LaLiga collected from Iran through a Chinese shell company and multiple deposits from ATMs in Dubai

LaLiga collected from Iran through a Chinese shell company and multiple deposits from ATMs in Dubai

This article features Government Accountability Project’s Investigator, Zack Kopplin, and was originally published here.

December 2017. Former Real Madrid striker Fernando Morientes throws an autographed ball to the applauding crowd in a packed auditorium in Tehran, Iran. In the background, a portrait of Ayatollah Khameni, the country’s supreme leader. LaLiga had just publicly partnered with MTN Irancell, Iran’s state-owned telecommunications giant. And Morientes, LaLiga’s ambassador, is delighted to bring his star touch to the event.

Morientes did not want to talk to OCCRP, a network of which infoLibre is a member, about his visit to Tehran, which took place when abundant information had already been published that MTN Irancell was mostly owned by an Iranian company that, in turn, was in the hands of entities linked to the Ministry of Defense and the Revolutionary Guard Corps (IRGC). The Pasdarans, an arm of the Iranian military that have been subject to international sanctions. Among the dignitaries attending the Tehran ceremony was Mustafa Ajorlu, a Revolutionary Guards commander who has retaliated against Iranian players who supported recent anti-government protests

The alliance with MTN Irancell gave LaLiga access to the lucrative Iranian market. Contracts seen by OCCRP show that MTN Irancell agreed to pay LaLiga 10% of the profits it made from subscribers who watched Spanish football on its online channel, plus about $900,000 over about three years.

The problem is that due to the sanctions imposed by the United States on Iranian banks, taking money out of the country could be problematic: the South African group MTN, a minority shareholder of MTN Irancell, noted in its 2021 annual report that it was having trouble “repatriating cash” from its Iranian partners.

So LaLiga found at least two ways to circumvent those difficulties. The first is to use in at least one of MTN’s transfers Irancell, a Hong Kong shell company set up by an Iranian citizen with a passport from the Caribbean island of Dominica. The second is to send money, in small amounts, from ATMs in Dubai.

From Hong Kong after passing through Dominica

Leaked documents seen by OCCRP show that LaLiga received at least one payment from MTN Irancell from a shell company owned by an Iranian intermediary. This middleman had bought a gold passport from Dominica, a small Caribbean country with a thriving program that grants citizenship in exchange for making an investment. The passport was used to create the Hong Kong-based front company that directed the Iranian payment to LaLiga, a private association that brings together first and second division clubs to make a spectacle profitable, according to the entity itself, reaches 2.800 billion people in the world.

The U.S. government later sanctioned a similar company owned by the middleman — and also set up with a Dominican passport — for selling tens of millions of dollars of Iranian petrochemicals on behalf of entities linked to the Revolutionary Guards.

These methods of transferring money illustrate well how passports acquired in places like Dominica can be used to circumvent sanctions and make secret payments. And it’s not just about Iranians. As part of the Dominica: Caribbean Passports project, OCCRP has also uncovered that sanctioned Russian oligarchs, fugitive Taiwanese engaged in Ponzi schemes, a Yemeni allegedly involved in hacking, and even Saddam Hussein’s chief nuclear weapons scientist obtained Dominica passports.

LaLiga’s explanation

In his response to questions posed by OCCRP on the matter, a lawyer representing LaLiga assures that the body chaired since 2013 by Javier Tebas is “unaware of any link between the contractual relationship it had in the past with MTN Irancell and the creation of any company by Dominican passport holders”.

The LaLiga spokesperson describes its relationship with MTN Irancell as a “sponsorship contract” that allowed “numerous promotions of Spanish football in Iran, where there is a great love for football among its young population”. It also states that the agreement was part of a pre-existing relationship with MTN Group in Africa, the parent company of MTN Irancell, which ended years ago, and that “currently, there is no relationship with MTN or MTN Irancell.” It adds that the Spanish league “complied with the EU sanctions regulations in relation to the Iranian contract”, after stressing that MTN Irancell “was not, nor has it ever been, an entity sanctioned” by the international community.

