Ali Sadr Hashemi Nejad gained notoriety in Malta as the chairman of Pilatus Bank, but the businessman’s interests stretch far beyond this country’s Mediterranean shores.

The 38-year-old is the son of banking tycoon and Iran rich-list mainstay Seyed Mohammad Sadr Hashemi Nejad, and it is his Iranian connections which have drawn him into the FBI’s net.

What is he charged with?

US investigators say Mr Sadr helped funnel US$115 million to Iranian individuals and companies through the US banking system, violating sanctions against Iran. 

The money, the US Department of Justice alleges, was moved through Switzerland, Turkey and the British Virgin Islands to hide the fact that it was destined for Iran. The money was intended as payment for a large-scale housing project in Venezuela.

What did the project involve?

Venezuela and Iran agreed to a housing project in 2005 and struck a deal to build 7,000 housing units for $475 million the following year. The project was led by a subsidiary company of Stratus Group, an Iranian company owned by Mr Sadr’s family. That subsidiary was called Iranian International Housing Corporation( IIHC) and Mr Ali Sadr was put in charge of managing the housing project’s finances, the FBI says.

How did Mr Sadr allegedly evade sanctions?

In Mr Sadr’s indictment, US investigators lay out how they believe the Iranian businessman used a St Kitts and Nevis passport, together with an address in the UAE, to incorporate two companies specifically created to channel money from Iran to IIHC.

One of those companies, Clarity Trade and Finance, was incorporated in Switzerland. The second, Stratus International Contracting, was incorporated in Turkey. Both had US dollar accounts with a Swiss bank.

READ: 'It's the start of the spring clean,' says former FIAU official Ferris

Those two companies, US investigators said, moved US$115 million to IIHC between April 2011 and November 2013 in 15 separate payments. Money would first be moved through US banks to the companies’ Swiss accounts, and then transferred to an offshore entity incorporated “by Sadr and others” in the British Virgin Islands in 2009.

In February 2012, one of those companies, Clarity, also wired US$2 million from the housing project directly into the United States, with the money then used to buy real estate in California.

The indictment quotes several e-mails sent to and from Mr Sadr discussing the transfers of the above-mentioned funds. 

"It seems our strategy has worked so far," Mr Sadr allegedly wrote in a July 2011 e-mail including Swift confirmation of a $20.6 million transfer.

The indictment also highlights the role Mr Sadr's father in the alleged operation, naming him as "a co-conspirator".   

When did the investigation start?

Manhattan district attorney Cyrus Vance Jr Said that his office began investigating Mr Sadr back in 2013 – the same year the process to set up Pilatus Bank in Malta got underway.

It also appears that Maltese authorities were aware that Mr Sadr was under investigation. An FIAU report presented to the police commissioner in July 2016 noted that the bank chairman was “subject to a criminal investigation which is currently underway in a foreign jurisdiction for money laundering, illegal money transmission as well as other violations".

What rules were allegedly violated?

The US has imposed sanctions against Iran for several years, going back to 1979. Sanctions were broadened in 1995 to include any companies dealing with the Iranian government.

In 2006, the international community followed suit, with the United Nations Security Council imposing sanctions on Iran following its refusal to suspend its uranium enrichment program. Those sanctions were lifted 10 years later, in January 2016. But US sanctions remain in place, as do European Union restrictions.

US sanctions are especially restrictive, with an almost total economic embargo in place, Iranian bank assets frozen and several Iranian individuals and entities

How does Pilatus Bank figure in all this?

We do not know. The US Department of Justice indictment makes no mention of the Ta’ Xbiex-based bank, and Mr Sadr's business interests here would, at first glance, appear to be distinct from the activities which landed him in hot water Stateside. 

But the fact that Mr Sadr was already being investigated by US authorities before he was granted a licence to open Pilatus Bank in Malta raises serious questions about the due diligence process carried out by local regulators, and the US indictment is bound to lead to far greater scrutiny into Mr Sadr's business interests in third countries, and most notably the EU.   

Shortly before 5pm on Wednesday, the MFSA announced that it was ordering Mr Sadr to step down as bank director and suspending his voting rights. The financial regulator also said any banking activity involving top bank officials, directors and managers would be frozen. 

The MFSA supervisory council decisions came following a marathon day-long meeting which began at 8.30am.

What does Mr Sadr face if found guilty?

Mr Sadr faces six separate charges, ranging from bank fraud to money laundering and the violations of sanctions. The most benign charges – conspiracy to defraud the United States – carries a maximum jail sentence of five years. Bank fraud charges come with a maximum 30 year sentence.

Should Mr Sadr be found guilty of all six charges, he faces up to 125 years in prison.

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