VZCZCXRO0324
OO RUEHBC RUEHDE RUEHDIR RUEHKUK RUEHTRO
DE RUEHC #2348/01 1411903
ZNY SSSSS ZZH
O 211849Z MAY 09
FM SECSTATE WASHDC
TO RUEHRL/AMEMBASSY BERLIN IMMEDIATE 1307
RUEHLO/AMEMBASSY LONDON IMMEDIATE 4245
RUEHVT/AMEMBASSY VALLETTA IMMEDIATE 7276
INFO IRAN COLLECTIVE IMMEDIATE

S E C R E T SECTION 01 OF 04 STATE 052348

SIPDIS E.O. 12958: DECL: 05/21/2029 

TAGS: EFIN ETTC KNNP IR UK MT PREL PARM FR

SUBJECT: IRISL CONTINUING EVASIVE ACTIVITIES IN MALTA 

Classified By: Acting EUR/PRA Office Director Mary Nash for reasons 1.4 (b) and (d).

1.(U) This is an action request. Please see paragraph 3.

------------------ SUMMARY/BACKGROUND ------------------

2.(S) The U.S. has information that the Islamic Republic of Iran Shipping Lines (IRISL) is creating phantom companies and engaging in other deceptive activities in Maltese jurisdiction with the help of Maltese law firms. We would like to share this information with the Maltese government and urge it to reach out to Maltese legal firms and recommend that they institute enhanced vigilance over transactions with IRISL and its affiliates that may facilitate evasion of UN Security Council restrictions.

------------------------- OBJECTIVES/ACTION REQUEST -------------------------

3.(S) Washington requests Posts pass the attached nonpaper in paragraph 6 to appropriate government officials and pursue the following objectives. Washington notes that the cleared intelligence points were delivered to Finance Minister Alan Caruana in meetings with Treasury and State officials in Washington on April 22-23, 2009. Please use the summary of those meetings in paragraphs 4 and 5 for information purposes when preparing this demarche.

-- Stress that IRISL and its affiliates continue to use deceptive practices to obscure their activities from scrutiny.

FOR MALTA ONLY: -- Urge Government of Malta to approach law firms in its jurisdiction and recommend that they institute enhanced vigilance over transactions with IRISL and its affiliates that may facilitate evasion of UN Security Council restrictions. -- Note that the U.S. values Malta's partnership on proliferation-related issues and its previous attentiveness to IRISL's deceptive practices.

FOR UK ONLY: -- Recommend that all ships owned or operated by XXXXXXXXXXXX be subject to the same level of scrutiny as those of IRISL and its affiliates and that HMG should take action if either XXXXXXXXXXXX are engaging in proliferation-related activity.

FOR GERMANY ONLY: -- Urge the German government to approach SMAG GmBH and all other domestic crane manufacturers and encourage them to cancel contracts with IRISL to limit their risk to proliferation-related activity.

----------------------------------- BACKGROUND ON U.S./MALTESE MEETINGS -----------------------------------

¶4. (S//NF) On April 22, 2009, Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey met with Alan Caruana, Head of Secretariat in the Maltese Finance Ministry and discussed Iran sanctions issues and IRISL. Mr. Caruana also met with State Department officials on April 23, 2009 to discuss similar issues. During these meetings, Caruana was receptive to the U.S. message and shared a document containing shipping statistics for IRISL in 2008. Caruana indicated that since his last meeting with U/S Levey in April 2008, the Maltese government had pushed away Iranian business, which is not always legal. U/S Levey shared the nonpaper below on IRISL and also provided Caruana with a copy of the most recent Financial Action Task Force (FATF) statement, which calls on jurisdictions to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism emanating from Iran.

¶5. (S//NF) Upon returning to Malta, Caruana informed the Charg that Malta's Maritime Authority made its databases available to the public on-line. He offered to assist U.S. authorities in their attempts to find any data that may exist STATE 00052348 002 OF 004 but was not made available to the public. Caruana mentioned that the U.S. and Malta had a good policy of sharing information and a strong relationship with the U.S. Embassy.

--------------------------------------------- ---- NONPAPER ON IRISL's CONTINUED DECEPTIVE PRACTICES --------------------------------------------- ----

¶6. (S//REL MLT, GBR, AND GER) BEGIN TEXT OF S//REL MLT, GBR, AND GER NONPAPER -- The U.S. has continued concerns about the Islamic Republic of Iran Shipping Lines' (IRISL) evasive activities in Maltese jurisdiction.

-- As of mid-December 2008, IRSL has taken action to conceal its vessels' true identities in an attempt to maintain access to capital and avoid scrutiny by foreign governments and firms.

-- IRISL has begun to reflag and rename its ships, remove its label and logo from the vessels, and set up new management companies abroad to hide the company's ownership or involvement.

-- As of mid-December 2008, only 66 IRISL ships were still flying the Iranian flag; the rest were sailing under the flags of Malta (50), Hong Kong (18), and Cyprus (2).

-- Thirty-six of the Iranian-flagged vessels were tugs, tankers, or ships that operated exclusively in the Persian Gulf or the Caspian Sea and were owned by IRISL subsidiaries Valfajr Shipping Co. and Khazar Shipping Company.

-- IRISL also continues to charter foreign-operated vessels to expand its capacity and hide its activities. IRISL renamed vessels either during or shortly after their flagging out. While earlier names for IRISL's Iranian-flagged vessels included the word "Iran," e.g. "Iran Makin," the newly reflagged ships now carried less conspicuous and primarily Western-sounding names. Some vessels sailing under the flag of Malta or Hong Kong were renamed for the second time in a year.

