[EN-SEA] IRISL Still Free to Trade in UK

David Osler - Tuesday 13 October 2009

ISLAMIC Republic of Iran Shipping Line ’s British subsidiaries IRISL UK and Irinvestship, with offices in London , Liverpool and Felixstowe, can continue to operate legally in this country despite Monday’s ban on the provision of financial services to the parent company, the Treasury has confirmed to Lloyd’s List.

An IRISL UK representative in London said that she was aware of no communication from the British government restricting activities. It remains unclear whether IRISL has any recourse to shipfinance from UK sources, but being partly owned by the Iranian state, it would have no obvious necessity to do so.

One potential impact of the decision is that hull underwriters are now formally banned from writing IRISL business, but as far as Lloyd’s is aware, none of them does so anyhow, and the move is unlikely to make any practical difference.

Nor does the ruling prevent British companies such as multinational agency chains supplying services to shipowners at locations around the world, although some of them may choose not to do so.

The developments suggest that the announcement of a tough line against the company, which is accused of transporting goods for Iran ’s ballistic missile programme and its alleged nuclear weapons programme, will overall have little teeth and may be intended largely for show.

The Treasury order — a so-called direction, made by the Treasury under the Counter-Terrorism Act 2008 — also forbids transactions with Bank Mellat, an Iranian bank.

Mark Dunn, a risk and compliance specialist at LexisNexis, said that the legislation was specifically aimed at financial services, but could have indirect effects on financial services users, such as shipping concerns.

“There are different flavours of the directions that may come from government, but they have made it very clear that no financing is to be offered to these companies without the financial institutions applying for a licence and asking whether they can do business or not,” he said.

As only financial services are covered, nothing stops the provision of agency services, Mr Dunn added. IRISL is on the US list of Iranian entities under full rather than limited sanctions, but not on the equivalent UK list.

A Treasury representative confirmed that the direction was aimed solely at IRISL, and that IRISL UK and Irinvestship would be allowed to continue to operate, as they were subsidiaries and therefore not covered by the legislation.

“We’re not shutting [the agencies] down. We are saying people cannot trade with them. If you needed to pay for something or a service provided, you would be unable to do so.”

Nor is IRISL UK ’s bank account affected by the direction, which was an order to cease financial services business but not an asset freeze.

Asked if the Treasury whether it knew of any British companies providing financial services to IRISL, the spokesman said the matter could not be discussed. “I can’t go into details. I am pretty much not saying yes and I’m not saying no,” he added.

Lloyd’s of London said that it is almost entirely confident that there is no exposure whatsoever to IRISL. “We have told the underwriters that if you are involved, you have to stop. But we have taken a look into our own records and there is unlikely to be any material exposure at all.”

In March this year, Lloyd’s List revealed that IRISL had changed the names of more than 40 of its vessels since US Treasury’s Department’s Office of Foreign Assets Control instituted sanctions against it in 2008.

Many vessels bearing politically-charged names were redesignated after flowers. For instance, boxship New State now trades as Dandelion.

Iran has long been a target of US sanctions, with relations poor since the Iranian revolution of 1979. In September 2008, OFAC named IRISL and 17 allegedly linked entities as providing logistics services to Iran ’s Ministry of Defence.

Source : Lloyd’s List, 13.10.09