At the time the relationship began in 2017, “the Iranian nuclear deal signed in 2015 was in full force, which led to the lifting of international economic sanctions. In addition, there were no sanctions on professional sport, on sponsorship contracts linked to the promotion of professional sport.”

The president of La Liga, Javier Tebas, dismissed as “fake news” the information published by Okdiario about the agreement with the Iranians.

MTN Irancell and the Mostazafan Foundation

MTN Irancell is a joint venture between South African group MTN, a major telecommunications company with a 49% stake, and an Iranian firm owned by entities linked to the Ministry of Defense and the Iranian Revolutionary Guards. Iranians have a majority stake of 51%. Although there are no ownership records of Iranian companies to verify these corporate agreements, they are attested in reports published by Western and Iranian media, expert reports, notifications of U.S. Treasury sanctions, and legal records that span over the past few years.

According to the U.S. Treasury, and as stated in several lawsuits filed by U.S. citizens, the Iranian shareholder of MTN Irancell is Iran Electronic Development Company. The same sources describe this company as a joint venture between Iran Electronic Industries (also known as Sairan), a company controlled by the Iranian Ministry of Defense, and the Mostazafan Foundation (also known as Bonyad Mostazafan). These holdings are confirmed by a 2015 report by the research department of the Central Bank of Iran, which names the Mostazafan Foundation as owning 23.25% of MTN Irancell and the Ministry of Defense as owning 27.75%, adding up to a total Iranian stake of 51%.

In a sanctions notification to the Mostazafan Foundation in 2020, the U.S. Treasury described it as “a huge conglomerate of about 160 holdings in key sectors of the Iranian economy, such as finance, energy, construction, and mining,” chaired by “former Islamic Revolutionary Guard Corps officer Parviz Fattah.”

“While Bonyad Mostazafan is ostensibly a charity tasked with providing aid to the poor and oppressed,” the note adds, “its assets are taken from the Iranian people and used by Supreme Leader Ali Khamenei to enrich his cabinet, reward his political allies, and persecute enemies of the regime.”

A renewal of the agreement

In April 2019, about a year and a half after that first act in Tehran by MTN Irancell, the U.S. branded the Revolutionary Guards a terrorist group, putting it in the company of ISIS and Boko Haram. This did not prevent the agreement between the Spanish league and the Iranians from being renewed several months later, in August of that same year.

OCCRP has asked Spain’s League why it renewed the agreement even after the Revolutionary Guards were deemed a terrorist group by the United States. LaLiga replies that it did so “taking into account that at that time the European Union, where LaLiga is located, along with the rest of the signatory countries of the 2015 nuclear agreement (except for the new Trump administration in the United States), defended the validity of the aforementioned nuclear agreement, stating that Iran was fully complying with its commitments“.

Dominica’s route to circumventing sanctions

U.S. sanctions make it difficult for Iranian institutions to move money through much of the international financial system, experts warn. “You simply can’t do any normal international transactions if the counterpart is Iranian,” said Mahdi Ghodsi, an economist specializing in Iran and international sanctions at the Institute for International Economic Studies in Vienna. “Everything that is illegal in the United States is de facto illegal for the rest of the international banking system, because the United States is the chief governor of that system.”

So, instead of resorting to U.S.-controlled financial routes, MTN Irancell used intermediaries with gold passports purchased in Dominica to transfer at least one payment from Iran to Spain, documents seen by OCCRP show.

Two Iranians, Hossein Mohamedrezaei and Pedram Pirouzan, ran a money-changing business called Pedram Pirouzan and Partners in Damavand, a small town near Tehran. Both had taken advantage of the citizenship program in exchange for investments from Dominica, which allowed the former to obtain a passport from the Caribbean island in 2017 and the latter, another at an unknown date. Using these documents, they then set up shell companies around the world.

One of them facilitated the illegal transfer of tens of millions of dollars from Iranian petrochemical sales to China and was sanctioned by the United States in 2022. Another was used to make a payment of €65,000 from MTN Irancell to LaLiga.

