Exclusive: Iranian cell-phone carrier obtained banned U.S. tech

Mon Jun 4, 2012 5:00pm EDT
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By Steve Stecklow

WASHINGTON (Reuters) - A fast-growing Iranian mobile-phone network managed to obtain sophisticated U.S. computer equipment despite sanctions that prohibit sales of American technology to Iran, interviews and documents show.

MTN Irancell, a joint venture between MTN Group Ltd of South Africa and an Iranian government-controlled consortium, sourced equipment from Sun Microsystems Inc, Hewlett Packard Co and Cisco Systems Inc, the documents and interviews show. MTN owns 49% of the joint venture but provided the initial funding.

The procurement - through a network of tech companies in Iran and the Middle East - offers further evidence of the limitations of U.S. economic sanctions.

The sanctions are intended to curb Iran's nuclear program, which Tehran maintains is peaceful. No U.S. company can sell goods or services to Iran unless it obtains special authorization, such as for humanitarian aid. But U.S. enforcement has focused on containing Iranian banks, terrorism, Iran's oil industry, and individuals and companies that Western capitals believe are involved in Tehran's nuclear development program.

Reuters reported in March and April that ZTE Corp, a Chinese telecom-equipment maker, had sold or agreed to ship millions of dollars worth of U.S. hardware and software to Iran since 2010 despite a longtime U.S. sales ban on tech products to Iran. The buyers were Iran's largest telecom carrier, Telecommunication Co of Iran, and a unit of the consortium that controls it. The U.S. Department of Commerce is investigating.

People involved in Iran's telecommunications industry say U.S. computer components remain widely available in Iran today.

"There's nothing you can get in the U.S. or Dubai that you can't get in Iran," Chris Kilowan, who was MTN's top executive in Iran from 2004 to 2007, said in an interview. He said MTN's parent company, MTN Group, was directly involved in procuring U.S. parts for MTN Irancell, which launched in 2006 and is now Iran's second-largest mobile-phone operator.

"All the procedures and processes around procurement were established by MTN," he said. He said the company agreed to allow its Iranian partners and MTN Irancell to set up a local Iranian company with the "basic" purpose of evading sanctions on Iran.   Continued...

A woman talks on her mobile phone while passing a mural on a wall of the former U.S. embassy in Tehran November 5, 2008. REUTERS/Morteza Nikoubazl (IRAN)