-- The measures described above involved the need to repaint the hulls of renamed or flagged-out vessels. Some of this work had been done, but several reflagged and renamed ships still carried the IRISL label and logo.

-- IRISL has registered new companies in Malta and Hong Kong. XXXXXXXXXXXX IRISL had also set up four companies in Hong Kong that were acting officially as registered owners. However, IRISL was still listed as the parent company and IRISL was often identified as a charterer in correspondence.

-- To better evade scrutiny, as of mid-January 2009, IRISL had decided to rename each ship twice at the same time. IRISL had found that by only renaming each ship once, the former sanctioned IRISL-registered name would still appear on voyage paperwork. By renaming each ship twice, IRISL could ensure that both the current and former names of each ship would appear on voyage paperwork to be unrelated to IRISL or its affiliates.

-- As of late January 2009, IRISL had transferred four or five ships to the personal ownership of XXXXXXXXXXXX

POINT FOR UK ONLY: -- All ships owned or operated by XXXXXXXXXXXX should be subject to the same level of scrutiny as those of IRISL and its affiliates. HMG should investigate these two firms and ensure XXXXXXXXXXXX are not engaging in proliferation-related activity.

END POINT FOR UK ONLY -- As of mid-January, IRISL planned to split into four companies. IRISL's operations would be divided into a bulk and general cargo company; a ship management company; a container company; and a manning company.

-- As of mid-January 2009, IRISL was experiencing serious cash flow problems.

STATE 00052348 003 OF 004 -- As of late-January, IRISL was forced to cancel a recent order it had placed with SMAG GmBH, a German company that manufactured deck cranes for cargo ships. Several ships built recently for China used this brand of deck cranes. IRISL also had an outstanding debt to SMAG for previously purchased deck cranes.

POINT FOR GERMANY ONLY: -- Given the importance of deck cranes to the operation of maritime cargo vessels, we urge the German government to approach SMAG GmBH and all other domestic crane manufacturers and encourage them to cancel contracts with IRISL to limit their risk of contributing to proliferation-related activity.

END POINT FOR GERMANY ONLY -- As of mid-February 2009, Maltese law firm Ganado and Associates had terminated all aspects of its professional relationship with IRISL. The firm cited a number of reasons, to include compliance with UN and U.S. sanctions, as well as Maltese anti-money laundering laws as reasons for terminating its relationship with IRISL. IRISL Malta has since replaced Ganado and Associates with Maltese law firm Fenech and Fenech.

-- As of February 6, 2009, Ganado had officially terminated the mandate and ceased to act as special attorneys for the following IRISL-owned companies: - ETA NARI NAVIGATION LIMITED - BETA KARA NAVIGATION LIMITED - ALPHA KARA NAVIGATION LIMITED - ALPHA NARI NAVIGATION LIMITED - EPSILON NARI NAVIGATION LIMITED - GAMMA KARA NAVIGATION LIMITED - IOTA NARI NAVIGATION LIMITED - KAPPA NARI NAVIGATION LIMITED - MU NARI NAVIGATION LIMITED - LAMBDA NARI NAVIGATION LIMITED - ZETA NARI NAVIGATION LIMITED - BUSHEHR SHIPPING COMPANY LIMITED - THETA NARI NAVIGATION LIMITED - KINGSWOOD SHIPPING COMPANY LIMITED - SHERE SHIPPING COMPANY LIMITED - JACKMAN SHIPPING COMPANY LIMITED - KERMAN SHIPPING COMPANY LIMITED - TONGHAM SHIPPING COMPANY LIMITED - OXTED SHIPPING COMPANY LIMITED - UPPERCOURT SHIPPING COMPANY LIMITED - NEWHAVEN SHIPPING COMPANY LIMITED - REIGATE SHIPPING COMPANY LIMITED - VOBSTER SHIPPING COMPANY LIMITED - QUINNS SHIPPING COMPANY LIMITED - WOKING SHIPPING COMPANY LIMITED - MARBLE SHIPPING COMPANY LIMITED - PETWORTH SHIPPING COMPANY LIMITED

-- We are concerned that IRISL could use these phantom companies to engage in proliferation-related activity and avoid scrutiny from foreign governments.

POINTS FOR MALTA ONLY: -- We urge Maltese government officials to approach law firms in Maltese jurisdiction and recommend that they institute enhanced vigilance over transactions with IRISL and its affiliates that may facilitate evasion of UN Security Council restrictions.

-- The U.S. values Malta's partnership on proliferation-related issues and its previous attentiveness to IRISL's deceptive practices.

END POINTS FOR MALTA ONLY -- We look forward to working with you on this and other related security and counter-proliferation matters, and are prepared to provide additional assistance as appropriate. END TEXT OF S//REL MLT, GBR, AND GER NONPAPER

------------------ REPORTING DEADLINE ------------------

7.(U) Post should report results within seven business days of receipt of this cable. Please slug replies for ISN, T, EAP, EUR, TREASURY, and NEA. Please use the caption SIPDIS in all replies.

---------------- STATE 00052348 004 OF 004 POINT OF CONTACT ----------------

8.(U) Washington point of contact for follow-up information is XXXXXXXXXXXX.

9.(U) Department thanks Post for its assistance. 
CLINTON