By Louis Charbonneau and Michelle Nichols
UNITED NATIONS (Reuters) - Metals swap deals with Iran by Switzerland-based commodities giants Glencore Xstrata and Trafigura could have been a way of skirting international sanctions against Tehran over its nuclear program, according to a confidential U.N. Panel of Experts report seen by Reuters on Wednesday.
Reuters reported on March 1 that Glencore had supplied thousands of tons of alumina to an Iranian firm that has provided aluminum to Iran's nuclear program, an allegation Glencore confirmed as accurate. Afterward, Trafigura acknowledged it had also traded with the same Iranian firm.
Swiss authorities said at the time that they saw no evidence of U.N. or Swiss sanctions violations by Glencore, but the U.N. experts, who monitor compliance with the Iran sanctions regime, raised the possibility that the swap deals were a means of flouting restrictions on trade with Iran.
"If confirmed, such transactions may reflect an avenue for procurement of a raw material in a manner that circumvents sanctions," the 49-page report said in reference to the media reports on the swap deals. "The companies involved have stated that they have halted those transactions."
Reuters has sought comment from both companies regarding the report, which was delivered to the U.N. Security Council's Iran sanctions committee earlier this month.
Reuters reported on Tuesday that Glencore's head of aluminum, Gary Fegel, is set to leave the company, the first high-profile departure since the commodity trading giant closed its purchase of miner Xstrata this month. The timing and reason for his exit after 12 years at Glencore are unclear.
The experts' annual report said they have found evidence that Tehran routinely attempts to flout the sanctions applied against Iran over its nuclear program, which Western powers and their allies suspect is aimed at producing weapons but the Iranians say is for peaceful electricity generation.
"Iran continues to seek items for its prohibited activities from abroad by using multiple and increasingly complex procurement methods, including front companies, intermediaries, false documentation, and new routes," the experts said.
"These require additional vigilance and expertise on the part of states in order to identify suspicious transactions," it said.
IRANIAN REACTOR CONSTRUCTION
The panel listed 11 violations by Iran since June 2012 and said it has at least six ongoing investigations into possible sanctions violations, including the export of machine tools reported by Spain and the export of technical equipment for use in satellite technology reported by Germany.
The United States reported transfers and attempted transfers of items linked to Iran's nuclear program, including vacuum equipment for test stands, pressure transducers, vacuum pumps and materials for fabrication of centrifuge machine components like magnetic tape, marching steel and aluminum alloys.
The United States also reported a violation involving the transfer of specialized metals to several entities in Iran associated with the ballistic missile program.
The report said recent Iran sanctions violations had also been reported by Sweden, Bahrain, France, Britain and an unidentified country listed as "State X".
The experts said Iran had not demonstrated any significant new missile capabilities in the past year, but had continued to violate Security Council resolutions by launching missiles.
"Despite at least the partial success in making its ballistic missile program indigenous, Iran remains reliant on foreign suppliers for technology, some components and raw materials," the panel said.
"Preventing supply of these items is critical for international efforts to slow Iran's prohibited ballistic missiles activities," it said.
The experts recommended the Security Council sanction one entity - Pentane Chemistry Industries "for the procurement of valves for use in the Arak Heavy Water reactor." The company was blacklisted by the United States in 2012.
The reactor near the central Iranian town of Arak is under construction and nuclear analysts have said it could yield plutonium for nuclear arms if the spent fuel is reprocessed, something Iran has said it has no intention of doing.
The U.N. nuclear watchdog in Vienna said on Wednesday Iran was pressing ahead with construction of the Arak plant.
The panel also said it was aware of reports of weapons being transferred to Syria, in violation of the U.N. ban on Iranian arms exports, through Iraqi airspace, but that Iraqi authorities had said they checked two shipments and found no arms. The experts did not elaborate further on the allegations.
The eight-member panel of experts were split over whether a seizure of weapons on a ship named Jihan off the coast of Yemen was a violation or probable violation of the Iran arms embargo.
Yemen has said its coast guard seized missiles and rockets on January 23 believed to have been sent by Iran. Iran has denied any connection to the weapons, which were found aboard a vessel off the coast in an operation coordinated with the U.S. Navy.
"Five members of the panel found that all available information placed Iran at the center of the Jihan operation. The crew bypassed routine immigration and airport security procedures while in Iran. The voyage originated in Iranian territorial waters," the experts' report said.
"Three members of the panel noted that no information was found about the time and location that the arms and other items were loaded on the Jihan," it said.
Highlighting the methods used to hide weapon shipments, the panel described one of the hiding places it found on board the Jihan when its members inspected the vessel.
"The seized items were concealed in four compartments hidden by diesel fuel tanks which could not be accessed from the deck," the report said. "These hidden compartments could be accessed only after the diesel fuel tanks were emptied."
Diplomatic sources familiar with the investigation of the ship have told Reuters that there were indications the ship's ultimate destination may have been Somalia, but there was no mention of this in the Panel of Experts report.
(Additional reporting by Emma Farge; Editing by Stacey Joyce and Paul Simao)