Treasury Targets Transnational Corruption

Treasury Targets Transnational Corruption 

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned two former Afghan government officials — Mir Rahman Rahmani (M. Rahmani) and his son, Ajmal Rahmani (A. Rahmani), collectively known as “the Rahmanis” — for their extensive roles in transnational corruption, as well as 44 associated entities. These individuals and entities are designated pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world. Through their Afghan companies, the Rahmanis perpetrated a complex procurement corruption scheme resulting in the misappropriation of millions of dollars from U.S. Government-funded contracts that supported Afghan security forces.

“Today’s designations underscore Treasury’s commitment to holding accountable those who seek to exploit their privileged positions for personal benefit,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury will continue to utilize our tools to promote accountability, including by disrupting the networks that enable corrupt activities.”

Concurrently, the Department of State designated Mir Rahman Rahmani, Ajmal Rahmani, and their immediate family members, under Section 7031(c) of the annual Department of State, Foreign Operations, and Related Programs Appropriations Act for involvement in significant corruption as a public official.

THE RAHMANIS’ FUEL PROCUREMENT CORRUPTION SCHEME

In nearly every step of their corruption scheme, the Rahmanis created opportunities to enrich themselves at the expense of others. The Rahmanis have faced allegations of fraud involving fuel contracts that their companies controlled to provide fuel to the Afghan National Defense and Security Forces (ANDSF). They artificially inflated the price of fuel contracts they won to deliver fuel to Afghan security forces, to include the ANDSF. They fraudulently imported and sold tax-free fuel and under-delivered fuel owed on their contracts. After bribing their way into the Afghan Parliament, the Rahmanis used their official positions to perpetuate their corrupt system. 

Contract Inflation

A. Rahmani and M. Rahmani used their hidden control of numerous companies to artificially inflate fuel contract prices by fraudulently submitting contract bids from multiple companies that obscured their involvement, rigging bids, and eliminating competition on U.S.-funded contracts. For example, in 2014, several families involved in the fuel business, including the Rahmanis, colluded to drive up the price of fuel on U.S.-funded contracts by more than $200 million and eliminate competitor bids.

Import Tax Fraud

The Afghanistan Customs Department was responsible for regulating the importation of dry goods and fuel for North Atlantic Treaty Organization (NATO), U.S., and Afghan forces using “maffinamas,” letters that allowed the holder to import a limited amount of goods tax free. These maffinamas were supposed to be cross-referenced with orders and delivery receipts to ensure that only allotted quantities were imported tax free. Representatives for Rahmani fuel companies repeatedly gave cash to Afghan Customs officials in what were seen as bribes for excess maffinamas.

In one such case, A. Rahmani received maffinamas for more than double the quantity of fuel authorized for a given delivery. In 2017 and 2018, one of the Rahmanis’ companies imported almost 1 billion liters of fuel—an amount greater than the total ANDSF annual consumption (estimated at 400 million liters), despite only supplying a minority of the fuel task orders during those years to the ANDSF.

After the cancellation of one of the Rahmanis’ company’s contract to supply aviation fuel to the ANDSF in early 2019, the company imported an additional 2.5 thousand metric tons of aviation fuel tax free. Fraudulent use of maffinama certificates by the Rahmanis is estimated to have potentially robbed the Afghan government of millions of dollars in tax revenue.

Fuel Theft

The Rahmanis further bolstered their corrupt fuel profits by under-delivering on their companies’ fuel contracts. One of the Rahmanis’ fuel companies, Secure Movement Logistics (SML), bribed Afghan National Army (ANA) personnel to conceal their non-delivery of fuel, allowing at least 11 million liters of fuel to go undelivered in less than a year.

Parliamentary Corruption

Ahead of the October 2018 parliamentary elections, A. Rahmani gave potential voters gifts and money in exchange for their promise of a vote and promised additional compensation after the election if he received their vote. To ensure his election to the Afghan Parliament, A. Rahmani paid $1.6 million to some members of the Afghan Independent Election Commission to inflate the results of the election by thousands of votes.

M. Rahmani paid millions of dollars to multiple Members of Parliament throughout the parliamentary speakership elections in 2018 to secure their votes for his bid for Speaker of Parliament.

