When Milavous Group Ltd. rented an upper floor in a swanky Dubai corporate tower two years ago, few had heard of the firm. Yet within months it won outsized influence in global energy markets — said to be steered by a businessman whom traders describe as one of the most powerful kingpins distributing Iranian oil worldwide.
From its perch in Dubai, Milavous has raked in billions of dollars in sales from commodities originating out of Iran, Russia and elsewhere, according to more than a dozen people familiar with the matter, who requested anonymity discussing confidential business dealings. At its highest levels sits Hossein Shamkhani, the soft-spoken son of a former Iranian security chief who remains a prominent adviser to Supreme Leader Ayatollah Ali Khamenei, people with direct knowledge of the matter said.
In Dubai and trading circles worldwide, few know Shamkhani’s real identity and he is widely known only as Hector, the people said. Even fewer fully grasp the vast scale of his international network. All told, Shamkhani’s empire represents significant amounts of Iranian and Russian global crude exports, according to people with direct knowledge of his operations. Companies in his network also sell oil and petrochemicals from non-sanctioned nations and sometimes mix crude from various jurisdictions, so even buyers who test barrels may not be able to identify the country of origin, the people said.
This exclusive account of Hossein Shamkhani’s rise to prominence in global oil markets is based on interviews with more than three dozen people familiar with the operations of companies in his network — both inside and outside — as well as documents seen by Bloomberg News.
His ascent offers a glimpse into parts of a sprawling shadow economy of dark oil fleets that have sprung up since Russia’s February 2022 invasion of Ukraine. It also shows an increasing cooperation between Tehran and Moscow as global powers ratchet up sanctions against both governments. Washington faces challenges clamping down on this trade because that risks pushing up prices at the pump in an election year. Meantime, the Islamic Republic gets an annual windfall of some $35 billion from its oil exports, a boon as it backs proxy groups that have attacked Israeli or Western assets.
The US has restrictions on the sale of Iranian and Russian oil, but many nations including the United Arab Emirates and China aren’t party to them. Hossein Shamkhani isn’t under US sanctions and UAE law doesn’t prohibit firms from trading crude from Iran or Russia. Entities in his network also do substantial business with Chinese buyers, with many of these transactions in yuan and beyond the purview of American sanctions, some of the people said.
Nonetheless, the US has already sanctioned ships believed to be controlled by Shamkhani, people familiar with the matter said. Shamkhani and parts of his trading network, including Milavous, that do some business inside the dollar system, are under investigation for possible sanctions violations by the Federal Bureau of Investigation and the Treasury Department, according to the people and documents seen by Bloomberg.
In an emailed response to questions, Milavous Managing Director Mohamed Al Hashmi said the firm has no connection with Shamkhani while a lawyer representing the company said it follows all rules and has no links with any Russian or Iranian interests. Shamkhani also said he neither founded, owns or has any role in the management of Milavous. He denied owning any oil company, controlling a trading network or having a firm involved in commodities deals with Iran or Russia.
“I am not involved in the commodity industry as Bloomberg suggests,” Shamkhani said in an emailed statement sent by his lawyer, noting that he is primarily engaged in logistics. “As for my business, I operate in countries not under sanctions.”
Shamkhani’s influence is so wide that products supplied by entities in his network have also reached global majors like China’s Sinopec, US-based Chevron Corp. and UK-based BP Plc, according to people familiar with the matter and a Milavous brochure seen by Bloomberg. Spokespeople for Sinopec, Chevron and BP said they abide by all laws, regulations and trade sanctions.
“Shamkhani’s network can be considered one of the three biggest oil traders in Iran,” said Saeed Aganji, an Iranian researcher, who’s been investigating the country’s commodities industry for years. “They have a sea fleet with dozens of tankers and hidden business with big oil companies. If any of their entities are sanctioned, it would disrupt the whole oil market.”
People familiar with Shamkhani’s empire said he effectively oversees an intertwined web of companies, with Milavous operating as one of the parent firms. Business ownership, shareholding and control information are easy to obscure, and other executives have been formally registered as the owners and managers, the people said.
