Trump’s Top Sanctions Official Departing for Private Sector

By Saleha Mohsin

The U.S. Treasury Department’s top sanctions official, Sigal Mandelker, plans to leave the Trump administration after helping to increase the pace of economic penalties against American adversaries.

Mandelker, who joined the Treasury Department in June 2017, has helped lead new sanctions on countries including North Korea, Russia, Venezuela, and Iran. She plans to take a job in the private sector.

She moved to Washington from New York to work in the Trump administration.

The Wall Street Journal first reported her plans for departure, citing Treasury Secretary Steven Mnuchin and Mandelker.

“She is a fierce advocate for effectively leveraging our powerful economic tools to make an impact for a safer world,” Mnuchin said in a statement. “Sigal’s steadfast devotion to mission will be missed, as she is truly a unique talent.”

Mandelker plans to depart in coming weeks and will leave Mnuchin with one of three undersecretary jobs filled.

Deputy Treasury Secretary Justin Muzinich will take Mandelker’s portfolio after she departs in the next few weeks, a Treasury spokesman said. Muzinich also oversees the domestic finance unit, leaving two of the agency’s three offices under his purview while the undersecretary seats remain open.

Mnuchin has struggled to fill top jobs at the department since the start of the Trump administration. The Treasury chief hasn’t replaced Eli Miller, who left as chief of staff in April, or Craig Phillips, who served as a counselor leading the domestic finance unit until May.

Photo: Bloomberg

US to Press UAE CEOs to Tighten Financial Screws on Iran

By Zainab Fattah

A senior U.S. Treasury official is in the United Arab Emirates to meet with the chiefs of the country’s banks and shipping companies as the Trump administration seeks to further tighten sanctions against the Iranian regime.

Sigal Mandelker, the Treasury’s undersecretary for terrorism and financial intelligence, will be meeting the chief executive officers of seven U.A.E. banks on Sunday and Monday. She will also hold talks with officials before heading to Switzerland and Israel.

“We’re discussing ways to work together to counter terrorism and Iran’s destabilizing influence in the region and around the world,” Mandelker told reporters in the capital, Abu Dhabi, on Sunday.

The trip marks the latest effort by the U.S. to turn up the pressure on Iran, which has so far refused to negotiate unless American sanctions are lifted. President Donald Trump pulled the U.S. out of the multiparty 2015 nuclear deal and began to reimpose penalties last year. Earlier in 2019, the U.S. suspended waivers that allowed countries to buy Iranian oil.

The Treasury has issued over 30 rounds of curbs targeting more than 1,000 Iran-related entities, Mandelker said.

Last week, a major shipping network was also sanctioned after selling millions of barrels of of Iranian crude, she said. It allegedly supports the Qods Force, the international brigade of Iran’s Revolutionary Guard Corps, which has been shipping oil to help the regime of Syrian President Bashar Al Assad and Lebanon’s Hezbollah, she added.

The U.S. is also targeting those who engage in other trade and financial activities related to Iran’s petrochemical and metal production, Mandelker said. On June 7, Iran’s largest petrochemicals group was sanctioned, and two of its designated sales agents were based in the U.A.E., she said.

“As we’ve seen historically, that kind of trade has happened right here in the U.A.E.,” she said. “And we want to make sure that that sector understands that there are similar consequences to continuing to engage in that kind of trade.”

Photo: Wikicommons

Mnuchin Warns Europe Not to Breach U.S. Sanctions on Iran

By Saleha Mohsin

Treasury Secretary Steven Mnuchin made clear that participating in the U.S. financial system means abiding by its sanctions amid a European effort to sidestep American economic pressure on Iran to continue trade.

Germany, France and the U.K. created a trade vehicle known as INSTEX in January to allow companies to do some trade with Iran without the use of U.S. dollars or American banks—thus allowing them to get around wide-ranging American sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

“We’ve been very clear that we expect U.S. sanctions to be adhered to,” Mnuchin said in response to questions from reporters on Thursday in France where he met with Group of Seven counterparts. “Whether it’s Iran or anyone else, if people want to participate in the dollar system people will be obligated to follow the U.S. sanctions.”

He said that INSTEX should be “careful on diligence.”

Treasury’s top sanctions official, Sigal Mandelker, sent a letter in May warning European allies not to violate sanctions through Instex. Mnuchin confirmed that a letter was sent.

European countries broadly opposed Trump’s decision to withdraw from the nuclear accord but have struggled to deliver the economic benefits Iran expected from the deal, known as the Joint Comprehensive Plan of Action, since the U.S. quit. In the meantime, U.S. sanctions have delivered a blow to Iran’s economy, fueling inflation, reducing oil revenue and pressuring President Hassan Rouhani’s government. INSTEX was supposed to help address that, but so far it has largely failed to get up and running.

Frustrated at the U.S. withdrawal and stalled European efforts, Iran has already breached some of the limits on its nuclear program imposed under the deal, and has warned European governments that it will give up on the accord entirely unless they can find some way to work around the U.S. sanctions.

