• Tallman

Laundering Misery: The Khouri Network’s Global Reach

This barrel bomb was different. This one sent up plumes of yellow vapor, a telltale sign of chlorine attack.

Dr. Abdullah Darwish had seen barrel bombs before. As the director of the hospital in Kafr Zeita, a town near Hama in Syria, he had treated many of their victims, their flesh torn by the scrap metal packed around the explosive core.

One of at least 150 victims of the attack on April 11, 2014, had a head injury, but most showed unusual symptoms. Civilians, including many children, streamed into the hospital, vomiting and screaming that they couldn’t breathe.

The attack on Kafr Zeita wasn’t a one-off. The Syrian air force has dropped nearly 70,000 barrel bombs from July 2012 through 2017, and the regime is known to have used chemical weapons at least 330 times between 2012 and 2019.

Barrel bombs and chlorine were the weapons of the cash-strapped regime. In the first years of the war, Syrian President Bashar Assad’s regime was running out of men, money, and materiel. Stocks of missiles had reportedly dwindled, forcing the air force to improvise. The size of the Syrian army fell from a pre-war high of 325,000 to an estimated 150,000 in 2014.

Syria’s foreign exchange reserves halved, from US$18 billion to an estimated $5 billion to $10 billion, as the conflict reportedly cost the regime as much as $1 billion per month in 2012.

Syria, once an oil exporter, also desperately needed fuel.

Damascus turned to Russia, Iran, and networks of expatriate Syrians who stepped in as fixers, quietly providing the pariah regime access to international markets.

One key network is led by an urbane Moscow-based Syrian-Russian financier, Mudalal Khouri.

It is not suggested that any of the individuals or companies featured in this article were directly responsible for acts of war, war crimes, or human rights abuses in connection with the Syrian war.

The full extent of Khouri’s network activities is written across the pages of different sanction notices issued by the U.S. Treasury’s Office of Foreign Assets Control. OFAC has long accused him of attempting to purchase a chemical used in manufacturing explosives, and his associates of facilitating the purchase of fuel and hard currency.

A joint Global Witness-OCCRP investigation also supports allegations that Khouri Network members provided front companies for the sanctioned Syrian Scientific Research Centre (SSRC), which is responsible for Syria’s chemical weapons and ballistic missile programs.

But Khouri’s assistance to the regime was not just about weapons. When Assad’s family wanted to move $40 million into Moscow property, they turned to the Khouri Network for help.

A social media picture of Mudalal Khouri holding two women at an event.Credit: Facebook

More recently, a Russian financial institution partly controlled by Khouri through a network of proxy companies and business associates was sanctioned for assisting embargoed North Korean firms.

The full story of the Khouri Network can be found in the Global Witness report, “Assad’s Money Men in Moscow.”

For this article, Global Witness and OCCRP analyzed leaked bank documents to uncover how the Khouri Network appears to have received or processed money from a variety of frauds and received payments from key shell companies in other “laundromats.”

Laundromats are all-purpose financial fraud networks of banks and shell companies designed to move large amounts of money. They tumble and wash together money from legal businesses, private wealth, and organized crime to obscure its origins, avoid capital controls, or evade taxes.

Khouri Network companies interacted with three of these laundromats, dubbed by OCCRP the Proxy Platform, the Russian Laundromat, and the Troika Laundromat. Khouri’s companies also received or processed millions from the notorious $230 million Russian tax fraud exposed by Sergei Magnitsky, a Russian lawyer who subsequently died after severe mistreatment in prison. Companies controlled by the Khouri Network received or processed funds from companies linked to apparently fraudulent payments to Sergei Roldugin, a close friend of Russian President Vladimir Putin, and from a separate fuel scam at Moscow’s Sheremetyevo International Airport.

The Khouri Network is itself a small laundromat that tapped into other illicit financial networks. But this one attempted to help the Assad regime and, to the extent that it succeeded, indirectly enabled its repeated attacks on civilians using chemical and conventional weapons.

by Sara Farolfi, Isobel Koshiw, Nick Donovan and Mohamed Abo-Elgheit (Global Witness) and Stelios Orphanides (OCCRP), 13 July 2020, published OCCRP

Pic By Avron - Own work, CC BY-SA 4.0, Wikipedia


Subscribe to Our Newsletter

  • LinkedIn
  • White Facebook Icon

© 2023 by i-AML