The United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has designated five corporate officers and ten businesses affiliated with either the Islamic Republic of Iran Shipping Lines (IRISL) or Bank Mellat. Both of these entities have previously been designated by Treasury for allegedly supporting Iran’s weapons of mass destruction (“WMD”) program and facilitating the transportation of Iranian military cargo. Pearl Energy Company, a Malaysian-based entity owned by a subsidiary of Bank Mellat, its Director Ali Afzali, as well as Pearl Energy Services, SA, a wholly-owned subsidiary of Pearl Energy Company were all designated as part of OFAC’s action. OFAC also announced the designaton of four top IRISL executives and eight companies located on the Isle of Man which they believe to be IRISL front companies.

Pearl Energy Company was formed by First East Export Bank (FEEB), a designated subsidiary of Iran’s Bank Mellat, to provide economic research on an array of global industries. Due to Pearl Energy Company’s affiliation with FEEB they were designated along with their Director and Principal Officer Ali Afzali. Pearl Energy Company’s subsidiary, Pearl Energy Services, SA, was also designated for being owned or controlled by Pearl Energy Company. Pearl Energy Services provided financing and expertise to entities seeking to enter Iran’s petroleum sector.

The IRISLwas designated in September 2008 for providing logistical services to Iran’s Ministry of Defense and Armed Forces Logistics, the arm of the Iranian military that oversees its ballistic missile program. Since that time IRISL has increasingly created and relied upon a series of front companies to evade the impact of sanctions and increased scrutiny of its activities. Mohammad Hossein Dajmar, IRISL’s Chairman and Managing Director was designated as part of OFAC’s most recent actions.

Officers from three previously-designated front companies – Safiran Payam Darya Shipping Company (SAPID), Hafiz Darya Shipping Company (HDS), and Soroush Sarzamin Asatir Ship Management Company (SSA) were also designated today. Gholamhossein Golparvar, Managing Director of SAPID and a director of SSA and HDS and Hassan Jalil Zadeh, Managing Director of HDS both were placed on OFAC’s Specially Designated Nationals (“SDN”) list. Finally, Mohammad Hadi Pajand, Company Secretary of Irinvestship Ltd., and a company director of Lancelin Shipping Company Ltd. – two previously-designated IRISL affiliates – was also designated by OFAC.

In total OFAC has designated nearly 80 IRISL front companies and affiliates and has identified more than 100 ships as being the property of IRISL or its front companies and affiliates. The only recourse for these parties is to file a request for reconsideration with OFAC to petition for their removal from the SDN list. In this request for reconsideration they must show that their designation was made in error or that circumstances have changed to such a degree as to warrant a removal from the list. The SDN removal process is a long and arduous one, however, if one does not seek removal they will not be removed until the sanctions program under which their designation occurred is repealed. Since this is an unacceptable proposition for most designated parties, they should seek to address their designation as soon as possible.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.