Exclusive: Iranian cell-phone carrier obtained banned U.S. tech By Steve Stecklow Posted 2012/06/04 at 1:40 pm EDT WASHINGTON, June 4, 2012 (Reuters) A fast-growing Iranian mobile-phone network managed to obtainsophisticated U.S. computer equipment despite sanctions thatprohibit sales of American technology to Iran, interviews anddocuments show. MTN Irancell, a joint venture between MTN Group Ltd of South Africaand an Iranian government-controlled consortium, sourced equipmentfrom Sun Microsystems Inc, Hewlett Packard Co and Cisco SystemsInc, the documents and interviews show. |
MTN owns 49% of the jointventure but provided the initial funding. The procurement - through a network of tech companies in Iran andthe Middle East - offers further evidence of the limitations ofU.S. economic sanctions. The sanctions are intended to curb Iran's nuclear program, whichTehran maintains is peaceful. No U.S.
company can sell goods orservices to Iran unless it obtains special authorization, such asfor humanitarian aid. But U.S. enforcement has focused oncontaining Iranian banks, terrorism, Iran's oil industry, andindividuals and companies that Western capitals believe areinvolved in Tehran's nuclear development program. Reuters reported in March and April that ZTE Corp, a Chinesetelecom-equipment maker, had sold or agreed to ship millions ofdollars worth of U.S.
hardware and software to Iran since 2010despite a longtime U.S. sales ban on tech products to Iran. Thebuyers were Iran's largest telecom carrier, Telecommunication Co ofIran, and a unit of the consortium that controls it. The U.S.Department of Commerce is investigating. People involved in Iran's telecommunications industry say U.S.computer components remain widely available in Iran today.
"There's nothing you can get in the U.S. or Dubai that you can'tget in Iran," Chris Kilowan, who was MTN's top executive in Iranfrom 2004 to 2007, said in an interview. He said MTN's parentcompany, MTN Group, was directly involved in procuring U.S. partsfor MTN Irancell, which launched in 2006 and is now Iran'ssecond-largest mobile-phone operator. "All the procedures and processes around procurement wereestablished by MTN," he said.
He said the company agreed to allowits Iranian partners and MTN Irancell to set up a local Iraniancompany with the "basic" purpose of evading sanctions on Iran. In a statement, Paul Norman, MTN Group's chief corporate affairsofficer, said: "To the best of our knowledge, MTN personnel,directly or indirectly, did not acquire or seek to acquireequipment for use in Irancell's operations in a manner that wasintended to avoid or circumvent U.S. sanctions. MTN is committed tocompliance with U.S. sanctions, and is working with the U.S.government and its international legal counsel to remain compliant.MTN owns a non-controlling 49% share in Irancell." Reuters provided MTN with the names of four current MTN Groupexecutives believed to have knowledge of the procurement of U.S.parts by MTN Irancell.
MTN declined to make any of them availablefor interviews. Kilowan is a central figure in a lawsuit, filed in Washington inMarch, against MTN by a rival telecommunications company, Turkcell.The Turkish telecom carrier has accused MTN of bribing an Iranianofficial and other alleged wrongdoing "to steal" from it theoriginal license to launch the operation that became MTN Irancell.Kilowan has provided thousands of pages of documents to Turkcell.MTN denies the allegations and has called Kilowan "a disgruntledformer employee" who is an unreliable witness. Kilowan's claims regarding how MTN Irancell obtained U.S. parts forits network are not a subject of the lawsuit. The claims weresupported in documents and numerous interviews conducted byReuters.
For example, Reuters reviewed an 89-page MTN Irancell document from2008 that shows the telecom carrier was specifically interested inacquiring embargoed products. The document spells out the requirements of a managed-servicescontract it ultimately awarded to Huawei Technologies Co, China'slargest telecom-equipment maker. In a section on managingproduct-support agreements for third-party equipment, the MTNIrancell document states, "This should include embargo items." The document also includes lists of network equipment, includingCisco routers, Sun servers and products from HP. Ross Gan, a spokesman for Huawei, said the company observes U.S.export laws and did not provide any equipment to MTN Irancell."Based on our limited understanding, we are unaware of anyembargoed components," he said.
