Along with President Hassan Rouhani, Iran’s foreign minister Mohammad Javad Zarif is yet another arrow in the quiver of the Islamic Republic’s charm offensive. The chief negotiator at Geneva over Iran’s nuclear weapons program, Zarif was schooled in the United States, is fluent in English, and exudes a polished manner befitting a veteran diplomat who served from 2002-2007 as U.N. ambassador. During his posting in New York, he met with a number of senior U.S. politicians, including future vice president Joe Biden and future secretary of defense Chuck Hagel (both then senators), and impressed them as someone they could do business with. He’s “pragmatic,” said Biden, “not dogmatic.” The courtship continues. After meeting with Zarif in September, Sen. Dianne Feinstein, chair of the Senate Select Committee on Intelligence, told Time magazine last month, “He doesn’t play games.”
U.S. federal court documents say otherwise. While Zarif was beguiling lawmakers, he was violating U.S. sanctions and funneling millions of dollars into Iran’s state-owned Bank Melli, designated by the Treasury Department for its role in Iranian nuclear proliferation. Known as the Alavi case, this scheme ranks as the biggest money-laundering operation involving U.N. diplomats since Saddam Hussein’s oil-for-food program, and Zarif is in the middle of it.
The Alavi case attracted the serious attention of U.S. authorities while Zarif was serving in New York. The Manhattan district attorney’s office dug into it, then federal authorities took over. After almost five years of court proceedings, a ruling issued in September in the United States District Court for the southern district of New York paved the way for what U.S. Attorney Preet Bharara described as “the largest-ever terrorism-related forfeiture,” including a 36-story office tower in midtown Manhattan, at 650 Fifth Avenue. Referred to in court documents as “the Building,” the skyscraper was constructed in the 1970s by the shah of Iran’s Pahlavi Foundation and financed by Bank Melli. Following the 1979 Islamic Revolution, the new government in Tehran took control of the building and the bank, hiding its role behind a nest of front corporations.
The public face of the operation was a Manhattan-based tax-exempt foundation now known as the Alavi Foundation. Officially dedicated to spreading Persian culture and Islamic teachings, Alavi collected millions annually in office rents from the building, and doled out money across the United States and Canada. Funds were distributed to Islamic community centers and Farsi-language schools; grants were given to universities, including Harvard and McGill, and interest-free loans to deserving students. However, investigators also discovered “money going overseas to suspect people,” as former Manhattan district attorney Robert Morgenthau testified in 2009 at a Senate hearing chaired by then-senator, now secretary of state, John Kerry.
The Alavi Foundation claims no wrongdoing, and is filing to appeal the forfeiture of 650 Fifth Avenue and some related properties. The court alleges that Alavi was managing the building for the Iranian government and transferring funds to Bank Melli. The court also found that the co-owner of the Alavi building, the Assa Corporation, “was (and is) a front for Bank Melli, and thus a front for the Government of Iran.”
Indeed, Treasury had already designated the Assa Corporation a front for Bank Melli in 2008. Treasury’s then undersecretary for terrorism and financial intelligence Stuart Levey described Assa’s funneling money to Bank Melli as a “dangerous mix of proliferation and deception.” And Bank Melli itself, Treasury’s statement read, had been designated for “its role in Iran’s nuclear and ballistic missile programs” and for providing “banking services to the Iranian Revolutionary Guard Corps (IRGC) and the Qods Force”—the IRGC’s external operations unit and behind many of Iran’s most notorious terrorist operations.