U.S. to Lift Sanctions on Khamenei’s Financial Empire

Khamenei’s financial network estimated to be worth at least $95 billion

Ali Khamenei
Ali Khamenei / AP
July 28, 2015

The Obama administration is gearing up to lift economic sanctions on a nearly $100 billion network of organizations belonging to Iranian Supreme Leader Ali Khamenei, according to the parameters of the recent Iranian nuclear deal.

On the day the nuclear deal is implemented, the United States will lift sanctions on Khamenei’s financial empire, which comprises a large network of foundations and companies that personally enrich the Islamic Republic’s leader.

The removal of these sanctions will likely "pump tens of billions of dollars into the supreme leader’s personal coffers, helping him secure his grip on the Iranian people, and bolstering Iran’s ability to promote its agenda abroad," according to a recent analysis from the Foundation for Defense of Democracies.

Iran is poised to receive billions of dollars in sanctions relief under the deal and will also see restrictions on its Revolutionary Guards Corps waived.

U.S. lawmakers and critics of the deal maintain that Iran will use this money and newfound freedom to boost its rogue activities in the region and fund terrorist proxy groups, such as Hezbollah.

A comprehensive reading of the agreement also reveals that the United States agreed to waive sanctions on the conglomerate at the center of Khamenei’s financial empire, known as the Headquarters for the Execution of Imam Khomeini’s Order, or EIKO.

According to analysts at the foundation, "of all the sanctions to be lifted in last week’s Iran nuclear agreement, few are more significant" than those applying to EIKO.

Since its creation in 1989 by Khamenei’s predecessor, the Ayatollah Ruhollah Khomeini, the EIKO "has grown into a vast business conglomerate—everything from agriculture to leisure resorts, parking lots and residential complexes—but one that remains unknown to many Iran watchers and even most Iranians," according to the foundation.

EIKO and 37 affiliated subsidiaries were sanctioned by the U.S. Treasury Department in June 2013 due to their efforts "to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators," according to the designation.

EIKO, which is also known as Setad, is suspected to be worth at least $95 billion in total, according to reports that estimate its real-estate holding at $52 billion and its public holdings at $3.4 billion.

U.S. sanctions on "all the companies controlled by the supreme leader" will be lifted under the nuclear deal, analysts at the foundation found.

"These include Rey Investment Company (the $40-billion investment arm of a religious trust), Parsian Bank and Karafarin Bank (publicly traded banks worth $900 million and $830 million respectively) and Tadbir Group, EIKO’s investment arm on the Tehran Stock Exchange," according to the foundation.

This assessment comports with the terms of the deal, which states: "This JCPOA will produce the comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran’s nuclear programme, including steps on access in areas of trade, technology, finance and energy."

Two experts at the foundation, Emanuele Ottolenghi and Saeed Ghasseminejad, warned that the removal of these sanctions will empower Iran to continue its expansion in the region.

"As long as the supreme leader uses shadowy, off-the-book financial assets to exert political influence, the risk that EIKO poses to the international financial system will remain undiminished," they wrote.

While U.S. citizens will continue to be prohibited from engaging in business with these companies, foreigners will be given free rein.

"This is fortuitous [sic] for EIKO," according to Ottolenghi and Ghasseminejad. "It has assets in Europe, including a German factory with advanced dual-use machinery that Iran needs for the indigenous production of centrifuges."

"The lifting of U.S. sanctions against EIKO and its subsidiaries further means that the supreme leader’s foundations may invest in European securities, among others, and benefit from normal commercial relations with foreign companies wishing to invest in Iran from around the world," according to the analysis.