Larry Mizel another of his HSBC Bank Scandals

Two federal statutes, the Bank Secrecy Act of 1970 and the Patriot Act of 2001, make it a crime for banks to knowingly process transactions related to illegal activity or to ignore red flags that they may be allowing illegal cash to flow through the financial system. Whether Citibank or HSBC broke the law depends on whether investigators determine that Unaoil’s deals were illegal and whether the banks knew or should have known about that.

Thousands of internal Unaoil emails obtained by HuffPost and Fairfax Media make clear that both HSBC and Citibank were intimately involved in Unaoil’s complex finances.

In Kazakhstan, Unaoil helped U.S. energy conglomerate KBR and British oil company Petrofac secure millions of dollars of work on the Kashagan oil field, one of the biggest fossil fuel discoveries of the 21st century. The joint contract was facilitated by huge payments that Unaoil made to a consultant working for Kazakhstan’s state-owned oil company. That arrangement could potentially run afoul of the Foreign Corrupt Practices Act, which bars companies that do business in the United States from paying bribes to foreign government agents.

In a statement to HuffPost and Fairfax Media, Unaoil founder Ata Ahsani denied that his firm bribed public officials. “The answer is absolutely no,” Ahsani said.

The KBR money went through HSBC’s Private Bank subsidiary in Monaco, according to emails. The Petrofac funds went through Citibank’s affiliate in Geneva, Switzerland, until late 2008, when they began flowing through HSBC. HSBC also executed trades in shares of Petrofac stock on behalf of Unaoil. On the Kazakhstan deal alone, HSBC processed millions of dollars in payments to Unaoil from KBR.

Unaoil deliberately structured bank accounts to obscure its dealings from other companies and legal authorities. In September 2008, for instance, the firm was negotiating a contract with Weatherford, a U.S. chemical company that was paying Unaoil to help it get business with the Iraqi government. Unaoil finance manager Sandy Young sent an email to the firm’s leadership explaining why the firm wanted to shield as many bank accounts as possible from Weatherford, which was required to perform due diligence on Unaoil under the Foreign Corrupt Practices Act. Unaoil eventually secured a lucrative deal with the Iraqi government on behalf of Weatherford that involved paying kickbacks to senior Iraqi officials.

“Restricting the audit rights to the bank account where [Weatherford] monies have been transferred into is certainly preferred with advance warning and inspection during normal working hours,” Young wrote. “As it stands today we use such several sub-accounts only to collect money from principals (we do not make payments from these sub-accounts other than to transfer funds out to our main account from which all payments are made). So with such restrictions all Wfd. would be able to see will be their payments coming in and subsequent transfers of funds out of this account to our main account.”

In other words, money from major Western corporations went into one account, which was then transferred to other accounts, which in turn was used to pay various officials. This made it harder for outsiders to track Unaoil’s funds. It is not clear from the emails what the company’s bankers knew about the legality of Unaoil’s activities. But it is very clear that Unaoil trusted both HSBC and Citibank with the detailed orchestration of its accounts.

Valerie Kanat and Robert Troxler were in charge of Citibank’s Unaoil business. When Troxler left Citibank in early 2007 to start his own firm, Unaoil decided to keep him as an investment adviser, while continuing to work with Kanat at the bank. Ata Ahsani explained the decision in a March 14, 2007, email to Kanat that suggests Troxler had deep knowledge of the firm’s financial complexities.

“We value his advice and even more his ability to coordinate all our investment activities across all our banks/funds etc.,” Ahsani wrote.

Troxler and Kanat did not respond to requests for comment. Citibank said Kanat left the company in 2009.

HSBC and Citibank have histories of corruption. In 2012, HSBC was fined $1.9 billion for laundering drug money and violating U.S. sanctions against Iran. In 2015, it paid Swiss authorities $43 million to settle allegations that it helped the global elite illegally dodge taxes. Citibank was fined $140 million last year for violations of money laundering laws related to its work with an energy company involved in a bribery scandal with the Mexican government. The bank is currently being investigated for its role in the bribery scandal at FIFA, the international soccer organization.

In addition to managing Unaoil’s accounts, HSBC also vouched for the company, helped it win business and loaned money to members of the Ahsani family. In October 2004, Unaoil asked HSBC to send a letter to the Iraqi government vouching for the company as a legitimate business in sound enough financial shape to follow through on its bid for a government contract. In September 2007, HSBC helped Unaoil arrange for a bid bond from the Trade Bank of Iraq so that it could bid on a separate piece of business. And Cyrus Ahsani, a top official at Unaoil and son of its founder, took out a loan from HSBC in 2007 to help him buy Villa Beaulieu in Monaco, a lavish estate with marble-floored balconies and high-end furniture imported from Italy and Paris.

Unaoil was so close with HSBC that in November 2007, Saman Ahsani — another member of the family — sent an email to bank officials Keith Campbell and James Dodson asking if HSBC would be interested in financing a project with a host of oil companies in Kazakhstan.

“I feel I owed it to our long-standing relationship with HSBC Private Bank to give you first right of refusal – at any rate it doesn’t hurt us to inject some competition into the fee discussions!” Ahsani wrote. “But as we discussed, this is one of the more straight forward transactions we are involved in and, I feel, a good starting point for our relationship with the Corporate bank – after which hopefully you will have enough comfort to begin discussing our more exotic activities, such as our work with Rolls Royce in Iraq where we are just about to start trading, installing and commissioning (ie. technical trading) their turbines for the South Oil Company.”

“Exotic” is an apt descriptor of Unaoil’s activities with Rolls Royce in Iraq. According to emails, Unaoil paid thousands of dollars a day to stay in the good graces of a senior Iraqi oil official in order to help secure a pricey contract for Rolls Royce to make generators. Rolls Royce is currently cooperating with an investigation by the British Serious Fraud Office.

Unaoil also capitalized on its relationships with Citibank and HSBC to win business with new clients. As money laundering standards tightened after the passage of the Patriot Act, many companies began requesting more stringent details about Unaoil’s operations. When German manufacturer Man Turbo pressed the firm for credentials in the fall of 2007, Unaoil’s response included “bank recommendations” from both HSBC and Citibank.

Citibank also had a cozy relationship with the Ahsani family. In March 2007, Kanat secured VIP tickets for Ahsani brothers Saman and Cyrus to attend the elite Top Marques car show in Monaco. That summer, she got them in the room with members of the Chinese government.

“There will be interactions with senior government officials as well as the who’s who in the Chinese business community, providing deep investment insights into China,” Kanat wrote in an email.

Kanat booked the Ahsani clan for a 2007 conference in Dubai and offered to help them obtain discounts on luxury hotels. She got the family access to an exclusive dinner-and-drinks event in the south of France at the Grand Hotel du Cap Ferrat held in August 2008. When Cyrus couldn’t attend, his brother Sassan mocked him via email, “U is gay.”

The Ahsanis thanked Kanat for her efforts by sending her a gift in January 2009.

“Dear Ata, Samy and Cyrus,” she wrote. “I have received this morning at home a lovely gift! It was a very good surprise! I thank you very much for this kind thought.”

http://www.huffingtonpost.com/entry/unaoil-citibank-hsbc_us_56feba02e4b0daf53aefa1da

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