DefenseNews.com
September 27, 2013
September 27, 2013
WASHINGTON — A contractor has admitted that it shipped dozens of containers
filled with construction supplies through Iran to Afghanistan to support US
troops there, a possible violation of US law. Internal emails suggest that at
least one senior executive was involved in the process.
The company, Anham FZCO, a Dubai-based firm with US offices in McLean, Va., has received contracts with a total value in the billions to provide logistical support for US military operations in the Middle East, including one valued at US $8.1 billion in June 2012.
Shipping items through Iran is more direct, and therefore far less costly than other transport routes and avoids the contentious Afghanistan/Pakistan border, where Taliban rebels and others prey on convoys carrying allied military supplies.
The Wall Street Journal first reported the shipments, which included dozens of truckloads of steel and insulation panels, through Iranian ports to the Afghan border Sept. 26. In some cases, the shipments were routed through Iran, into Turkmenistan and then on to Afghanistan. The Journal article said the company claimed senior executives were previously unaware of the deals and noted that the company’s CEO and managing director were not copied on emails the paper analyzed for the story.
But emails obtained by Defense News tell a different story. The internal company emails show that Fadi Nahas, vice president of operations for Anham and the company’s No. 3 executive — according to one source — was part of several email chains discussing details of the shipments, including their transfer from Iranian to Afghan couriers at the Islam Qala border crossing, and complications with Iranian customs.
In response to one email describing issues with the transport of steel and extra payments of $500 to drivers, an email from Nahas’ company account, and signed “Fadi,” raises concern about the cost:
“We shud [sic] call dispatch and resolve instead of paying. Now we have 2 pots of money, and transport is mixed with slush funds.”
Mazen Farouki, brother of CEO A. Huda Farouki, and head of Unitrans International — a subcontractor involved with transporting the items — was also copied on several emails.
Anham disclosed the shipments through Iran to government agencies in the past several days, although the Wall Street Journal noted it had raised the topic of the shipments with Anham several weeks ago.
A company spokesman was asked by Defense News to comment on Nahas’ role and about the discussion of “slush funds.” Excerpts from some of the emails were provided to the spokesman, who declined to comment.
Cash payments to officials to help move goods across borders are not unusual in the Middle East, although companies that are subject to the UK anti-bribery act, which is most of the defense industry, are prohibited from making such payments except in cases involving the safety of an industry representative, an industry source said.
Nahas did not return an email requesting clarification as to what the term might have meant.
The spokesman was also asked if the company wanted to rethink its position that top executives were unaware of the shipments, and declined several requests to comment on the details of this story.
The spokesman provided a statement in response.
“Anham has made a voluntary disclosure to the [US] Treasury and Commerce Departments that some items were transhipped through Iran and we are currently conducting a full investigation,” the Anham statement said. “Based on the current state of the investigation, Anham believes that only a handful of foreign-origin items for use in Afghanistan were involved out of our thousands of shipments to Afghanistan, all or some of which we believe may have been eligible for such transshipment under legal exceptions and other provisions of law in place at the time. We will not comment on any specific charges or allegations until that investigation is complete nor will we be responding to rumors and innuendo. Anham remains committed to providing the best service in a remarkably hostile environment.”
Douglas Ide, a spokesman for the US Defense Logistics Agency (DLA), the contracting authority on the program, which was connected to a warehouse Anham was building with construction materials shipped through Iran, said the agency learned of the Iran issue on Sept. 23.
“Anham leadership notified DLA leadership Sept. 23 that it made a disclosure to the US Treasury and the Commerce departments, stating that certain items may have been transshipped through Iran by a subcontractor,” Ide wrote in an email.
While the agency monitors the shipment of food items, the components included in Anham’s shipments were for use in building a company warehouse required to complete its contract with DLA.
“DLA monitors the routes used by our vendors for transportation of all items to be delivered to the US Government, but does not generally monitor the routes used by the vendors to obtain equipment it will use in the operation of their facilities,” Ide wrote. “Clauses are included in our contracts regarding specific source restrictions, and our vendors are expected to comply.”
In 2010, the Treasury Department released guidance on shipment through Iran to help businesses navigate the issue.
“Under the ITR [Iranian Transaction Regulations], goods that are transshipped through Iran enter into Iranian Commerce and become ‘goods of Iranian origin,’ ” the guidance said. “US persons are prohibited from engaging in transactions or dealings in or related to those goods unless authorized by general or specific license.”
