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Is Iran resorting to an insurance scam to keep oil exports flowing?

Forbes

By Emanuele Ottolenghi and Mark Dubowitz

Europe’s oil embargo against Iran, reinforced by U.S. extraterritorial measures, is having a serious impact on Iran’s oil exports. Iran has lost all its European clients, and many habitual buyers have scaled down their dependence on its oil. This is due largely to European and U.S. sanctions on insurance and reinsurance for oil cargoes — which depend on Protection and Indemnity Coverage.

P&I for oil tankers covers pollution and spillage, and international maritime authorities require Very Large Crude Carriers — the largest class of tankers on the oceans — to carry mandatory third-party liability insurance for claims of up to $1 billion. P&I clubs, large insurance ventures backed by ship owners, provide the policies.

As a result of sanctions, European P&I clubs, which cover approximately 90 percent of world shipping, no longer insure Iranian ships.

Without reliable insurance alternatives, Iran cannot deliver its oil.

Oil sales are vital to Iran’s economy and its ability to continue financing its clandestine nuclear and ballistic missile programs. New evidence has emerged which raises the question of whether Iran is engaging in a giant insurance fraud, replacing private insurance with a patina of coverage shrouded in mystery.

Suddenly and out of nowhere, a newly established Iranian P&I club called Kish P&I has begun providing full coverage to the 44 oil tankers of the National Iran Tanker Company — the entire fleet.

According to its website, Kish P&I is a private and independent club of ship owners in Iran. Established in 2011, the group appears not to have the means to provide the necessary coverage in case of accident. Again, according to its website, Kish offers only “USD 500,000 for each accident or occurrence, promising coverage for the remaining 999.5 million dollars through reinsurance “by a consortium of Iranian Insurers headed by Central Insurance of Iran.”

According to Kish P&I’s deputy manager, Vahid Ansari Dezfouli, the consortium offers “a financial support of 50 million USD.”

Dezfouli insists that “500,000 USD is substantial for a club of only one and a half years of age,” but many questions remain.

For starters, Kish appears to insure only NITC vessels.

According to Central Insurance of Iran, in 2011, Kish P&I held only 0.1 percent of Iran’s insurance market. That’s 44 policies — the same number of NITC oil tankers.

No available information suggests that other ship owners, aside from NITC, are members of the club. In an email to the author, Mr. Dezfouli responded that 50 ship owners belong to the club. But Kish P&I’s members could simply be companies controlled by the NITC.

In recent months, NITC has incorporated companies such as Anchor Shipping, Balm Shipping, and Camellia Shipping at the Singapore-based Tuvalu registry of international companies. Each of these companies in turn was given ownership of one NITC vessel. When asked specifically about these companies, Mr. Dezfouli declined to answer.

As for the “consortium of Iranian insurers” are said to provide virtually all of Kish’s coverage, it is unclear who belongs to it, and despite repeated requests, Mr. Dezfouli has so far declined to offer more details.

NITC is owned by a consortium of insurers. Ostensibly privatized in the year 2000, NITC was bought by three Iranian pension funds: The State Retirement Fund (33%), the Social Security Organization (33%) and the Oil Employee Retirement and Saving Fund (34%).

The United States recently designated NITC as a government of Iran-owned entity, and the European Union sanctioned the company on similar grounds. While NITC claims to be a private entity, its shareholders are clearly state pension funds.

It is impossible to determine whether the same pension funds are involved in reinsuring the policies underwritten by Kish P&I. Kish could simply be a smokescreen for a company acting as both owner and insurer of its vessels — not exactly what insurance is meant to be.

Even more alarming is Kish P&I’s lack of transparency regarding its personnel. Its website does not list any board member, and Dezfouli indicated only that such information would become available “in the future.”

There is virtually no publicly available information about the professional career of Kish’s managing director, Mohammad-Reza Mohammadi Banaei.

Dezfouli, by contrast, appears to have had a colorful past. Though he confirmed only that he had spent 23 years in the shipping business — including three dealing with maritime insurance — he appears to have spent part of his career at the Islamic Republic of Iran’s Shipping Lines (IRISL).

UN Resolution 1929 (2010), and U.S. and EU sanctions blacklisted IRISL for its extensive role in procuring nuclear components and missile parts for Iran across the globe, while shipping weapons from Iran to its terrorist proxies in the Middle East and West Africa.

Company records show that a Captain Dezfouli worked for IRISL BENELUX, the Belgium-incorporated branch of IRISL that gave cover for Iran’s procurement efforts in Antwerp in the early 2000s. As IRISL BENELUX came under increasing scrutiny from European export control agencies, it changed its name twice, first becoming ANTARES SHIPPING and then EIFFE NV.

Dezfouli was the supercargo manager for EIFFE NV, the Antwerp, Belgium agent for HDS Lines, an IRISL subsidiary the EU sanctioned in 2010 for its links to IRISL’s proliferation efforts.

EIFFE NV, a Belgian-incorporated company, was, according to official records, the successor of IRISL BENELUX. Queried about Dezfouli’s role in EIFFE, a spokesperson for Ahlers, IRISL’s former partner in Antwerp, indicated that all 15 employees of EIFFE were dismissed in the second half of 2010, after the company was hit by sanctions. She declined to answer any question about Dezfouli, but a former employee of IRISL BENELUX who left the company in 2006 confirmed that Dezfouli worked there and remembered him fondly as “a good colleague anda hard working man with a passion for his company, IRISL.”

According to Western intelligence sources, IRISL BENELUX was considered a main gateway for missile and nuclear technology proliferation. They view Captain Dezfouli at IRISL BENELUX as a key figure in procurement activities and their concealment, and believe that the Dezfouli who formerly worked for IRISL BENELUX and its successor companies is the same Dezfouli who now works for Kish P&I. For his part, Mr. Dezfouli has yet to offer clarifications on his professional past.

A Captain Vahid Ansari Dezfouli also officially represented the Islamic Republic of Iran as a member of delegations attending subcommittee working groups of the International Maritime Organization in 2006 and 2008 — here, here, here, and here — and was identified as a “Master Mariner” of NITC.

In short, for many years, Dezfouli appears to have been involved with Iranian shippers who are a vital part of Iran’s nuclear procurement and proliferation efforts. Now, he has emerged in a key role in a “club” that purports to insure Iran’s tankers, but is unable to provide any specifics about where that insurance actually comes from. In the absence of any information on anyone else working for Kish P&I, Dezfouli’s past association with NITC also strengthens the impression that Kish P&I may actually be an offshoot of NITC.

In coming months, as the U.S. and EU consider new sanctions, Kish P&I and its leading man of mystery, deputy managing director Vahid Ansari Dezfouli, should receive their undivided attention.

Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies, where Mark Dubowitz is Executive Director and head of the Iran Energy Project.