Risky Business: Deficient Safeguard Protocols And Deception By Italian Companies Undermining Rome’s Push To Assert Itself Among Allies

(New York, N.Y.) — Since coming into office in February, Italian Prime Minister Mario Draghi and his government have worked to distinguish itself from the previous government by asserting a view that the Joint Comprehensive Plan of Action (JCPOA) is a “pillar of nuclear nonproliferation” – which aligns Rome with its E4 allies of France, Germany, and the United Kingdom, as well as the Biden Administration. Italian companies, however, are undermining the Draghi government’s narrative that Italy is a responsible ally willing to ensure compliance with U.S. economic sanctions.

Last month, a London court revealed that Rome-based Eni SpA, one of Europe’s largest oil companies, had unwittingly purchased a consignment of sanctioned Iranian crude oil in 2019 from Iraq. Eni, which is a publicly traded company in the U.S. with significant energy interests in the Gulf of Mexico and several U.S. states, concluded that the supposedly Iraqi oil was in fact Iranian by using some of the same techniques employed by United Against Nuclear Iran (UANI) to track Iran’s illicit smuggling operations. Once the true origins of the oil were revealed, Eni absorbed the cost of transporting the 700,000 barrels back to Iraq from a Sicilian port. 

Eni claims that the oil was rejected thanks to the effectiveness of its controls, but it appears to be the absence of sufficient safeguards that led to this costly failure,” said UANI Research Director Daniel Roth. “Exactly three years ago, on December 3 2018, Eni commendably assured UANI that it was ‘strongly committed to ensure full compliance with the relevant legal restrictions that may be applicable in different jurisdictions and to prevent any significant risk that may affect the interest of our Company and its shareholders.’ This recent development is therefore especially disappointing.” 

UANI Chief of Staff Claire Jungman added that “the Iranian regime has become increasingly sophisticated in masking its oil and natural gas exports. Tehran uses a wide variety of techniques including a ‘Ghost Armada’ of foreign-flagged tankers that transports up to half of all Iranian oil exports. These vessels often carry falsified records, engage in flag hopping between small nations without the capacity to sufficiently police vessels, and use a Global Positioning System (GPS) manipulation known as ‘spoofing’ to hide their true locations.” 

“Eni, as well as governmental authorities globally, should recognize the necessity of being equally as cunning as the Iranian regime in preventing it from generating revenues that fund terrorism, its illicit nuclear program, and continued human rights violations. Eni’s policy of refusing to buy Iranian oil needs to be properly carried out.” Roth added. 

Eni is not alone in running afoul of U.S. sanctions violations. More recently, the U.S. Treasury Department announced a settlement of $950,000 with Nordgas, S.r.l., a company that produces and sells components for gas boiler systems and applications, for hiding from U.S. companies its intention to re-export U.S. products to Tehran. The agreement also called for Nordgas to implement enhanced compliance standards. 

For the Draghi government to play a more constructive role in reducing the Iranian threat, it must ensure that Italian companies large and small understand the importance and the value of compliance. Italian diplomats, up to and including Foreign Minister Luigi di Maio – who expressed to his counterpart in May that Italy maintains an interest in strengthening its bilateral relationship with the Iranian regime to include expanded political, economic, and cultural ties – that Italy will not be complicit in Iran’s sanctions-busting schemes.

To read UANI’s Iran Tanker Tracker resource, please click here. 

To read UANI’s blog post, Stop The Hop II: The Ghost Armada Grows, please click here.