The guidance goes on to note that most of the exceptions to the rules involve Iranian carpets and foodstuffs. Anham, while claiming that some of the shipments may have been eligible for exceptions, has not claimed it received any.
One email chain that included subcontractors and several Anham employees, reproduced verbatim here, described issues with suspicious guards at the border crossing into Afghanistan through the Turkmenistan route.
“Lot of people in Aqina taking and looking at your containers now, we don’t know from where they getting information the containers has danger goods and it is going governments identify that is wrong way to deal with, please give us time to do our best and solve problems you made at Aqina border as agreed,” RCCC, a Dubai-based subcontractor, wrote.
Anham was previously in the news after being named in the final report from the US special inspector general for Iraq reconstruction.
The report blamed Anham and its subcontractors for a series of overcharges on a $300 million contract, including:
*$900 for a control switch valued at $7.05 (a 12,766 percent markup).
*$80 for a small segment of drain pipe valued at $1.41 (a 5,674 percent markup).
*$75 for a different piece of plumbing equipment also valued at $1.41 (a 5,319 percent markup).
*$3,000 for a circuit breaker valued at $94.47 (a 3,176 percent markup).
*$4,500 for another kind of circuit breaker valued at $183.30 (a 2,455 percent markup).
In 2004, the company won a US supply contract for the Iraqi security forces with a $259 million bid, prompting complaints from competitors that the bid was very low.
The contract was re-competed after a company called Nour won a competition with a bid of $327 million, an award that was contested. But Nour and Anham have the same backers and directors and were operating at the same time (nourusa.com, the former website of Nour’s US group, now redirects viewers to Anham.com).
Both were backed by A. Huda Farouki, known to be a close associate of Ahmad Chalabi, the Iraqi national who is often credited with convincing the US to go to war in Iraq in 2003.
Farouki maintained the Nour businessname for years afterward, and at least one person copied in emails reviewed by Defense News was still using a Nour emailaccount. The name was in use until at least the fourth quarter of 2010, when Nour USA was listed as a client of the Cohen Group, the lobbying firm founded by former US Defense Secretary William Cohen, on a lobbying disclosure form. .
The emails reviewed by Defense News show a difficult shipping process fraught with delays and occasionally yielding obvious frustration.
“We are surprised when you say, ‘Everything is going well, we are moving the containers,’ ” one subcontractor wrote. “Your assessment of your performance is completely absurd! Freight must ‘NEVER’ stop in the pipeline.”
The company, Anham FZCO, a Dubai-based firm with US offices in McLean, Va., has received contracts with a total value in the billions to provide logistical support for US military operations in the Middle East, including one valued at US $8.1 billion in June 2012.
Shipping items through Iran is more direct, and therefore far less costly than other transport routes and avoids the contentious Afghanistan/Pakistan border, where Taliban rebels and others prey on convoys carrying allied military supplies.
The Wall Street Journal first reported the shipments, which included dozens of truckloads of steel and insulation panels, through Iranian ports to the Afghan border Sept. 26. In some cases, the shipments were routed through Iran, into Turkmenistan and then on to Afghanistan. The Journal article said the company claimed senior executives were previously unaware of the deals and noted that the company’s CEO and managing director were not copied on emails the paper analyzed for the story.
But emails obtained by Defense News tell a different story. The internal company emails show that Fadi Nahas, vice president of operations for Anham and the company’s No. 3 executive — according to one source — was part of several email chains discussing details of the shipments, including their transfer from Iranian to Afghan couriers at the Islam Qala border crossing, and complications with Iranian customs.
In response to one email describing issues with the transport of steel and extra payments of $500 to drivers, an email from Nahas’ company account, and signed “Fadi,” raises concern about the cost:
“We shud [sic] call dispatch and resolve instead of paying. Now we have 2 pots of money, and transport is mixed with slush funds.”
Mazen Farouki, brother of CEO A. Huda Farouki, and head of Unitrans International — a subcontractor involved with transporting the items — was also copied on several emails.
Anham disclosed the shipments through Iran to government agencies in the past several days, although the Wall Street Journal noted it had raised the topic of the shipments with Anham several weeks ago.
A company spokesman was asked by Defense News to comment on Nahas’ role and about the discussion of “slush funds.” Excerpts from some of the emails were provided to the spokesman, who declined to comment.
Cash payments to officials to help move goods across borders are not unusual in the Middle East, although companies that are subject to the UK anti-bribery act, which is most of the defense industry, are prohibited from making such payments except in cases involving the safety of an industry representative, an industry source said.
