Luxembourg's Cargolux allegedly smuggled cigarettes for Iran. Photo: markyharky, Flickr
From the cold grey skies of Luxembourg to the hot tarmac of Tehran’s Imam Khomeini International Airport, a few corrupt government officials from Luxembourg facilitated a stunning illegal operation of smuggling, money laundering and proliferation over much of the past decade. They have been using their positions of authority and diplomacy for nefarious purposes: personal profit, pleasure and power – all while working in the interest of Iran and other corrupt nations. Following a tip from a sensitive government source, Nuqudy conducted an investigation into this affair and found some stunning results.
From at least 2006 through 2008, Cargolux, the national cargo airline of Luxembourg majority-owned by direct and indirect holdings of the state, ran a coordinated smuggling operation transporting cigarettes to Iran. These cigarettes were unloaded directly into Iranian Revolutionary Guard trucks and then smuggled back to Europe by land where they were sold. The illicit profits are believed to have been laundered into the Western banking system through front companies used by Iran to acquire dual-use parts for their nuclear program. While we found no evidence showing that the Luxembourg facilitators of this operation were aware of the proliferation dimension of their crimes, we were informed that on December 21st
, 2007 Western intelligence agencies intercepted dual-use parts that were scheduled to be flown from Frankfurt to Tehran on one of these same Cargolux flights.
Our investigation also revealed that Cargolux management became increasingly uncomfortable with the Tehran flights. In September 2006, Uli Ogiermann, at the time the CEO of Cargolux, sent an e-mail to then Minister of the Economy Jeannot Krecké proposing that they reduce or stop the flights. In response, Minister Krecké informed Mr. Ogiermann that the flights would actually be increased and Luxembourg worked to protect its trade with Iran
. Minister Krecké then installed Jean-Claude Knebeler, his right hand deputy who had been seconded to him by the Ministry of Foreign Affairs, on to the board of directors of Cargolux and had him travel several times to Tehran in an official capacity in order to ensure that their wishes would be met. A “secret” U.S. State Department cable on the subject of Iran Sanctions from Brussels dated April 8th
2009 confirms the Luxembourg Government’s protection of the cigarette smuggling racket during Mr. Knebeler’s tenure on the board.
Minister Krecké and Mr. Knebeler had great personal interest in seeing the continuation of this criminal enterprise. They were in partnership with their close friend Albert Pansin, a Luxembourg citizen residing in Dubai who represents Cargolux and the Luxembourg Ministry of Economy in the Middle East. Through a Luxembourg company called Malu Enterprises, with Mr. Pansin’s wife as the director
, they received at least 1.4 million dollars per year in kickbacks from the operation between 2006 and 2008. Malu and Cargolux faced other accusations of smuggling as well
As the separate U.S. Justice Department investigation into Cargolux involvement in price fixing was heating up, it became clear that their smuggling and money laundering would be increasingly difficult to hide and would have to be shut down. In an effort to keep the entire operation well hidden from the American investigators, the board of Cargolux produced a report called the “Songa Report”, that was shown to us by a source. According to the source, this report was theatrically treated as so sensitive it had to be kept on an offline PC in a locked room. It consisted of a number of "confessions" to small transgressions that were used to gain political control of the airline from potential whistle-blowers in upper management and the board while hiding their real secrets from the American investigators. The report made grand confessions of an affair dealing with the Silk Way Airlines but failed to mention any Iranian connections or kickbacks laundered through Malu Enterprises. In the final agreement with the U.S. Justice Department that resulted in a prison sentence for Mr. Ogiermann, the Cargolux board managed to negotiate no further investigation or prosecution of past crimes. Had the Justice Department known about the illegal Iranian proliferation and smuggling they would have probably not agreed to this provision. A legal expert has confirmed to us that “full and truthful cooperation requirements” are included in the plea agreement and that the Cargolux board may have violated them by not disclosing these facts that its member Mr. Knebeler was aware of.
After their cash cow shut down and Cargolux entered into dire financial straits, it was apparent to these corrupt individuals that their criminal activity still posed a significant risk. This was a secret that an investor might discover during a due diligence process. To cover their risk, they proceeded to sell the airline to Qatar Airways. In a totally opaque process that raised eyebrows and questions by observers
, several potential investors were ignored in favour of an investor that could be trusted to keep their secret. Mr. Knebeler was an instrumental facilitator of this deal; manipulating the board with subtle suggestions and ensuring that the Qatari investors would grant Minister Krecké and himself a favour by ultimately taking control of the airline. Former Prime Minister Hamad bin Jassim bin Jaber Al Thani, for his part, was eager not only to acquire an airline and two banks, but the goodwill of at least one minister and several influential government representatives in the process. To ensure the acquisition, separate sources have confirmed that Qatar provided Mr. Knebeler and others with credit cards that could be used "reasonably without limit" to draw on special accounts established at the Bank of Qatar.
However, when Jeannot Krecké was forced to resign in the wake of a separate and unrelated corruption scandal
, it became apparent that the Cargolux acquisition had not offered good value for money – the acquired “goods” were damaged beyond expectations. Consequently, Qatar sold their stake back to the Luxembourg government for the same 117 million Euro price that they paid knowing that such an outrageous unwinding could not be refused by the Luxembourg government for this rotten mess.
It is surprising that their Cargolux deal failed miserably. This was not the first time that Minister Krecké and Mr. Knebeler had engaged in self-dealing. A source informed us that Mr. Knebeler had played a similar role in the takeover of Arcelor by Mittal and told us that phone records would confirm that Mr. Knebeler had been in direct GSM contact with Lakshmi Mittal during the sensitive negotiations, providing him with inside information from the Luxembourg government negotiating team. For the treason conducted by his deputy, Minister Krecké was awarded with a seat on the board of the new ArcelorMittal company. Apparently Mr. Knebeler was not yet bold enough to demand the seat for himself for the risk he had taken. Both have since moved on to other activities.
Jeannot Krecké now divides his time between his seat on the board of OAO Sistema, the large Russian conglomerate, and his yacht. Jean-Claude Knebeler was a member of the board of Enevos, the Luxembourg energy company, and is now “out of the way” as Luxembourg’s Consul in New York
. He is known to be romantically involved with attractive Russian women, one first provided in Luxembourg by ex-KGB agent Nikolay Bogachyov and now one with whom he resides in New York provided by disgraced Russian senator Vitaly Malkin. We would not be surprised to learn that they also have their hands on a hot Russian energy deal.
Current Luxembourg policy does not forbid government ministers and civil servants from sitting on boards of for-profit companies and they are even allowed to personally keep the payments for this activity, which they affectionately refer to as "jetons" or tokens. Apparently, the quest for "jetons" was the beginning of a slide into corruption that led Jeannot Krecké and his deputy Jean-Claude Knebeler to become cigarette smugglers and nuclear proliferators for the Iranian Revolutionary Guards.