Photo: White House

U.S. Warns Europe That Its Iran Workaround Could Face Sanctions

By Jonathan Stearns and Helene Fouquet

The Trump administration escalated its battle with European allies over the fate of the Iran nuclear accord, threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions.

Sigal Mandelker, the Treasury Department’s undersecretary for terrorism and financial intelligence, signaled in a May 7 letter obtained by Bloomberg that INSTEX the European vehicle to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.

“I urge you to carefully consider the potential sanctions exposure of INSTEX” Mandelker wrote in the letter to INSTEX President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Germany, France and the U.K. created INSTEX in January to allow companies to trade with Iran without the use of U.S. dollars or American banks—thus allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

A senior official involved in the internal debate that led to the letter said the U.S. decided to issue the threat after concluding that European officials, who had earlier downplayed the significance of Instex in conversations with the Trump administration, were far more serious about it than they had initially let on.

The official, who asked not to be identified discussing internal deliberations, said the letter was intended to serve as a warning that the U.S. would punish anyone associated with INSTEX—including businesses, government officials and staff —if they were working to set up a program to help Iran evade U.S. sanctions.

“This is a shot across the bow of a European political establishment committed to using Instex and its sanctions-connected Iranian counterpart to circumvent U.S. measures,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies in Washington.

Deceptive Practices

Asked to comment on the letter, the Treasury Department issued a statement saying “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.”

The French Finance Ministry, which handles press queries for INSTEX, had no immediate comment.

European countries broadly opposed Trump’s decision to withdraw from the nuclear accord but have struggled to deliver the economic benefits Iran expected from the deal, known as the Joint Comprehensive Plan of Action, since the U.S. quit. In the meantime, U.S. sanctions have delivered a blow to Iran’s economy, fueling inflation, reducing oil revenue and pressuring President Hassan Rouhani’s government. Instex was supposed to help address that, but so far it has largely failed to get up and running.

Iranian leaders have rejected the U.S. moves while pressuring European nations to accelerate efforts to ensure Iran benefits from staying in the JCPOA. At the same time, Iran has said it will scale back some of its commitments under the accord, signaling it could surpass some limits on enriched-uranium in weeks.

At the heart of the latest U.S. move is the argument that Iran and its central bank use deceptive financial practices and haven’t implemented minimum global safeguards against money laundering and terrorism financing.

Pompeo Warning

Opponents of INSTEX, including Dubowitz’s Foundation for Defense of Democracies, argue that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.

During a visit to London on May 8, Secretary of State Michael Pompeo also warned that there was no need for Instex because the U.S. allows for humanitarian and medical products to get into Iran without sanction.

“When transactions move beyond that, it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction,” Pompeo said. “It’s very straightforward.”

Photo: House.gov

Trump's Sanctions Staff Defects as U.S. Expands Economic War

The U.S. office in charge of financial sanctions, President Donald Trump’s favorite weapon against American adversaries, risks being hobbled by staff departures due to management turmoil and growing private-sector demand for its expertise.

Trump has nearly doubled the number of people and companies under U.S. sanctions. But in the last two years, about 20 staff have left the office in charge of implementing and enforcing sanctions, the Office of Foreign Assets Control—about 10 percent of its workforce.

The sanctions office, part of a Treasury division overseen by Sigal Mandelker, has the power to freeze billions of dollars in assets, blacklist individuals and companies from participating in the U.S. economy and punish violations. The Trump administration has turned to sanctions to pressure countries including North Korea, Venezuela and Turkey.

The increased tempo and sophistication of the work of the sanctions office, known as OFAC, has contributed to attrition. Washington law firms, Wall Street banks and other companies have sought to hire Treasury’s sanctions officials to help them translate the agency’s decisions, which can have sweeping effects on financial markets.

But some who have left also blame Mandelker, 47, the undersecretary for Treasury’s Terrorism and Financial Intelligence unit, or TFI, which is composed of four offices, including OFAC.

While they say Mandelker is smart and well-versed, people familiar with her work also call her disorganized, indecisive and short-tempered and say she has embroiled her staff in feuds with a deputy, Marshall Billingslea.

Mandelker’s poor leadership has hurt morale across the units she oversees, according to more than 20 people familiar with the inner workings of her department, all of whom asked not to be identified because of the sensitivity of the situation.

Attrition Risks

The Treasury Department made Secretary Steven Mnuchin available for an interview after it was asked for comment from Mandelker. He expressed confidence in her work and said criticism of her is “completely inconsistent” with the operations of her division.

“Sigal and I have tremendous confidence in the career staff and their opinions,” he said. Mnuchin said attrition rates are lower at TFI than other parts of Treasury, though the department declined to provide numbers.

Mandelker said in written testimony for a House hearing last week that she was “humbled to supervise TFI’s career professionals who work day-in and day-out, often behind the scenes, to keep America safe.” She called OFAC the “beating heart of U.S. sanctions.”

Mnuchin has taken an increased interest in TFI’s work compared to his predecessors, often saying that he spends half his time on sanctions. Some of the people who blame Mandelker or Billingslea for the attrition say Mnuchin’s involvement in the office helps speed decisions, and that the secretary was more willing to hear and follow advice from civil servants than Mandelker.

