Iran's Mahan airline defies sanctions in shadowy aircraft deal

Iran has defied international sanctions and acquired nine large commercial aircraft worth more than $300m.

Mahan Air, which is blacklisted by the US and Europe because of alleged links to Iran's revolutionary guard - denied by the airline - is suspected of spending more than a year brokering a complex series of arrangements with apparently unwitting companies across Europe using the small Iraqi Al-Naser Airlines as a front, according to western security officials.

Al-Naser denies the allegation.

Western diplomats fear the aircraft could be used to ferry weapons to conflicts in Yemen and Syria, a concern that Mahan - which is owned by the Kerman Molal-Movahedin Non-Profit Institute - rejects.

Hossein Marashi, a member of the institute's board of trustees, confirmed the purchase of the nine jets but said it "is really baseless to say Mahan buys modern planes to carry weapons as if there is shortage of planes in Iran for such purposes".

Western aerospace companies are prohibited from dealing with Iran by sweeping sanctions linked to the country's nuclear programme and to its sponsorship of terrorist groups. Under US law hefty financial penalties can also be applied to non-western entities which do business with Tehran. These extraterritorial rules have all but choked the Iranian aviation industry of supplies.

The sanctions-busting operation to acquire the nine new aircraft for Mahan, the country's second carrier, is the most ambitious scheme by Iran's hard-hit aviation sector yet uncovered and is believed to have involved a sprawling network of leasing arrangements and contracts across Europe.

It comes at a particularly sensitive time for Iran's relationship with the west. While landmark nuclear negotiations are poised to open up the Islamic Republic's economy to the world in exchange for curbs on its atomic ambitions, there are also concerns over Tehran's role in bloody proxy conflicts with its regional rivals.

Mahan did not disclose where it bought the planes.

"The [first] company had sent those planes back to Airbus and Airbus overhauled them and sold them to [other] non-Iranian companies which then sold them to Mahan after they did not find any interest in the Iraqi market," said Mr Marashi.

But the company has been implicated by the US Treasury in helping the Qod's force - the Iranian Revolutionary Guard Corps' extraterritorial special forces arm - to ferry advisers and weaponry to both Syria and Yemen.

The airline uses regular commercial flights to disguise such activities, according to three western security officials. One described Mahan as the IRGC's "airline of choice" over Iran's other carriers. However, in Iran Mahan is known for its affiliation to Akbar Hashemi Rafsanjani, the former president who has been at odds with the guards.

A Mahan commercial aircraft was intercepted by Saudi jets on route to Yemen earlier this month and turned back. On a recent visit to Dubai, Hamid Arabnejad, Mahan's chief executive, was briefly detained by local security authorities.

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Eyad Abdelkarim, head of marketing for Al-Naser insisted the allegations that his company had acted as a front for Mahan were untrue.

"I don't have any information about this," he said. "This is some kind of propaganda. There is no truth to the information you have received."

Mr Abdelkarim was unable to give the whereabouts of Al-Naser's aircraft.

However, two senior diplomats from separate western countries said they had no doubt Al-Naser had been operating as a "cut-out" in acquiring the aircraft on behalf of Mahan. One said they had traced payments from Mahan through a series of Gulf-based companies to buy the planes in Al-Naser's name.

Al-Naser previously owned just three aircraft, only one of which was operational. Until 2014, the company was owned by Iraq's powerful al-Khawam family, and is still listed as part of their Riyadh Investment Group - the Khawam-controlled industrial conglomerate - on its official website. The Khawams sold Al-Naser in 2014.

Al-Naser's new owner is Firas al-Mayyali. Mr Mayyali, who is involved in foreign exchange trading in Baghdad, declined on several occasions to speak to the Financial Times.

Soon after Mr Mayyali's takeover of Al-Naser the company entered into negotiations with several European aviation businesses. Two Airbus A340 planes were acquired outright by the company. Others were wet-leased - seconded with crew, according to documents from European aviation authorities.

Mahan has previously circumvented sanctions by buying spare parts and second-hand planes from regional countries, which the company - and many Iranians - see as crucial for flight safety. Iran's commercial fleet is in desperate need of modernisation because of sanctions and has a poor safety record. Many Iranians prefer to fly with Mahan because its planes are newer and better maintained.

In one earlier scheme, Mahan acquired three Boeing 747 aircraft through a similarly complex series of international companies and tax-haven shells. In a legal case in the UK brought by some of the parties involved, Mahan was explicit about its intents and methods in arranging the transactions: Mahan's lawyers told the court the agreements were "superficial" and "window dressing" designed to avoid sanctions and "create a false impression".

Mahan "[operates] in a culture in which complex dealings are conducted at meetings and with little documentation other than emails and handwritten notes of the meetings", UK judge Justice Beatson concluded in his 2009 judgment.

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