Nahas did not return an email requesting clarification as to what the term might have meant.
The spokesman was also asked if the company wanted to rethink its position that top executives were unaware of the shipments, and declined several requests to comment on the details of this story.
The spokesman provided a statement in response.
“Anham has made a voluntary disclosure to the [US] Treasury and Commerce Departments that some items were transhipped through Iran and we are currently conducting a full investigation,” the Anham statement said. “Based on the current state of the investigation, Anham believes that only a handful of foreign-origin items for use in Afghanistan were involved out of our thousands of shipments to Afghanistan, all or some of which we believe may have been eligible for such transshipment under legal exceptions and other provisions of law in place at the time. We will not comment on any specific charges or allegations until that investigation is complete nor will we be responding to rumors and innuendo. Anham remains committed to providing the best service in a remarkably hostile environment.”
Douglas Ide, a spokesman for the US Defense Logistics Agency (DLA), the contracting authority on the program, which was connected to a warehouse Anham was building with construction materials shipped through Iran, said the agency learned of the Iran issue on Sept. 23.
“Anham leadership notified DLA leadership Sept. 23 that it made a disclosure to the US Treasury and the Commerce departments, stating that certain items may have been transshipped through Iran by a subcontractor,” Ide wrote in an email.
While the agency monitors the shipment of food items, the components included in Anham’s shipments were for use in building a company warehouse required to complete its contract with DLA.
“DLA monitors the routes used by our vendors for transportation of all items to be delivered to the US Government, but does not generally monitor the routes used by the vendors to obtain equipment it will use in the operation of their facilities,” Ide wrote. “Clauses are included in our contracts regarding specific source restrictions, and our vendors are expected to comply.”
In 2010, the Treasury Department released guidance on shipment through Iran to help businesses navigate the issue.
“Under the ITR [Iranian Transaction Regulations], goods that are transshipped through Iran enter into Iranian Commerce and become ‘goods of Iranian origin,’ ” the guidance said. “US persons are prohibited from engaging in transactions or dealings in or related to those goods unless authorized by general or specific license.”
The guidance goes on to note that most of the exceptions to the rules involve Iranian carpets and foodstuffs. Anham, while claiming that some of the shipments may have been eligible for exceptions, has not claimed it received any.
One email chain that included subcontractors and several Anham employees, reproduced verbatim here, described issues with suspicious guards at the border crossing into Afghanistan through the Turkmenistan route.
“Lot of people in Aqina taking and looking at your containers now, we don’t know from where they getting information the containers has danger goods and it is going governments identify that is wrong way to deal with, please give us time to do our best and solve problems you made at Aqina border as agreed,” RCCC, a Dubai-based subcontractor, wrote.
Anham was previously in the news after being named in the final report from the US special inspector general for Iraq reconstruction.
The report blamed Anham and its subcontractors for a series of overcharges on a $300 million contract, including:
*$900 for a control switch valued at $7.05 (a 12,766 percent markup).
*$80 for a small segment of drain pipe valued at $1.41 (a 5,674 percent markup).
*$75 for a different piece of plumbing equipment also valued at $1.41 (a 5,319 percent markup).
*$3,000 for a circuit breaker valued at $94.47 (a 3,176 percent markup).
*$4,500 for another kind of circuit breaker valued at $183.30 (a 2,455 percent markup).
In 2004, the company won a US supply contract for the Iraqi security forces with a $259 million bid, prompting complaints from competitors that the bid was very low.
The contract was re-competed after a company called Nour won a competition with a bid of $327 million, an award that was contested. But Nour and Anham have the same backers and directors and were operating at the same time (nourusa.com, the former website of Nour’s US group, now redirects viewers to Anham.com).
Both were backed by A. Huda Farouki, known to be a close associate of Ahmad Chalabi, the Iraqi national who is often credited with convincing the US to go to war in Iraq in 2003.
Farouki maintained the Nour businessname for years afterward, and at least one person copied in emails reviewed by Defense News was still using a Nour emailaccount. The name was in use until at least the fourth quarter of 2010, when Nour USA was listed as a client of the Cohen Group, the lobbying firm founded by former US Defense Secretary William Cohen, on a lobbying disclosure form. .
The emails reviewed by Defense News show a difficult shipping process fraught with delays and occasionally yielding obvious frustration.
“We are surprised when you say, ‘Everything is going well, we are moving the containers,’ ” one subcontractor wrote. “Your assessment of your performance is completely absurd! Freight must ‘NEVER’ stop in the pipeline.”
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