IRGC Front Company Risk
Doing business in Iran means exposure to doing business with the Islamic Revolutionary Guard Corps (IRGC), an organization engaging in illicit actions ranging from terrorism to money laundering and smuggling[AT1] . It is flatly illegal for American and international companies to do business with the IRGC, but corporate compliance officers and country managers will find it enormously difficult to discern if their companies are doing business with a reputable Iranian company or one that is secretly operated, managed, and even owned by the IRGC. Furthermore, the IRGC can apply pressure, like abusing the judiciary, against companies that seek to “stay clean” and not do business or favors for it.
Bonyad Affiliation Risk
IRGC companies have received a lot of attention in the West, but other powerful Iranian entities also present business risks for international companies looking to do business in Iran. The Supreme Leader controls bonyads that are exempt from taxes and are unaccountable to no one except himself. These entities, such as the Imam Reza Foundation and Execution of Imam Khomeini’s Order (EIKO), are financial behemoths with interests in virtually every sector of the Iranian economy. A 2013 Reuters investigation estimated EIKO at $95 billion. These foundations have participated in illicit activities. For instance, Lebanese Hezbollah’s representative to Iran Abdullah Safieddine told Al-Akhkbar in 2012 that “Khamenei has his own budget outside the state,” which is financed by certain “religious associations other than the awqaf/bonyads [Islamic charitable endowments].” These entities wield informal and formal influence to undercut businesses and rivals, and undertake actions like abusing the judiciary against companies that want to “stay clean” and not do business or favors for it.