NEW YORK--(United Against Nuclear Iran (UANI) called on Canadian investment firm AGF Management Limited (“AGF”) to divest from its Lebanese bonds, and stop supporting the Iranian regime’s efforts to circumvent sanctions.)--On Tuesday,
“HIZBALLAH, LEBANON & IRAN: PARTNERS IN A SOVEREIGN MONEY LAUNDERING SCHEME.”
AGF holds fraudulent Lebanese sovereign bonds that support illicit Hizballah and Iranian activities, yet in discussions with UANI AGF has said it will not divest from them, since “there are currently no U.S. or Canadian laws that restrict or prohibit investment in Lebanon.”
UANI finds this response to be wholly inadequate in the context of a discussion about fraudulent terror financing, and calls on AGF to immediately reconsider its position.
In a letter to AGF Chairman, President, & CEO Blake Goldring, UANI CEO, Ambassador Mark D. Wallace, wrote:
… UANI is surprised and disappointed to hear your response, especially in the wake of the continuing turmoil in Lebanon and the terrible attack by Hizballah in Bulgaria. I urge you to reconsider this important matter. Determining that there is not currently an explicit legal prohibition on this investment (while nonetheless incorrect) cannot be the end of your inquiry as a fiduciary under U.S., and pursuant to the similar duty of care owed by an investment adviser under Canadian law, and so I recommend that you engage in appropriate diligence with respect to the issues at stake. If you do so, I believe you will realize that, far from being a conflict with your duty to act in your clients’ best interest, divesting from Lebanese debt is entirely consistent with (and mandated by) that duty.
As you recall, in our letter we called on AGF to divest from all Lebanese sovereign bond and credit default swaps (“CDS”) that it invests in directly, or on behalf of clients or funds, and we showed that the value of these securities is based on a massive fraud, one that masks a money-laundering operation that not only permits Lebanon to portray a false image of economic stability but also supports terrorism by Hizballah and Iran. I further expressed UANI’s belief that Banque du Liban (“BDL”) and the Lebanese banking system (“LBS”) meet the criteria for determination under Section 311 of the USA PATRIOT Act as a jurisdiction of primary money laundering concern that would result in their ban from the U.S. financial system.
UANI believes that divesting from these securities is not only the ethical thing to do, but that continuing to hold these securities, given what you now know about them, would be a problematic position to take from a compliance and fiduciary perspective, which creates an insupportable level of risk in a variety of areas. Indeed, failure to divest from these securities could present an unjustifiable risk to AGF’s reputation, its duty to its clients and fund investors, and possibly its efforts to comply with its regulatory obligations.
Firstly, an investment in these securities is riskier than it would appear, which does a disservice to you, your clients and investors. Second, your role in facilitating this investment perpetuates an unjustifiable veneer of respectability, masking BDL and LBS’s true activities. Finally, because any investment in these securities facilitates money laundering operations and also shields the true financial health of the Lebanese economy from investors, a facilitating financial institution may subject itself to heightened legal and reputational risks, even with respect to securities that, as you note, have not yet been specifically sanctioned by the U.S. or Canadian government authorities. …
In July, UANI announced the results of a three month-long investigation into the influence of Iran and Hizballah in the Lebanese banking system (LBS) and Lebanon's sovereign bond market, and announced a campaign to compel legitimate financial institutions into divesting from Lebanon's bond market.
UANI has previously announced that Erste-Sparinvest, Eaton Vance, Nord Est Asset Management, Aktia, and Ameriprise Financial have already divested from Lebanese bonds.
to read UANI’s full letter to AGF.
Click here to read UANI’s June 8, 2012 letter to AGF.
Click here to read the July 3 Wall Street Journal article, "Banks Get Pressed on Beirut."
Click here to view UANI's research, "HIZBALLAH, LEBANON & IRAN: PARTNERS IN A SOVEREIGN MONEY LAUNDERING SCHEME."