Money Bomb

07.10.15 5:15 AM ET

Clinton Foundation Donor Violated Iran Sanctions, Tried to Sell 747s to Tehran

Vahid Alaghband's firm did business with an Iranian airline accused of shipping guns and troops to Syria.

An Iranian businessman accused by the U.S. government of violating sanctions on Tehran donated money to the Clinton Foundation, The Daily Beast has confirmed.

Vahid Alaghband’s Balli Aviation Ltd., a London-based subsidiary of the commodities trading firm Balli Group PLC, tried to sell 747 airplanes to Iran, despite a federal ban on such sales. The company pleaded guilty to two counts of criminal information in 2010. In its plea agreement with the Department of Justice, Balli Aviation agreed to pay a $2 million criminal fine, serve five years of corporate probation, and pay an additional $15 million in civil fines. The hefty sum was “a direct consequence of the level of deception used to mislead investigators," Thomas Madigan, a top Justice Department official, said at the time.

Alaghband is one of an array of questionable actors who’ve been found in recent months to have given to the Clinton Foundation. The gifts—from foreign governments with human-rights violations like Qatar, Algeria, Saudi Arabia, and China, as well as FIFA, soccer’s corrupt governing body—have complicated Hillary Clinton’s campaign for president and raised questions as to whether these entities were trying to curry favor with the former Secretary of State. 

But Alaghband stands out from the rest, because the beneficiary of his firm’s deals with Tehran was an Iranian airline accused by the U.S. government of working with the regime’s foreign intelligence operatives and shipping arms and troops to Syria. Plus, if an agreement between Iran and the world’s major powers is concluded in the coming days—as is widely expected—operators like Alaghband could stand to benefit. Hillary Clinton will be put in the awkward position of either defending the act of the Obama administration in which she once served or criticizing the culmination of a U.S.-Iran rapprochement effort, which her State Department began.

One of the two counts against Balli Aviation was that it “conspired to export three Boeing 747 aircraft from the United States to Iran,” according to a Justice Department statement, without first obtaining the necessary export licenses from the U.S. government. The company then used its Armenian airline subsidiary to buy the 747s with financing obtained from Mahan Air, Iran’s largest private airline, which is thought by the State Department to be controlled by former Iranian President Akbar Hashemi Rafsanjani.

In 2011, the Treasury Department sanctioned the airline for “providing financial, material and technological support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF),” or the expeditionary arm of the Islamic Republic's praetorian military division, now heavily active in both Syria and Iraq. At the time, the Treasury Department accused the Qods Force of “secretly ferrying operatives, weapons and funds” on Mahan flights.

On the Clinton Foundation website, Alaghband’s company is listed as a donor in the $10,001 to $25,000 bracket. Moreover, on the website for Balli Real Estate, a property investment and development subsidiary also based in the UK, his personal bio describes him as a member of the Clinton Global Initiative.

This affiliation, along with his donation to the Foundation, came as a surprise to Alaghband.

“I am not a member of the Clinton Global Initiative,” he told The Daily Beast from London. “I attended a few meetings. The last meeting was 10 years ago. I don’t recall having ever made a contribution.” Asked why he was listed as a member of the CGI on his own corporate website, he said: “I haven’t seen this website recently. If attending a few meetings makes you a member, I don’t know.”

A source familiar with the Clinton Foundation told The Daily Beast that “Vahid Alaghband was never a member of CGI in a personal capacity.” However, the source added, “In 2007, Balli Group paid a onetime CGI membership fee and they designated him as their delegate to the meeting.”

Alaghband did recall giving money to another influential organization—the Washington, D.C.-based think tank the Brookings Institution. The donation he gave was to Brookings’ former Middle East policy shop, the Saban Center, which had been named for its major benefactor, the Israeli billionaire Haim Saban. (Staunchly pro-Israel, Saban is also, coincidentally, an avowed supporter of Hillary Clinton’s presidential ambitions.)

In 2007, Alaghband offered to give a $900,000 donation to run for three years to Brookings via the U.S.-based PARSA Foundation, “the first Persian community foundation in the U.S. and the leading Persian philanthropic institution practicing strategic philanthropy and promoting social entrepreneurship around the globe,” as the foundation’s website describes it.

Emails obtained in the discovery process of a separate libel case show that Alaghband, who had already donated at least $50,000 to PARSA, initially intended to make a pass-through donation via the foundation to Brookings.

