Cyprus Confidential

Assad regime used Cyprus in efforts to evade sanctions

Syria’s state-owned oil company sought to buy equipment from US firm via intermediary in Cyprus

President Bashar Assad's regime had launched sarin gas attacks on the city’s suburbs and was subjecting rebel-held areas to indiscriminate shelling and bombing. Photograph: AP

Thu Nov 16 2023 - 06:00

In June 2014, Syria’s civil war was entering its bloodiest phase. Rebel militias had seized large swaths of the country. The Islamic State had set up a de facto capital in the city of Raqqa and would soon rampage across Syria and Iraq.

In Damascus, Syria’s capital, President Bashar Assad was running out of money and clinging to power through increasingly brutal means. His regime had launched sarin gas attacks on the city’s suburbs and was subjecting rebel-held areas to indiscriminate shelling and bombing.

That same month, an official for Syria’s state-owned oil company, Syrian Petroleum Co. (SPC), sent a terse request via fax to H.A. Cable Export Co. Ltd., an import-export firm registered in Cyprus.

The Syrian government wanted help buying drilling equipment – crucial to keep the regime’s oil revenue flowing – from an American oil equipment giant, NOV Inc.

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The SPC official said he had received a letter from National Oilwell Varco (NOV’s name at the time) that referred all sales inquiries to H.A. Cable Export. The Cypriot firm, the official wrote, had been “authorized by National Oil Well Company to supply National Oil Well S/Ps [spare parts] of American Origin.”

Over the next five years – some of the most brutal of the civil war – the SPC and the Cyprus firm, working as a middleman, would discuss buying equipment from NOV.

The correspondence involving the NOV equipment emerged from a review of data as part of Cyprus Confidential, an investigation led by the International Consortium of Investigative Journalists along with TK media partners. Based on leaked documents, including records from six Cyprus corporate services providers, the project shines a light on the island nation’s role in helping authoritarian actors evade Western law.

The correspondence between the SPC and H.A. Cable Export had been obtained from the Cyprus law firm Demetrios A. Demetriades LLC, also known as Dadlaw, one of 14 additional offshore services providers whose leaked documents formed the basis of ICIJ’s 2021 Pandora Papers investigation. H.A. Cable Export was a Dadlaw client.

The Dadlaw records contain confidential communications that discuss five separate transactions to provide American drilling equipment to the Syrian firm between 2014 and 2019 in violation of U.S. sanctions. Assad’s government was an international pariah throughout this period: The United States had prohibited the export of any goods or services to Syria’s oil industry since 2011. NOV, which admitted in 2016 to sanctions violations involving deals with Iran, Sudan and Cuba, had declared to U.S. authorities that it ceased all business with Syria before 2014.

But while NOV publicly claimed to be following United States law, the documents show Syrian officials seeking to buy NOV equipment through the Cypriot import-export firm in order to evade sanctions.

In a 2016 fax to H.A. Cable Export, for instance, the officials write that a transaction to purchase drilling equipment had been “turned to yr. company due to USA sanction imposed on Syria.”

The leaked documents, which don’t say if the discussed transactions were completed, consist of scanned digital copies of faxed correspondence between the SPC and H.A. Cable Export, which was owned by a Damascus-based businessman.

These documents raise questions about why the SPC, a sanctioned Syrian company, would claim that NOV directed it to a middleman to purchase NOV equipment; whether the American firm actually sold the gear to the middleman; and, if so, whether it was aware that the middleman was buying it on behalf of the sanctioned Syrian firm.

If, in fact, the SPC did buy the equipment through a middleman, any such purchases would violate U.S. and EU sanctions. They would also have come at the expense of Syrian lives, providing the Syrian regime with the means to conduct its vicious crackdown.

NOV Inc.’s chief compliance officer, Brent Benoit, told ICIJ in an email that the company reviewed its transactions and found no evidence that NOV was involved in any sales to H.A. Cable Export during the period in which the discussions between H.A. Cable and the SPC occurred. He did not address a question about the letter the SPC said in June 2014 it had received from NOV referring it to H.A. Cable Export.

Benoit said that while NOV identifies the end user of its goods for each sale, such equipment can be resold over time. He said that the equipment described in the leaked faxes could refer to secondhand or even counterfeit goods. “What we can tell you is that we have no record of [the equipment] coming directly from us to anyone in Syria or to H.A. Cable Export Company,” he wrote.

H.A. Cable Export is owned by Ahmad Hadaya, a Damascus businessman who was born into a prominent family best known for selling imported Suzuki and Isuzu cars in Syria, Hadaya incorporated H.A. Cable Export Company Ltd. in Cyprus in 1989, and the firm at first shipped a wide variety of goods to Syria before turning in the mid-2000s to equipment and chemicals used in drilling.

In response to questions from ICIJ, Hadaya’s lawyer wrote that Hadaya “has no comments on the transactions you have questioned other than to indicate that no purchases were made from National Oilwell/Varco and no shipments were made to Syrian Petroleum Company. The project never took place and was not completed.”

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