How Iran Steams Past International Sanctions

Too often, one man's sanctions become another man's windfall. So it is with Iran sanctions and the minuscule Pacific island nation of Tuvalu, to which Iran's main oil tanker company, NITC, has just reflagged roughly half its fleet.

Iran fields one of the largest tanker fleets in the Middle East, with NITC, formerly called the National Iranian Tanker Company, owning at least 40 oil tankers, collectively worth billions. Tuvalu consists of a spatter of islands located some 2,000 miles northeast of Australia, with a population of about 10,000 and an annual gross domestic product of about $31 million, according to World Bank statistics.

Yet Tuvalu now hosts at least 21 Iranian oil tankers on its shipping register—the bulk of them previously flagged to Malta, and a few to Cyprus. Not that these ships tend to call at Tuvalu.

According to data from Lloyd's List Intelligence ship-tracking service, their new beachhead on Tuvalu consists of some half dozen new nominal corporate owners, holding one tanker apiece and sharing as an address a post office box (P.O. Box 62) in Vaiaku, the village housing Tuvalu's main administrative buildings on the atoll of Funafuti, the island-state's capital. The rest of the NITC oil tankers reflagged to Tuvalu now show up on Lloyd's as owned by companies in such opaque corporate havens as the Seychelles and the British Virgin Islands; though for all these vessels, NITC remains the commercial operator.

Amid this shift, the ships have also shed their old Persian names, such as the Nesa, Sima and Hatef. These vessels now sail under the new names of Truth, Blossom and Glory. Of the remaining NITC oil tankers, a handful still appear on Lloyd's as flagged to Malta; 10 now show as reflagged to Tanzania, bedecked with new names such as Justice, Leadership and Freedom.

Not that any of this is meant to accuse anyone of wrongdoing. For years, there have been no sanctions whatsoever on NITC or its ships.

On Thursday, the U.S. Treasury added NITC in Tehran, plus most of its newly reflagged tankers, to the U.S. blacklist. But that only constrains business done under U.S. jurisdiction or by U.S. citizens. It does not necessarily extend to places such as Tuvalu, Tanzania and Singapore. For years now, this kind of arrangement has been a gaping hole in the Iran sanctions net.

On July 1, the European Union implemented a ban on the import of Iranian oil. Weeks earlier, NITC had begun pre-emptively reflagging its ships away from EU countries Malta and Cyprus, where at least 39 of its tankers were registered. Not for the first time, NITC is taking evasive action, effectively shielding its role as the main carrier of the oil that fuels Iran's terror-based, nuclear-aspiring regime.

NITC, formerly an Iranian state enterprise, which describes itself as privatized since 2000, initially reflagged its oil tankers from Iran to Malta and Cyprus around 2008. That was about the time the U.S. blacklisted Iran's state-owned merchant fleet, the Islamic Republic of Iran Shipping Lines, or IRISL (but spared NITC). In response to sanctions, IRISL embarked on a global shell game in which scores of IRISL-linked ships, blacklisted by the U.S., have been reflagged and renamed, in some cases multiple times, with ownership transferred to shell companies, in a still-shifting kaleidoscope of places from Panama to Hong Kong to landlocked Bolivia. With similar sleight-of-hand, NITC is now following suit.

Not that the tankers themselves are easy to hide. They can all be identified, and thus followed from one registry to the next, by their unique hull numbers, or IMOs, issued for the life of each vessel by the International Maritime Organization.

In contravention of maritime safety practices, some of NITC's ships in recent months have taken to switching off their onboard transponders, thus cloaking their whereabouts from routine civilian ship-tracking services. This has attracted its own brand of attention. The game here for Iran is that each shift of tactics, flags and nominal ownership buys time and wiggle room while Iran trackers, including sanctions crafters and enforcers, race to keep up.

The Tuvalu ship registry does, however, offer a degree of streamlined convenience that might help focus inquiries. For starters, it's not actually on remote Tuvalu. It's in Singapore, where Tuvalu's honorary consul, ship registry and international corporate registry have different phone numbers but all share the same office, #25-16, in a high-rise complex called International Plaza.

In a circular posted on its website, the Tuvalu Ship Registry offers speedy processing, listing accounts with the Australia and New Zealand Banking Group Limited and J.P. Morgan Chase Bank, New York, for bank remittances in dollars. The Tuvalu ship registry promotes itself on its website as an office of “instant convenience,” noting in its circular, “We are able to provide incorporation services for Tuvalu offshore companies and package it attractively with ship registration to provide a one-stop service if required.”

Secrecy may also be part of the draw. There are no publicly posted fee schedules. The Tuvalu ship registry provides quotes only upon receiving a detailed application to register a ship. And, unlike the relative transparency of the Singapore corporate registry in which it is domiciled, the Tuvalu international corporate registry states on its website that information as basic as the names of directors and shareholders will be kept “confidential.”

Wearing various hats, the human face of this Tuvalu shipping shop is a Singaporean citizen with a history in the maritime trade, Chong Koy Sen. Mr. Chong currently serves as Tuvalu's honorary consul in Singapore.

He also serves as managing director of the Tuvalu Ship Registry Pte. Ltd., and as a director of the Tuvalu International Companies Registry Pte. Ltd., according to documents filed with the Singapore corporate registry. (Invited to comment, via an official at the Singapore Mission to the United Nations, Singapore authorities did not respond).

The website of Tuvalu's honorary consulate in Singapore features a photo of Mr. Chong, smiling, in an open-necked tropical-motif shirt, under a message describing Tuvalu as “One of the most fascinating and peaceful countries in the world.”

How much money are Tuvalu's ship and corporate registries receiving for their services to the NITC fleet? Who from Iran are they doing business with? A receptionist who answered the phone at the Tuvalu ship registry on July 5 said Mr. Chong did not want to speak by phone, and asked that all questions be emailed. My queries emailed to all three of Mr. Chong's Tuvalu-related offices in Singapore—Tuvalu's honorary consulate, ship registry and corporate registry—received no reply.

At Tuvalu's Mission to the United Nations in New York, Ambassador Afeele F. Pita said last week that he sees no problem with NITC flagging its ships to Tuvalu: “The ships are in order.” Can the same be said for a sanctions policy that's not only failing to stop the Iranian bomb, but couldn't even block Iran from shopping for Tuvalu flags in Singapore? Which one-stop-shop will they choose next?

Ms. Rosett is journalist-in-residence with the Foundation for Defense of Democracies, where she heads its Investigative Reporting Project.