Bloomberg News reached out to both Milavous and Shamkhani with a detailed list of questions via email and a letter delivered by courier to Milavous’s Dubai offices. Adnan Abrahim, a UAE-based lawyer who said he’s working on behalf of Shamkhani, told Bloomberg News that his client received Bloomberg’s request for comment from Milavous and said the company had passed it on because “they know him,” declining to specify the nature of their relationship. “He has a very full plate of businesses,” Abrahim said. Some aspects of Shamkhani’s work involve “business secrets” related to “methodology and client lists,” the lawyer said, adding that those are also not illegal.
Commander’s Son
As one of Iran’s most profitable sectors, oil is top of mind for officials in the US. International restrictions on crude sales have put sharp pressure on the Iranian economy for years. Even so, the Islamic Republic helps fund Hezbollah, which has been trading rocket fire with Israel, as well as Houthi militants who have been attacking Western and Israeli ships in the Red Sea. It also backs the Palestinian Islamist group Hamas, which has been at war with Israel in Gaza for almost 11 months.
A volatile back-and-forth between Israel and Tehran escalated once more since late July when a key Hamas leader was assassinated in the Iranian capital. Iran blamed Israel and has vowed to retaliate. The Israeli government has neither confirmed nor denied being responsible. The US, meanwhile, has boosted its military capabilities in the region to help Israel.
Over the last three decades, Shamkhani’s father Ali served as naval commander for the Islamic Revolutionary Guard Corps, defense minister and then Secretary of Iran’s Supreme National Security Council, the country’s top security body.
The younger Shamkhani is in his 40s and was born in Tehran, according to people who have worked with him. He attended university in Moscow and Beirut before returning to the Iranian capital to obtain a Master of Business Administration, an archived LinkedIn profile says. Shamkhani’s Russian connections are particularly valuable at a time when Tehran and Moscow, both under Western sanctions, are strengthening their military and economic cooperation.
For outsiders, the business of oil trading has long been a black box. As far back as the 1970s, entrepreneurs like Marc Rich, who founded the company now known as Glencore, were looking for ways to trade beyond the control of the more established industry heavyweights. In recent years, a new cadre of commodities houses have sprung up in Dubai to deal in Russian oil. While it’s an opaque part of the business world, there are billions at stake. And the tycoons calling the shots are indisputably significant players in the global economy, often carrying a great deal of political influence to boot.
Shamkhani spends most of his time in Dubai, where he’s made purchases of luxury property, according to people familiar with the matter. Still, he is so insistent on keeping a low profile that even as champagne flowed at a Milavous holiday party in December, the emcee only introduced him as “H” to roaring applause, according to several people in attendance. People who know him describe a soberly dressed businessman who wears glasses and often sports either a polo shirt or suit. He’s polite and serious, they said, with a good memory for birthdays, occasionally serenading a colleague to mark their special day.
People familiar with the matter said that even if he doesn’t own them all on paper, Shamkhani was involved in setting up dozens of companies or playing a role in directing their activities. Prominent among them is Milavous, but he also effectively controls dozens of ships, the people said. Records at the Dubai International Financial Centre list the shareholder of Milavous Group Ltd. as Milavous Holding Ltd. The financial center doesn’t publicly reveal the ultimate beneficial owner of a company.
Milavous through its entities relies on blending and rebranding crude along with various petroleum products from Iran and Russia in third jurisdictions, like the UAE port city of Fujairah, people familiar with the matter said. It also handles some oil from countries that aren’t under sanctions.
These methods can obscure the origins of the oil and fuel, posing problems for clients trying to determine its provenance, according to Matthew Levitt, a former counterterrorism official at the Treasury Department and FBI.
Still, such sales serve as a vital source of revenue for sanctioned nations and their governments.
“Iran together with a series of intermediaries and Chinese buyers has set up an interlocked set of financial networks that help to sell the oil despite comprehensive sanctions,” said Rachel Ziemba, the New York-based founder of the advisory firm Ziemba Insights, who specializes in economic statecraft.
Rapid Rise
As his son built a sprawling commodities trading empire, the elder Shamkhani played a role in Tehran’s rapprochement with the senior leaders of Saudi Arabia as well as the UAE. Last year, he was replaced as Iran’s top security body chief, though he’s still part of a consultative body that advises the Supreme Leader.
During a brief TV appearance in 2008, the elder Shamkhani said he advised his son to go into the private sector rather than follow in his footsteps with a government post.
The younger Shamkhani went on to run Admiral Group, a shipping firm based in Dubai specializing in trade within the Persian Gulf and South Asia. Business became a bit more challenging in 2020, when his father was sanctioned by the US Treasury Department, some of the people said.