But Alaghband says that he never ultimately used PARSA as a conduit for his donation; instead, he made his contribution directly to the Saban Center. He says the amount given was “far less” than $900,000 but declined to specify how much. Furthermore, he insisted, the money wasn’t earmarked for any specific project or research use. “Our donation went to the Saban Center and they had full discretion as to what to do with it,” Alaghband said. “Martin Indyk had discretion over the use of the funds.”

Indyk, who headed the Saban Center from 2002 to 2013, is today the vice president and director for foreign policy at Brookings. He also served— twice—as U.S. ambassador to Israel under the Clinton administration. In 2013, Secretary of State John Kerry named Indyk the U.S. envoy to the Middle East.

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“When we took the donation nobody knew there were any problems with Alaghband,” David Nassar, the vice president of communications for Brookings, told The Daily Beast, speaking on behalf of the think tank. Nassar also specified that the donation came from Balli Group bank accounts, not from Alaghband’s personal accounts. (Full disclosure: Daily Beast Executive Editor Noah Shachtman previously did work as a non-resident fellow in Brookings’ foreign policy division.)

A former Brookings staffer with direct knowledge of the donation told The Daily Beast that, on the contrary, Alaghband’s problems with the U.S. government were known to the think tank at the time and that the money helped finance the work of Suzanne Maloney, a former State Department policy adviser and Republican advocate of U.S.-Iranian rapprochement.

Nassar told The Daily Beast that the suggestion that Alaghband’s donation was intended to bolster Maloney’s pro-rapprochement research was false. “The money was general funding for the Persian Gulf Initiative and not directed at any particular issue or any particular scholar,” he said. Nevertheless, the Persian Gulf Initiative was a program run by the Saban Center and Maloney worked on it.

Maloney is married to Ray Takeyh, an Iran scholar who served in the Obama White House in 2009 and who, during that period, was one of the lead advocates of engagement with Tehran.

Since leaving the administration, Takeyh has emerged as a scathing critic of his former employer’s nuclear diplomacy. But in 2008, Maloney and Takeyh jointly published a 34-page white paper with the Saban Center titled, “Pathway to Coexistence: A New U.S. Policy toward Iran.” Arguing that the long-standing U.S. policy of containment “is actually obsolete because Iran is no longer an expansionist power,” they called not for a mere “policy shift but for a paradigm change” in Washington.

In many ways, the paper essentially forecasted the Obama administration’s approach to dealing with Iran, from the largely hands-off approach to Iran’s bloody 2009 Green Revolution to the present-day compromises on its nuclear program.

Alaghband’s legal troubles did not appear to affect his relationship with Brookings a year after Balli Aviation was hit by the U.S. Commerce Department with a temporary ban on his Iranian export business. In February 2009, he spoke at the U.S.-Islamic World Forum in Doha, where Brookings has another Middle East center, this one bankrolled by the Qatari government. The forum, in fact, was organized by the Saban Center on behalf of that government. 

Alaghband, for his part, insists that he did nothing wrong, despite his company’s guilty plea.

“The settlement [with the Justice Department] was one under which we did not have to accept liability. We just agreed to make a payment and settle out of court,” he told The Daily Beast. “We had to establish a compliance program and do all of those things. The transactions we were engaged in was reviewed by and subject to a legal to a legal opinion both in the UK and U.S. about the compliance of with sanctions. We proceeded on this basis.”

The settlement also represented the largest civil penalty ever imposed by the Commerce Department’s Bureau of Industry and Security.

PARSA’s second-largest recipient of grants is the National Iranian American Council (NIAC), a Washington, D.C.-based lobby group close to the Iranian regime, which advocates an end to all U.S. sanctions on Iran. It received a total of $591,500 from the foundation. Alaghband’s brother, Hassan Alaghband, who is also the CEO of the Balli Group, spoke at a conference organized in Tehran by one of NIAC's founders in June 2007, at which he spoke about Western companies doing business in Iran and cited Balli’s client, Caterpillar, as a case study.

The Balli Group PLC had once been the world’s second-largest steel trader but it declared bankruptcy in 2013. A major reason for its folding? U.S. sanctions on Iran.

UPDATE 12/14/15: Alex Shirazi is a pseudonym for a well-known Iranian dissident who requested that The Daily Beast keep his identity concealed for fear of what might happen to his family in Iran in retaliation for this article. We regret not noting this earlier.

-- with additional reporting by Jackie Kucinich