(October 29, 2020) – On August 27, 2020, a U.S. grand jury indicted the Iranian businessmen Mohsen Faghihi and Sahebali Moulaei as well as the Indonesian nationals Alfrets and Arnold Kaunang. The U.S. Justice Department charged Faghihi, Moulaei, and the Kaunangs with smuggling goods from the United States and violating the International Emergency Economic Powers Act (IEEPA). According to the indictment, the network procured U.S.-made products for Iran Aircraft Manufacturing Industries Company (IAMI), a branch of Iran’s military.
IAMI, a subsidiary of the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL), has a history of using illicit means to procure goods from the United States. The company’s involvement in this scheme suggests that Iran continues to depend on foreign components for its military aircraft despite claiming to have achieved self-sufficiency. The U.S. Treasury Department sanctioned IAMI—also known by the Persian acronym “HESA”—in 2008 because of its relationship with MODAFL and the Islamic Revolutionary Guard Corps (IRGC). The Treasury noted at the time that “the IRGC utilizes the ‘Ababil’ UAV, manufactured by HESA.”
In addition to the U.S. measures, IAMI remains subject to sanctions enacted by the Australia, Canada, Japan, South Korea, and the European Union over its contribution to Iran’s military development. The United Nations has also sanctioned one of IAMI’s subsidiaries, Farasakht Industries.
U.S. authorities allege that IAMI sought U.S.-made products to advance its “military and civilian capabilities” and looked to a series of middlemen in Iran and Indonesia to obtain the goods. Faghihi, Moulaei, and the Kaunangs, in turn, launched a multi-country procurement operation.
The Network
The indictment describes Faghihi, a resident of Tehran, as a procurement agent for IAMI. U.S. authorities argue that Faghihi outsourced many of IAMI’s requests for products manufactured in the United States to Moulaei, a Tehran-based trader also known as “Ali Moulaei” and “Saeed Moulaei.” According to the indictment, Moulaei serves as the managing director of Sepehr Ghoghnoos Kish Company, a firm located on the Iranian island of Kish; records from Iran’s company register indicate that Moulaei also chairs the firm’s board of directors. The indictment names him as the general director of yet another business, HRM Enterprise SDN BHD, a technology company in the Malaysian capital of Kuala Lumpur that specializes in “information technology products, spare parts, and electrical products and equipment.”
The Justice Department accuses Faghihi and Moulaei of partnering with Alfrets Kaunang, a businessman in the Indonesian province of West Java, and his son Arnold Kaunang. The pair operate the Indonesian company PT. Alstevia Dirga Deraya. According to the firm’s website, it is a provider of “total aircraft support” and “aircraft spare parts.” The website’s “Aircraft Capabilities” section further suggests that PT. Alstevia Dirga Deraya can service several types of Soviet- and U.S.-origin military aircraft.
Over the course of the scheme, PT. Alstevia Dirga Deraya bought goods from the United States, then worked with HRM Enterprise to send the products to Sepehr Ghoghnoos Kish in Iran.
The Scheme
According to U.S. authorities, the operation began in August 2015, when Faghihi asked Moulaei for assistance with the acquisition of U.S.-made components for IAMI aircraft. Moulaei then contacted the Kaunangs, who used their company to buy the goods from the United States. After making the purchases, the Kaunaungs would transship the parts from Indonesia to Malaysia in coordination with HRM Enterprise, Moulaei’s Malaysian company. Moulaei would then forward the components to Sepehr Ghoghnoos Kish in Iran. Throughout this process, Moulaei received payments for his services from IAMI before redistributing some of the money to the Kaunangs.
In interactions with the U.S. companies selling the goods, the Kaunangs misrepresented the end user of the components as Indonesian. This step prevented the U.S. firms from discovering that the Kaunangs were, in fact, sending the products to Iran. The indictment implies that Sepehr Ghoghnoos Kish served as a front organization for IAMI, the ultimate recipient of the goods.
U.S. authorities highlighted 2018 as the scheme’s most successful year. During that time, the Kaunangs used PT. Alstevia Dirga Deraya to seek 52 types of U.S.-manufactured components for aircraft on behalf of IAMI; the indictment includes a table listing orders for thousands of bearings, bolts, circuit breakers, end caps, grommets, locknuts, nuts, pins, rings, and washers from companies in Arizona, Florida, Georgia, Illinois, Maryland, Ohio, Texas, and Virginia. Sepehr Ghoghnoos Kish then received the shipments in Iran. HRM Enterprise gave the Kaunangs at least $40,000 for the purchases.
