A UN Security Council report says Yemen’s Houthi rebel group has been using falsified documents to import oil and gas in breach of western sanctions, potentially generating nearly US$4bn in revenue over a two-year period.
The report follows an investigation by a UN panel of experts into Houthi activity in Yemen, including its means of generating finances for military purposes.
The panel says it has “received information from several sources that Houthi-controlled companies are importing oil and liquefied petroleum gas using false country-of-origin certificates”, with shipments arriving at two Red Sea ports on Yemen’s west coast.
Between April 2022 and June this year, it estimates that customs duties at ports under Houthi control generated YR994bn in revenue for Houthi-appointed authorities, equivalent to just under US$4bn at current exchange rates.
In some cases, the report says fuel imports bypassed the UN’s Verification and Inspection Mechanism, which grants clearance to vessels carrying commercial goods.
This was done either by switching off vessels’ automatic identification systems to avoid detection during port calls, or by carrying out ship-to-ship transfers.
In some cases, fuel shipments from Iran to Yemen were disguised as having originated in the UAE. Two such cargoes were cited in a US enforcement action in August this year, which resulted in sanctions being applied to two vessels as well as a network of companies in the Middle East and Asia.
The UN panel says it has gathered information on individuals, entities and routes it believes are linked to Houthi leaders, and is continuing to investigate vessels. It is not yet disclosing further details as it is still attempting to uncover the entire supply chain and is wary of risk to confidential sources.
The report also cites sources suggesting the Houthis have collected illegal fees from shipping agencies in exchange for safe passage through the Red Sea and Gulf of Aden.
Attacks on commercial vessels in the region have resulted in a huge drop in vessel traffic, with shipping companies preferring to reallocate cargoes or take a longer journey around Africa’s Cape of Good Hope.
The US Energy Information Administration said last month that in response to the attacks, the volume of crude oil and petroleum products flowing through the Bab el-Mandeb Strait, between the Red Sea and Gulf of Aden, dropped more than 50% in the first eight months of this year.
The panel’s report illustrates the threats facing vessel operators, publishing messages sent by the Houthis informing crews they are “banned from crossing the Red Sea, Bab al-Mandab and the Gulf of Aden… unless you respond to this email”.
“We will consider stopping your ships’ voyages to Israeli ports as the first step in your cooperation, and this is a serious matter that requires your immediate attention,” one email says. “If you do not comply and respond, we confirm that you will bear full responsibility.”
The group – which has targeted more than 90 commercial vessels since October last year – says it is retaliating against Israel’s war with Hamas, and is acting “in support of Gaza and its resistance”.
But some vessels are continuing to make the journey, and the UN report cites sources alleging some shipping agencies “coordinate with a company affiliated with a top-ranking Houthi leader and that the fees are deposited in various accounts in multiple jurisdictions”.
Payment is made using hawala networks – informal money transfer mechanisms – or through trade-based money laundering schemes, generating as much as US$180mn in monthly revenue for the Houthis, it says. The panel has not been able to verify the information independently, however.
Other revenue-generating schemes cited in the report include fake telecommunications equipment trades.
Source: Global Trade Review