A payment from a Hong Kong company

A receipt issued by MTN Irancell and obtained by OCCRP shows that Pedram Pirouzan and Partners transferred the funds in the spring of 2019, around the same time the Revolutionary Guards were labeled a terrorist group. But, although the payment was arranged by the Iranian exchange house, a bank transfer receipt obtained by OCCRP reveals that it was sent from another corner of the planet.

On 18 March, LaLiga received a payment of the same amount of €65,000 from a Hong Kong company, Lonking Industrial, which had been set up by Mohamedrezaei using his Dominican passport. The company – which, like many Hong Kong companies associated with Iran, had an address in the mainland Chinese city of Yiwu – sent the money to LaLiga’s account at Banco Santander from another account at China’s Hua Xia bank. At the bottom of the transfer receipt is an information stamp written, not in Chinese, but in Farsi, the main language spoken in Iran.

LaLiga assures OCCRP that it has never heard of Mohamedrezaei and Pirouzan, or their money transfer company. For its part, Banco Santander has refused to comment on the matter. Mohamedrezaei and Pirouzan did not respond to questions from OCCRP, which was unable to reach Hua Xia bank for comment on the matter.

Shell Companies for Criminal Interests

In reality, the operation with the League from Yiwu is not exceptional. Previous reports published by OCCRP revealed how Hong Kong shell companies, controlled by individuals operating out of the eastern Chinese city of Yiwu, have moved hundreds of millions for a wide range of criminal interests, including an Iranian money launderer named Reza Zarrab. Yiwu is geographically linked to Iran: it is home to the start of the railway connecting Iran and China, and is a major Iranian trade hub.

Shell companies and other operatives moved $130 million for HMEA Co Ltd, a Hong Kong-based company dedicated to neutralizing Iranian sanctions and which had multiple accounts in some of the world’s largest banks. Although HMEA Co Ltd was controlled by a Swede wanted for fraud, the real owner of the company was Ehsan Azarnekou, an Iranian with a Dominican passport whose name appears in OCCRP’s Dominica: Caribbean Passports investigation.

According to OCCRP, Azrnekou had significant connections to Iranian oil interests and also ran several foreign exchange businesses in Iran. OCCRP tried, unsuccessfully, to contact Azarnekou.

The Second System: The “Smurfing”

The second system used by LaLiga and MTN Irancell to circumvent international sanctions was, according to OCCRP’s investigation, sending money from Dubai. Although the origin of the funds cannot be established, three former LaLiga employees with knowledge of the agreement with MTN Irancell explain that these transactions were part of the sponsorship agreement signed by LaLiga.

One of the forms of payment was to deposit cash into a LaLiga account from an ATM in Dubai. Five receipts obtained by OCCRP reveal that the same ATM was used on two different days in November 2019 to deposit a total of around $76,000 in Emirati dirhams, in multiple transactions just minutes apart.

Money laundering experts consulted by OCCRP indicate that the deposits resemble a common laundering practice called “smurfing,” employed to avoid attracting the attention of banking regulators. “Smurfing means dividing a large volume of money into small amounts in order to stay below the limits that force financial institutions, such as banks or trusts, to report [to authorities],” explains Brendan Newitt, a criminal defense attorney at the firm Roos & Pen.

LaLiga counters that it has never made ATM transfers “either directly or indirectly” related to that agreement.

But these are not the only payments to LaLiga that are setting off alarm bells.

Companies liquidated after making payments

Over the past few years, documents obtained by OCCRP show, the institution chaired by Javier Tebas received the equivalent of hundreds of thousands of dollars from shell companies based in the United Arab Emirates and Turkey. Several of these companies were liquidated shortly after payments were made. Some had no apparent connection to football, but appeared to be jewellery and electronics companies.

Attorney Brendan Newitt points out that this type of activity is very unusual in a major football league. “You might think that when a party uses an offshore entity, the loan or payment is made in a single transaction or a few. Why use offshore companies, cash and checks to make smaller deposits?” asks Newitt. “It could have completely legal economic reasons, but it’s still very unusual,” he concludes.

