between Syria and ISIL. However, that accusation should come as no surprise as the EU had already designated him for the same conduct in March of this year.
Haswani’s designation highlights the growing suspicion in the West that the war between Syria and ISIL is not legitimate, and the two entities are collaborating on some level. However, it is not only this theory that is interesting, but rather the fact that this theory is likely to be tested in the court, as Haswani has publicly denounced the allegations and has filed a court case in the EU challenging his designation. That case was filed in May, but as the time of posting no new information on the status of the litigation is available. Moreover, if Haswani’s position on his EU designation is any indicator, then it seems likely he will also challenge his designation in the U.S. as well, although at this time no announcement concerning Haswani’s challenge to the OFAC designation has been made.
As of now, scant details concerning the Syria-ISIL connection have been released publicly. However, the details that have been released relate directly to Haswani’s designation in the EU. For example, at the time of Haswani’s EU designation, reports alleged that Haswani was building a gas installation in central Syria during the time period that ISIL gained control of that area, a fact that Haswani has admitted. Other reports have stated that HESCO operates a gas plant in the town of Taqba in central Syria, in conjunction with personnel from both ISIL and the Syrian Government. It is unclear from the multiple reports whether this is the same gas facility or if there are multiple facilities in central Syria belonging to Haswani which may constitute the focal point of the West’s theory of a Syria-ISIL oil arrangements.
What is clear is that if Haswani is going to effectively challenge his designation, he is going to, at a minimum, have to rebut those details being reported by the media. Such rebuttal would presumably require describing the gas facilities’ operations, identifying the personnel working there, and providing documentation to establish where the gas produced at those facilities has gone, or is going. A strong rebuttal presenting details as to HESCO’s operations and documentation substantiating that their operations are not benefitting in any way ISIL would go a long way towards blowing a hole in the West’s Syria-ISIL oil theory.
Of course, there are going to be roadblocks to producing this information. First, if there is any involvement by ISIL whatsoever in the operation of the Haswani’s gas facilities in Central Syria, it is unlikely that they are going to allow any information regarding that involvement to make its way to the West. Second, even if there is no ISIL involvement in such operations, the Syrian Government may also have its own reasons for not wanting the West to understand the operations and capacity of gas facilities from which they benefit. Finally, even assuming Haswani and HESCO have no trouble supplying the information and documentation necessary to rebut the allegations underlying his designations in both the EU and the U.S., there would be massive complications in verifying the information being supplied, given the location of where the sanctionable conduct is occurring.
In short, Haswani’s designation is going to be exceedingly difficult to challenge. In addition to complications concerning release of potential rebuttal evidence, there is the always difficult task of getting OFAC to believe the SDN making the argument, and the fact that the issue is obviously one of significant geopolitical concern. Indeed, the deeper the West digs their heels into the Syria-ISIL Oil theory, the harder its going to be to remove George Haswani.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org