International Policy Digest

World News /28 Oct 2019

Something More than Money at Stake in Ras al Khaimah – Azima standoff

Why are the Emirate of Ras al Khaimah (RAK) and Iranian-American businessman Farhad Azima going at it hammer and tongs in a UK court over the relatively paltry sum of a few million pounds?

Having looked into the $2.6 million fraud dispute at length, including some of the communications from Azima leaked online in 2016 (which are still online and form the basis of separate UK court action), I still can’t say for certain.

Reading the RAK claim document everything seems relatively straightforward. The Emirate accuses Azima – a regular doer of business with RAK – of misrepresenting the amount of money one of his businesses – HeavyLift International Airlines – put into a joint venture with the Emirate’s RAK Airways. RAK is further accusing Azima of not acting in good faith in their business dealings, thus violating the terms of their partnership. RAK wants the money it paid out to Azima in the March 2016 settlement related to the winding down of their joint aviation venture repaid.

Reading Azima’s counterclaim, however, one uncovers a far more convoluted (and fantastical?) story. According to Azima, he is the victim of a complicated and long-running smear campaign organized by RAK and implemented by a list of PR consultancies and law firms. Again, all to recover the relatively paltry sum of a few million pounds, something an Emirate is likely to make in all of a few minutes.

If the Emirate is likely to be cross with anyone, it is Dr. Khater Massaad, the former head of its investment authority, who fled the Emirate in 2012 and is currently being held in Saudi Arabia having been convicted (in absentia) for multiple frauds following a series of audits done by RAK in the wake the 2008-09 global financial crisis. One estimate puts the Massaad fraud total at an eye-watering $1.5 billion, an amount one can easily imagine an Emirate becoming exercised about. Indeed, the frauds identified by the Emirate are also now being pursued legally in a number of jurisdictions outside of RAK, including India, Georgia, and the Congo, all places Dr. Massaad had deemed worthy of RAKIA investment.

And how does Azima fit into the Massaad picture?

Azima became involved in several business deals with Massaad when RAKIA was divesting the Emirate of assets in the years following the last global recession. One of their joint efforts – for which Azima was to receive a 10% commission, and Massaad a $500,000 payment – was the 2011 plan to sell a RAK-owned Sheraton hotel in Tbilisi, Georgia, to a company controlled by three Iranians – Houshang Hosseinpour, Pourya Nayebi, and Houshang Farsoudeh – who were then heavily involved in sanctions-busting on behalf of the Iranian Revolutionary Guard. Azima also tried to sell shares of the HeavyLift joint venture to the three Iranians. The deals eventually came unstuck, and soon after Azima’s long-time employee (and lover, if I’m reading the leaked emails correctly) Afsaneh Azadeh was detained during a visit to family in Iran and tortured for months in Tehran’s notorious Evin prison. Hosseinpour also filed a criminal complaint in Dubai against Azima over a deal to buy the latter’s luxury yacht. There was clearly a lack of trust, if not outright animosity, between Azima and three agents close to the Iranian Revolutionary Guard Corps. Indeed, Hosseinpour, Nayebi, and Farsoudeh would later end up on the United States sanctions list thanks, in part, to information provided by Azima to the Wall Street Journal’s Jay Solomon, who often used Azima as a source in his award-winning reporting on Iran (and who ended up being fired by the paper for what it deemed to be an inappropriate relationship with Azima, who had included Solomon in a business plan – never realized – to conduct surveillance on Iran via the United Arab Emirates). For his part, Massaad also had extensive business dealings with the then-under sanctions Iran.

It was only after RAK began investigating Massaad’s various frauds at RAKIA – frauds uncovered, it must be said, by reputable firms like PWC and KPMG – that things began to turn nasty. As Massaad’s former associates began to come under the scrutiny of the Emirate’s police and courts, the former head of RAKIA began a campaign to counter his former employer’s efforts to recoup some of its losses.

Enter Azima. According to the trove of leaked emails, the businessman put Massaad in contact with his attorney Kirby Behre of U.S. firm Miller & Chevalier, whose firm then assembled a team of former CIA operatives for the purpose of “waging war” on RAK. Behre’s consultants flew to Gulf region and began sourcing material for Behre to distribute to the press via Christopher Cooper, a former Wall Street Journal reporter, in an effort to discredit the Emirate before it could move on Massaad. The effort involved Azima himself, who was signed to a retainer by Miller & Chevalier and acted as a go-between with Massaad.

It wasn’t long, however, before Behre’s disruptive efforts came to the attention of Dechert LLP, the Emirate’s legal representative, who called a meeting in London to list Massaad’s transgressions and encourage Behre and his team to stop with any “shenanigans” – including briefing the UK’s Guardian newspaper – that made reaching a settlement more difficult. Behre averred any knowledge of the plot to Dechert; something the email trove makes plainly clear was untrue.

Of course, the Emirate didn’t know at the time the extent of Azima’s involvement with Behre and his team; RAK still believed Azima to be a trusted intermediary. And it was Azima who was eventually asked – or volunteered, depending on whose account you believe – to resolve the festering dispute between Massaad and RAK, something Behre encouraged despite knowing of Azima’s blatant conflict in the matter.

And as all of this was unfurling, Azima was in the middle of resolving his (separate) dispute with RAK on HeavyLift International, the $2.6 million now in dispute before the courts. No wonder the Emirate is arguing Azima was acting in bad faith. Now it’s up to a UK High Court to judge who is correct. The trial begins in January 2020.