In several instances described in the indictment, it remains unclear whether the goods that IAMI requested were delivered to Iran. Between January and March 2019, for example, Moulaei collaborated with the Kaunangs to buy $30,000 of components for aircraft from U.S. companies, routing the shipments through Singapore. However, the indictment fails to clarify what happened after that point. In a similar case, Faghihi directed Moulaei in February 2019 to seek the Kaunangs’ assistance with the acquisition of U.S.-made products worth $250,000. The Kaunangs procured some of the products from a supplier in Maryland, which delivered the goods to Singapore. Once again, though, the narrative stops there.
As early as July 2016, Faghihi pressed Moulaei to obtain over $45,000 in U.S.-manufactured goods for IAMI’s aircraft. While Moulaei was exchanging messages with the Kaunangs at that time, it is not known whether Faghihi’s directive resulted in any successful shipments.
The indictment also includes details about a separate exchange between Moulaei and an individual identified as “a helicopter broker in China.” In August and September 2017, Moulaei corresponded with the broker about buying U.S.-made helicopters for delivery to Iran. Moulaei also asked the broker about obtaining drones and an electronic system for a piloting turret that included “night vision, camera, laser, range finder, thermal imaging, television channel and multi function LCD with target detection range 10 km.” However, the indictment does not connect this query to IAMI or confirm if the correspondence resulted in any purchases, let alone the delivery of these items to Iran.
A Pattern
This case is not the first time that Iran has used Indonesian front companies to obtain U.S.-origin aircraft parts. On December 10, 2019, a U.S. grand jury indicted the Indonesian businessman Sunarko Kuntjoro and three companies affiliated with him—PT Antasena Kreasi, PT Kandiyasa Energi Utama, and PT MS Aero Support—on charges of violating the IEEPA and a host of other U.S. laws. On August 19, 2020, the U.S. Commerce Department went a step further by adding Kuntjoro, his brother Satrio Wiharjo Sasmito, his son Triadi Senna Kuntjoro, and the three companies involved in the scheme to the Denied Persons List, temporarily blocking their ability to trade with the United States.
U.S. authorities accuse Sunarko Kuntjoro, his relatives, and his companies of coordinating with Mustafa Oveici, a top executive at the Iranian airline Mahan Air, to move U.S.-origin goods to Iran between March 2011 and July 2018.
Mahan Air is subject to a string of U.S. sanctions. The Treasury first designated the company in 2011 “for providing financial, material, and technological support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF),” a wing of Iran’s military with ties to terrorist groups. In the last year, the U.S. State Department has also sanctioned Mahan Air for transporting export-controlled materials relevant to Iran’s nuclear and ballistic missile programs.
Kuntjoro and Oveici’s plot seems to have followed the same basic outline used in the IAMI case. Kuntjoro ordered goods from U.S. companies for delivery to third countries, in this case Hong Kong, Singapore, and Thailand, which he described as the final destination of the goods. He then transshipped the items to Iran. Using similar methods of obfuscation, Kuntjoro and Oveici sent parts from Mahan Air’s aircraft in Iran for repairs in the United States.
Similarities notwithstanding, Kuntjoro had access to much larger sums of money than the Kaunangs. According to the indictment, Kuntjoro in one case “caused the shipment of dozens of used and damaged Mahan airplane parts through Bangkok and Singapore to Conspirator B for repair and refurbishment in the United States, and submitted purchase and repair orders to Mahan in an amount in excess of $3 million.”
Case Status
All the defendants in the IAMI and Mahan Air cases remain at large. Because Indonesia does not have an extradition agreement with the United States, the Kaunangs and Kuntjoro are unlikely to stand trial.
If one of the defendants travels to a country that does perform extraditions to the United States, U.S. officials may seek the arrest of that individual. The indictment in the IAMI case implies that at least some of the defendants traveled abroad over the course of the multiyear conspiracy. The publicity surrounding the charges against the defendants in both cases, however, makes future overseas travel less likely.
Source » iranwatch