Niksima Food and Beverages

Food and Beverage

"A Canadian frozen yogurt franchise might seem like an entirely unusual conduit for Iran to evade hardening U.S. government sanctions. But among several companies the U.S. sanctioned in May for illicit dealings with Iran was a cold outlier: Niksima Food and Beverages, a firm based in Dubai that runs local outlets of Yogen Fruz, the Canadian frozen yogurt purveyor... While the ties between Iran’s energy industry and frozen yogurt may appear tenuous at first glance, Niksima, the U.S. state department said, had accepted payments on behalf of Jam Petrochemicals Complex, a major petrochemical facility on Iran’s southern coast that it is targeting as part of a new strategy aimed at curbing Iran’s income from things like plastics and lubricants. As U.S. sanctions over Iran’s disputed nuclear program deepen, the Niksima case points to growing evidence that the Islamic republic is using increasingly complex financial transactions and far-flung business partners to evade restrictions and keep its key industries humming... Niksima’s penalty was a ban on transactions involving U.S. jurisdiction, effectively freezing the company out of the U.S. financial system... The precise reasons why Niksima may have been involved in petrochemicals transactions remain unclear, but it’s possible that Iran has been using the company as a link in a complex barter that allows it to do deals and take shipments without exchanging any money, thus evading U.S. sanctions on financial transactions. Such a complex barter, the structure of which a person familiar with the matter said was not uncommon, might start not with Niksima but with one of the food firm’s sister companies called Paymood Petro Shipping. According to the now deleted website of Dubai-based Arcology Investments, which listed Paymood and Niksima as its subsidiaries, Paymood has two LNG tankers that serve the Jam Petrochemicals complex. Jam has become a major target of U.S. sanctions, and was also named with Niksima in the sanctions handed down in May. The idea is that Iran may be instructing customers who buy products from Jam to pay companies like Niksima instead – companies that aren’t subject to sanctions or U.S. scrutiny but who provide other valuable services to Jam through a parent company such as Arcology and its other subsidiaries like Paymood. Niksima, in other words, may get money from Jam’s customers in exchange for the services Paymood provides to Jam. This is how a frozen yogurt company could in theory get tied up with Iran’s energy industry. It is unclear if this transactional structure was indeed used in the Niksima case, and Niksima representatives refused to comment on the situation. Yogen Fruz also declined to comment, and the U.S. state department wouldn’t elaborate on it." (The Wall Street Journal, "Dubai Frozen Yoghurt Firm Feels Iran Sanction Chill," 7/15/2013)