Asked about these transactions, the LaLiga representative did not explain the use of the aforementioned companies, but assured that the institution had carried out “commercial due diligence, including an exploration of possible sanctions using specialized databases, which did not yield any sanctions alerts in relation to MTN Irancell or any other related third party.”

A letter obtained by OCCRP reveals that, in October 2019, approximately half a year after the Revolutionary Guards had been designated a terrorist group by the US, LaLiga officials informed MTN Irancell that they had “fully transferred all of their rights and obligations under the sponsorship agreement” to a subsidiary based in the United Arab Emirates. All subsequent payments, the letter said, should be made there. The LaLiga representative specifies that the operation was made “for commercial reasons”.

An “insatiable appetite for money”

Jens Sejer Andersen is the international director of Play the Game, an initiative that promotes democracy, transparency and freedom of expression in the world of sport, and has reviewed the facts revealed by OCCRP. “I think this whole thing shows how desperately European football needs financial supervision and regulation. It seems that LaLiga may not have been entirely unaware of how problematic it is to work with dictatorships far from Europe, but it has put aside all considerations in its insatiable appetite for money.

“This story should be one of many that will convince European politicians to step up and start regulating an industry that, under the guise of sporting autonomy, allows all kinds of financial and political malpractices to flourish,” he concludes.

The Problem of Sponsorships

Sponsorships remain a major source of revenue for European clubs and professional football leagues, despite the pre-eminence of television rights. According to the annual report on football finances, prepared by the consultancy Deloitte, sponsorship deals account for 37% of the commercial revenue generated by clubs in the five largest European leagues. They have grown by 6.5% since 2012. In the 2021/2022 season, the sponsorship income of the Spanish League totalled 950 million euros, slightly above the German League, but well below the 2,053 million of the British League.

According to LaLiga figures, its sponsorship revenue grew by 17% in the last season, 2022/23, to reach €177.6 million. And 60% of that amount came from agreements with foreign entities. It aims to reach 200 million by 2024/25. It has no choice, after the signing of the agreement with the CVC investment fund, by which it cedes 11% of the Spanish football business for 50 years in exchange for an injection of 2,667.5 million euros.

The transaction, a joint venture account similar to the one signed earlier by Real Madrid with the Providence fund, forces both entities to considerably increase their volume of income to pay the investment funds each year. “These agreements mean weakening the economy of the clubs in the medium term,” warns Marc Ciria, president of the financial management company Diagonal Asset Management, “they have a very high financial cost and do not add value to the clubs.” In his view, they are “bread for today and hunger for tomorrow”: they help pay the bills but, if revenues do not increase to the expected extent, they damage their competitiveness in the future.

Or change of criteria, or dependence on dictatorships

“If you want to remain competitive, you either change the criteria for choosing sponsors or you change the philosophy of the club or you are forced to have Saudi Arabia, Iran or Qatar as interlocutors,” criticises Ciria, who was part of Joan Laporta’s candidacy in the 2015 FC Barcelona elections. What’s more, he believes that the world of football is “auctioning off sponsorship“: “They don’t care about the who, they only care about the what. They are incapable of having strategies that allow them to go beyond the usual revenues: sponsorships, television rights and matchday [the income from ticket sales]. If you don’t get out of those three, selling all over the world and professionalizing the income, you turn to the one who gives you the most in the usual.”

But more than desperation for revenue, Marc Ciria attributes the agreements with questionable international partners to the lack of strategic vision and professionalization in Spanish football. “Sponsorships are a matter of compliance, of respect for values when choosing travel companions and what alternatives there are: who is good and who is not. Because we can also talk about how Apple or Nike makes their products in Asia,” he says. Although he also does not hesitate to affirm that “Barça lost their soul when they changed Unicef for Qatar, to have an immediate income”.

With or without soul, LaLiga announced last August the signing of a sponsorship agreement with Saudi Arabia: it will promote tourism in that autocracy that has no respect for human rights – “itscultural interest and its surprising landscapes“, said LaLiga ambassador Iker Casillas – in exchange for expanding the presence of Spanish football in the Arab world.