“Given the activity and the impact on the private sector both here and abroad I can see why companies would want to hire experts to deal with this,” Mnuchin said.

It’s difficult to pinpoint risks from staff attrition at TFI, but one vulnerability could be legal. People under U.S. sanctions sometimes sue the government for relief. Russian billionaire Oleg Deripaska, who was sanctioned last year in response to Moscow’s interference in the 2016 election, filed a lawsuit last week claiming $7.5 billion in losses related to the U.S. penalties.

Deripaska’s lawsuit names OFAC’s current director, Andrea Gacki, as a defendant.

OFAC has never lost such a case, but if it does, it “could tie OFAC’s hands in actions in the future, while also making a mess of economies facing sanctions,” said Erich Ferrari, who founded Ferrari & Associates in Washington and helps people get removed from U.S. sanctions.

“Sanctions are hard. It takes a long time to really understand how the tool can be effective and what the legal bounds are,” said Ferrari, one of the lawyers representing Deripaska. “When you lose all of that institutional knowledge, you could end up getting sued for not understanding which actions may not be in accordance with the law.”

Sanctions Power

OFAC’s work is as enigmatic as it is powerful. One day in February, trading of some Venezuelan debt came to a standstill after Treasury updated its sanctions guidelines on transactions tied to Maduro’s regime. OFAC’s complex instructions were interpreted as forbidding most transactions. Treasury clarified its guidance a week later.

OFAC also has the ability to punish anyone who violates its financial restrictions, whether it’s BNP Paribas, one of the world’s largest banks, which agreed to pay a $9 billion fine in 2014, or a beauty company using North Korean materials to make false eyelashes.

Recent departures from TFI include Sarah Runge, who left after about 10 years to lead regulatory strategy at Credit Suisse Group, Jennifer Fowler, who left after 17 years for Brunswick Group in Washington and Heather Epstein, who is now at Barclays Plc. Neither responded messages seeking comment.

The more than 20 people interviewed who blame Mandelker for the departures from TFI said she has ignored the advice of veteran civil servants in the unit, frequently loses her temper and often leaves dozens of employees waiting up to 40 minutes for her to arrive at meetings.

Office Friction

Her clashes with Billingslea, a fellow political appointee who is a subordinate but like Mandelker is Senate-confirmed, have also discomfited some staff, the people said.

Trump has nominated Billingslea to be an assistant secretary at the State Department.

Treasury Department officials asked some of Mandelker’s subordinates and supporters to contact Bloomberg News in her defense, including Isabel Patelunas, an assistant secretary in TFI; Kenneth Blanco, who heads another unit Mandelker oversees called the Financial Crimes Enforcement Network; Paul Ahern, assistant general counsel at Treasury; and others who asked not to be named. They said Mandelker deserves credit for her leadership of a division of Treasury undertaking challenging and high-pressure work.

They said she’s passionate about her work, aggressively advocates for resources and has helped break silos within TFI. Stuart Levey, one of Mandelker’s predecessors who also worked with her during the post-9/11 era at Justice Department, said she operates well under pressure.

“In every administration from Clinton to Bush to Obama to Trump, I saw conflict within the agency because they were incredibly passionate people who cared deeply about the mission,” said John Smith, who worked for Treasury for 11 years and left OFAC as director in May due to personal reasons.

Mandelker has said she takes pride in a career directed at fighting human rights abuses, including in her current role at Treasury. The daughter of Holocaust survivors, she held various positions at the Justice and Homeland Security departments during President George W. Bush’s administration. She was a partner at New York law firm Proskauer Rose LLP before she joined the Trump administration.

The departures at TFI echo instability earlier in Trump’s administration at Treasury’s International Affairs unit, led by David Malpass. Following a Bloomberg News report that Malpass’s mismanagement pushed more than 20 civil servants out of the office, Treasury officials started hosting listening sessions, lunches between civil servants and Malpass, and increased transparency into decision-making, according to two people familiar with the matter.

Photo Credit: Bloomberg

Turkish Businessman Sanctioned by US for Dealing with Iran

The United States slapped sanctions on aTurkish businessman on Thursday for violating US sanctions on Iran.

Evren Kayakiran, 39, was the managing director from 2013-2015 of a Turkish company that distributes motion control products, the Treasury Department said in a statement.

It said the Turkish firm, Elsim, had been acquired by a US company, Kollmorgen Corp., in 2013, making it subject to US sanctions on Iran.

Elsim violated US sanctions by sending employees to Iran to service machines under the guise that they were on vacation there, the Treasury Department said.

Kollmorgen, which reported the violations, reached a USD 13,381 settlement with the Treasury Department's Office of Foreign Assets Control.

"Treasury is sanctioning Kayakiran not just for his willful violation of US sanctions on Iran, but also for directing staff to commit and cover up these illegal acts," said Sigal Mandelker, undersecretary for terrorism and financial intelligence.

US companies and individuals are barred from dealing with Kayakiran and US financial institutions are not allowed to accept payments involving him.

Photo Credit: AP