US Defense Contractor Charged with Violating Iran Sanctions

Three senior executives at Anham FZCO have been charged with scheme to defraud the US military in connection with $8 billion troop supply contract and with violating the Iran sanctions regime. The company has denied all charges

Three men were charged in an indictment returned November 27 for their roles in a scheme to defraud US Military contracts in Afghanistan, engaging in illegal commerce in Iran, and laundering money internationally. Their conduct was in connection to two multi-million dollar contracts to provide supplies and logistical support to US troops in Afghanistan, the US Department of Justice said in a statement.     

Abul Huda Farouki, 75, of McLean, Virginia; his brother Mazen Farouki, 73, of Boyce, Virginia; and Salah Maarouf, 71, of Fairfax, Virginia, were each charged in an indictment filed in the District of Columbia with two counts of major fraud, one count of conspiracy to violate the restrictions on doing business with Iran, four counts of substantive violations of those restrictions, and one count of conspiracy to commit international money laundering.

The indictment alleges that Abul Huda Farouki was the CEO of Anham FZCO, a defense contractor based in the United Arab Emirates (UAE), which maintained offices in Dubai, UAE, Jordan, and the United States. Mazen Farouki was the President and Founder of Unitrans International Incorporated, an international logistics company with close ties to Anham. Defendant Salah Maarouf operated a company that procured goods and services for Anham. 

According to the indictment, on June 22, 2012, the US Department of Defense awarded Anham an $8 billion contract to provide food and supplies to US troops in Afghanistan known as the “SPV-A contract.” As part of the bidding process, the defendants allegedly caused Anham to represent that it would build two warehouses in Afghanistan, which Anham would use to provide supplies to US forces. 

The indictment alleges that the defendants schemed to defraud the Department of Defense in connection with the SPV-A contract by submitting bids that contained knowingly false estimates of the completion dates for the warehouses and by providing the government with misleading photographs intended to convey that Anham’s progress on the warehouses was further along than it actually was. Specifically, the indictment alleges that, in February of 2012, the defendants and others caused Anham employees to transport construction equipment and materials to the proposed site of one of the warehouse complexes to create the false appearance of an active construction site.  Members of the conspiracy then photographed the site, provided the photographs to the Department of Defense, and then largely deconstructed the staged construction site.    

The SPV-A contract also required bidders to certify that they abide by the Iran Sanctions Act, which prohibits US citizens and companies from engaging in commercial activity in Iran.  According to the indictment, the defendants conspired to increase Anham’s profits in connection with the SPV-A contract by shipping warehouse building materials to Afghanistan via Iran, instead of using more costly, but legal, routes. 

In addition to the SPV-A contract, the indictment alleges that the defendants schemed to defraud the Department of Defense with respect to the National Afghan Trucking (NAT) contract, which was a $984 million contract that required Anham to supply trucking services to the U.S. Military in Afghanistan.  As with the SPV-A contract, the NAT contract required bidders to certify compliance with laws concerning sanctions placed on Iran. According to the indictment, rather than ship trucks to Afghanistan using legal but relatively expensive routes, the defendants conspired to cut costs by transporting vehicles through Iran. The indictment alleges that the defendants’ conduct violated laws prohibiting fraud, commercial activity with Iran, and international money laundering.      

In a statement, the company has denied all charges. “Anham and its related subcontracting companies first self-reported shipments made through Iran in 2013, and have been cooperating with the Justice Department since the onset of its investigation. This investigation has been pushed by Anham’s chief competitor, a company that itself pled guilty to defrauding the United States, and which now seeks to profit through false accusations it has made in a civil case against Anham.”

According to Anham’s statement, the deliveries to Afghanistan through Iran were carried out by a Jordanian subsidiary of the company. “Anham did not do business with any sanctioned individual or sell any prohibited materials to Iran,” the company claims.