A. Rahmani and M. Rahmani are being designated pursuant to E.O. 13818 for being foreign persons who are current or former government officials, or persons acting for or on behalf of such an official, who are responsible for or complicit in, or have directly or indirectly engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

CITIZENSHIP BY INVESTMENT

Corrupt officials, like the Rahmanis, acquire and utilize foreign citizenships to conduct business around the world. Citizenship by investment (CBI) programs are intended to attract foreign investment by granting foreign investors citizenship rights, and the associated identification documents, in the country concerned—without requiring prior residency by the applicant. While many CBI applicants may engage with these programs for legitimate reasons, corrupt actors often abuse CBI programs and their benefits (such as passports) to hide assets, facilitate illicit cross-border activity, and access previously inaccessible areas of the international financial system. These actions can undercut anti-money laundering and countering the financing of terrorism (AML/CFT) regimes.  

THE BREADTH OF THE RAHMANIS’ NETWORK

While the underlying corrupt activity perpetuated by the Rahmanis occurred in Afghanistan, the Rahmanis continue to maintain an international corporate network. Treasury is designating the following 41 entities pursuant to E.O. 13818 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, A. Rahmani:

• 21 German companies: Ozean Immobilien Projektentwicklung Verwaltungs- GmbH, Ozean Immobilien Management GmbH & Co. KG, Ozean Immobilien Projektentwicklung GmbH & Co. KG, Pyramaxia Immoprojekt GmbH & Co. KG, Pyramaxia Real Estate Development GmbH & Co. KG, Pyramaxia Real Estate GmbH & Co. KG, Ozean Group GmbH, Ozean Baustoffe GmbH & Co. KG, Ozean Horizont Baumaschinen & Bauequipment GmbH & Co. KG, Ozean Horizont Bauwerke GmbH, Ozean Horizont Erdarbeiten GmbH & Co. KG, Ozean Horizont Objektplanung GmbH & Co. KG, Ozean Horizont Projektentwicklungs GmbH & Co. KG, Ozean Horizont Spezialtiefbau GmbH & Co. KG, RG Immoprojekt GmbH & Co. KG, RG Real Estate Development GmbH & Co. KG, RG Real Estate GmbH & Co. KG, NAI Energy Europe GmbH & Co. KG, NAI Energy Europe Verwaltungs GmbH, NAI Europe Energy GmbH & Co. KG, and NAI Management GmbH;
• Eight Cypriot companies: Pyramaxia Limited, RG Holdings Limited, NAI Logistics Limited, Buoyant Holdings Limited, Ocean Europe CY Limited, D.C.H. Dream Creators Holdings LTD, Riseonic Holdings LTD, and ZEM Holdings LTD;
• Six Emirati companies: RG Group FZE, The Fern Limited, Ascent Holdings LTD, Orbit International FZE, Ocean Estate Company Limited, and Rahmani Group International JLT;
• Two Afghan companies: Fidelis Logistic and Supply Services and Secure Movement Logistics Services;
• Two Austrian companies: Ocean Estate GmbH and Ocean Properties GmbH;
• One Dutch company: NAI Logistics B.V.;
• One Bulgarian company: Lego Investments EOOD

Additionally, the following two German companies are being designated pursuant to E.O. 13818 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Ocean Properties GmbH:

• Ozean Development Real Estate GmbH & Co. KG and Ozean Real Estate GmbH & Co. KG.

Lastly, the following Dutch company is being designated pursuant to E.O. 13818 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, RZ Group FZE:

• AlphaOne Pharmaceutical B.V.

SIGAR’S MISSION TO DETECT AND DETER WASTE, FRAUD, AND ABUSE

This investigation was conducted in close coordination with the Office of the Special Inspector General for Afghanistan Reconstruction (SIGAR), a U.S. agency created to provide independent and objective oversight of Afghanistan reconstruction projects and activities. SIGAR’s Investigations Directorate conducts criminal and civil investigations of waste, fraud, and abuse relating to programs and operations supported with U.S. funds allocated for the reconstruction of Afghanistan. Results are achieved through criminal prosecutions, civil actions, forfeitures, monetary recoveries and suspension and debarments.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person.

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Click here for more information on the individuals and entities designated today.

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