Iranian Company Asks Court to Vacate Sanctions Designation, End 'Sham Proceedings'

An Iranian car manufacturer is asking a federal court to order the Treasury Department to remove it from a U.S. sanctions list, saying Treasury has “no real intention of rescinding” its designation no matter what evidence it is shown. Bahman Group, which was first sanctioned in 2018, said Treasury continues to “manufacture a pretext” to maintain sanctions against the company despite being provided proof that it’s no longer engaging in sanctionable activities.

Treasury’s Office of Foreign Assets Control “has concocted pretext after pretext to support Bahman Group’s continued designation, believing that Bahman Group is powerless to stop them from doing so,” the company told the U.S. District Court for the District of Columbia in an amended complaint this month. Bahman said it has twice “successfully” rebutted OFAC’s facts for adding the company to its Specially Designated Nationals List, “only to have OFAC invent a new basis under which to maintain the designation.”

Without a court order, OFAC “will continue to require Bahman Group to engage in sham proceedings designed to provide the appearance of process,” the company said, “but only to cover up a pre-determined outcome.”

Bahman was first sanctioned as part of the Trump administration’s maximum pressure campaign against Iran because of its ties to Andisheh Mehvaran Investment Company, a firm owned by Iran’s Zinc Mines Development Company. But Bahman said its only connection to Andisheh Mehvaran Investment Company stemmed from its payment of dividends to the firm, a former minority shareholder in Bahman.

Bahman also said it “received no fair notice” that those payments were sanctionable conduct, adding that it had dispersed the dividends before Andisheh Mehvaran Investment Company was added to OFAC’s SDN List. In addition, Andisheh Mehvaran Investment Company had divested itself of Bahman before it was sanctioned by OFAC, the complaint said.

OFAC rescinded Bahman’s designation after being “confronted with its factual errors” but immediately re-sanctioned the company under a new basis: for being owned partly by Iran’s sanctioned Islamic Revolutionary Guard Corps. Bahman argued that this was also an incorrect designation, saying the IRGC sold its ownership stake in 2016, and the entire IRGC “had not yet been sanctioned under E.O. 13224 at the time in which the IRGC purportedly held such indirect ownership interest in Bahman Group -- meaning, the conduct for which Bahman Group was being re-designated was not sanctionable at the time that it was alleged to have occurred.”

Bahman filed another delisting application in April 2022, but OFAC again maintained the designation by pointing to the company's ties to its subsidiary, Bahman Diesel, which OFAC said “likely provided services to the IRGC.” OFAC provided “no reasoned analysis as to why Bahman Group should be held liable for the purported conduct of a legally distinct entity,” the complaint said, and gave no evidence “demonstrating that Bahman Group was actually transacting through the purported subsidiary or that the purported subsidiary acts as an agent of Bahman Group.”

Bahman said it “has become clear through multiple rounds of challenges” that OFAC “has no real intention of rescinding Bahman Group’s” designation, “regardless of whether the facts support Bahman Group’s delisting.” The company asked the court to rescind the designation and order OFAC to remove its name from the SDN List.

“Absent the Court’s intervention, this will leave Bahman Group to rebut the new allegations through yet another new administrative reconsideration process,” the company said, “which will merely serve as another opportunity for OFAC to move the goalposts on Bahman Group and maintain its designation on some other pretextual basis.”

An OFAC spokesperson declined to comment. The agency earlier this year denied a range of allegations made by Bahman, telling the court that the company lacked standing to bring the lawsuit and failed to state claims for which relief can be granted. OFAC also said it “at all relevant times acted in accordance with applicable legal authority,” including the International Emergency Economic Powers Act.