In the ensuing two years, Admiral’s public profile diminished, giving way to a new consortium of companies effectively overseen by the younger Shamkhani, including Milavous.
Within just two years of its incorporation in Dubai in January 2022, Milavous mushroomed into a team of nearly 200 people from just a handful of employees upon its inception, according to more than a dozen of the people.
Some ex-employees said working at Milavous felt like starring in a spy thriller. From its high-rise office, which has sweeping views of the Persian Gulf, some go by aliases — even with each other, the people said.
Another important figure in his orbit who often operates from Monaco is “Captain D,” the pseudonym of Alireza Derakhshan, a ship captain with a knack for transporting sensitive commodities, the people said. In a phone interview, Derakhshan said he’s done business with both Shamkhani and Milavous but denied having any official role within the company or related entities. In an email, Shamkhani called him a “friend” but not his partner.
Milavous’s main office sits on the 38th floor of ICD Brookfield Place, one of the most prestigious corporate addresses in Dubai. It’s several floors above international heavyweights like JPMorgan Chase & Co. and Millennium Management.
Mysterious Founders
On its website, Milavous Group says the company’s founders have more than 70 years of combined experience, without disclosing their names or prior roles. The firm says it handles a broad range of products, from oil and gas to petrochemicals, metals and agriculture. Last year, it opened new offices in Switzerland and Romania.
But it’s just one part of a vast Iranian-Russian oil network that people with direct knowledge of the matter say the younger Shamkhani helped set up.
Milavous’s business turnover in 2022 amounted to some $15 billion, according to people familiar with the matter. Annual sales across Shamkhani-associated firms total a sum that’s significantly higher than that, they said.
Shamkhani and his associates have parlayed their trading fortunes into trophy assets, and recent purchases have included yachts and lavish beachfront villas on Dubai’s Palm Jumeirah, some of the people said. In an email, Shamkhani said he doesn’t own a villa on the tree-shaped island.
There have also been some speed bumps in Shamkhani’s journey.
In the middle of last year, several big-ticket customers didn’t pay some of the firms back for shipments in a timely fashion, people familiar with the matter said. Those problems coincided with a push by the US Treasury to get stricter on Russian oil sanctions. Banks also began asking more questions amid the Treasury push, complicating money transfers, they said.
Earlier this year, Milavous abruptly shed dozens of jobs, according to more than a dozen of the people. Despite the setbacks, the people said Milavous is in a stronger position — given its business connections — than some rivals that went belly-up in recent months amid tighter sanctions. As a result, it’s able to continue selling oil, including from Iran and Russia, the people said.
Al Hashmi, the Milavous managing director, said Bloomberg’s request for comment “contained various averments and statements that mentioned the Milavous Group all of which are factually wrong, untrue, and legally incorrect and are hereby fully rejected by us.”
A spokesperson for the White House’s National Security Council said Washington’s extensive sanctions on Iran remain in place and the administration continues to increase pressure.
The US Treasury Department can sometimes find it more effective to target tankers rather than individuals because of frequent changes in ownership, according to several people familiar with the matter.
In early April, the US Treasury sanctioned roughly a dozen vessels within Shamkhani’s network without publicizing the link to him, some of the people said. Even so, more than 60 ships effectively controlled by him remain unsanctioned, they said. The US Treasury Department declined to comment. “In keeping with Department of Justice policy, we can neither confirm nor deny conducting specific investigations,” the FBI said.
In response to questions, a UAE official said in an emailed statement that the country is committed to its responsibilities to protect the integrity of the global financial system.
“The UAE strictly abides by UN sanctions and has clear and robust processes in place to deal with sanctioned entities, which we have exercised against a number of companies,” the official said. “We will continue to take these responsibilities extremely seriously and remain in close dialogue with our international partners, including the US, in this regard.”
Meanwhile, even as Milavous faces some challenges, Shamkhani is looking to bolster other firms within his network, allowing him to keep Iranian and Russian oil flowing through his web of interconnected businesses, the people said.
“It is likely to remain a cat-and-mouse and Whac-a-Mole game,” Ziemba said. Stopping the big traders of oil from sanctioned countries is possible but that means taking out the whole network, she said, which in turn “can have a ripple effect across the broader market.”
Source » mena-researchcenter