He also said Huawei was "unaware"of the contract document that refers to "embargo items." In interviews, the U.S. companies said they were not aware MTNIrancell had acquired their equipment. Two companies - Oracle Corp,which owns Sun, and Cisco - said they were investigating thematter. A spokesman for Cisco said: "Cisco complies with all US export lawsand requires our business partners to expressly acknowledge thatthey too must abide by these laws. We have been unable to find anyinformation suggesting that Cisco employees were aware of any salesof Cisco equipment to Iran.
We continue to investigate this matter,as any violation of U.S. export controls is a very serious matter." A spokeswoman for HP said its distribution contract terms prohibitsales into Iran. "Compliance with US and international trade law isa high priority for HP," she said. Kilowan said MTN Irancell originally obtained Sun servers from anIranian firm called Patsa Co. He said an official with Patsaapproached him and said: "We know you'll need these servers.
Wealready have them in Iran." Kilowan said the company delivered atleast a half dozen of the servers about two weeks later in early2006. The official at Patsa didn't return a call and emails seekingcomment. Patsa later won a contract to manage MTN Irancell's data center,which contains customer information. Kilowan said an Iranianofficial at the telecom carrier said Patsa could only have thecontract if it partnered with MTN's Iranian partners - Sairan,which is believed to be controlled by Iran's defense ministry, andBonyad Mostazafan, which is believed to report directly to Iran'ssupreme leader. Kilowan said the three companies then set up an Iranian firm calledArya Hamrah Samaneh Co with MTN's approval.
He said Arya Hamrah wasused to "camouflage" purchases of embargoed equipment. Arya Hamrah's website recently said the company was founded in 2006and was "a leading technology services company." According toarchive.org, which archives websites, the company in 2007 listedonly one customer under "Projects" - MTN Irancell - and stated itwas involved in "procurement" for the telecom carrier's datacenter. The section of the 2008 MTN Irancell contract document that refersto "embargo items" also states that the telecom carrier had asupport contract with "Arya Hamra Systems" and that "it would beprudent for the selected vendor to use the same supplier." Thespokesman for Huawei, which won the contract, said his company "hasnever worked with Arya Hamrah Samaneh as part of the managementservice contract with MTN Irancell." An Iranian familiar with Arya Hamrah said it was a "major partnerand major supplier" of MTN Irancell and that it was able to procureequipment from Sun and HP without any problems, via Dubai. Hedeclined to discuss Arya Hamrah's ownership, saying it was "asecret." Another person familiar with Arya Hamrah said one of its sourcesfor Sun equipment for MTN Irancell was an Iranian firm calledFakour Co, with which Arya Hamrah sometimes competes.
The home page of Fakour's website, fakour.net, features the logo ofOracle, which owns Sun. The website also includes detailedinformation about Sun products including Sun marketing material.The site states: "For near twenty years, Fakour Co has beenrecognized for its innovation and leadership in bringing networkcomputing products especially Sun Microsystems products andservices to the country's market." A lengthy list of Fakour's "main customers" for its "Fakour SunMicrosystems services department" includes Irancell, Arya Hamrahand Huawei. The list also includes 10 Iranian banks, Iran'sMinistry of Energy and numerous Iranian oil companies. U.S. tradesanctions specifically target some of the banks and other firms onthe list.
A manager at Fakour did not respond to a request for comment. Mahmoud Tadjallimehr, a former project manager at MTN Irancell,said in an interview he was present when the telecom carrierobtained more than 10 Cisco routers and numerous switches in 2007to route communications traffic. Tadjallimehr worked at the timefor Nokia Siemens Networks, but said Nokia-Siemens refrained fromany involvement in obtaining embargoed equipment. He said asubcontractor called Shabakkat "did all the work to source theproducts." Shabakkat is a telecom service provider based in Kuwait. At thetime, it had a unit in Iran called Shabakkat Cellular that workedon the MTN Irancell project.
Issaad Assoufi, who was countrymanager in Iran for Shabakkat Cellular, said in an interview thatequipment was purchased from a local company in Iran and that hisfirm was not involved with bringing it into the country. Hedeclined to identify the local company but said it was not AryaHamrah, which he said his company had declined to do business with. "I don't have anything to hide," Assoufi said. "I didn't doanything illegal." Asked how the local Iranian company obtained Cisco products, hesaid: "How they got into the country, this is another story. Idon't have any idea and I don't want to know." (Additional reporting by Marcus George in Dubai and Sylvia Westallin Kuwait.
Editing by Michael Williams.).
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