Lawsuits against Viaro boss raise questions about $500 million sale of strategic energy assets

An investor in North Sea gasfields is fighting a lawsuit over claims he diverted money from a company later blacklisted by US authorities for helping Iran evade sanctions.

Viaro Energy is set to buy 11 fields and a terminal that handles up to a third of Britain’s gas supply from industry giants Shell and ExxonMobil for around $500 million in a deal awaiting formal approval next year.

The transaction will see rapidly growing Viaro take control of “the backbone of the UK’s energy production and security”, according to the company’s 38-year-old owner, Francesco Mazzagatti, who a decade ago was running his family’s fruit-trucking business in rural Italy.

As he awaits completion of the purchase, Mazzagatti stands accused in court by former partners of siphoning $150 million from Mehr Petrochemical, an Iranian refinery—and secretly retaining a stake in the business after it was sanctioned. Mehr was part of a vast “shadow banking network” that helped Iran evade sanctions and fund the Islamic Revolutionary Guards Corps, designated a terror organisation in the US and Canada, the US Treasury said last year.

Mazzagatti says he has never breached sanctions. He says that he did not control Mehr and was holding a stake in it on behalf of a friend who has since launched a “vexatious campaign” against him.

“This is both an environmental and a national security issue”

In a separate action, he is accused of “asset stripping” an oil business of $85 million then selling it for a dollar—leaving it unable to pay clean-up costs on an obsolete gasfield. Meanwhile, he is one of several defendants in a corruption trial in Milan, where in one element of the case he is accused of laundering cash used to purchase Mehr.

Mazzagatti has consistently denied wrongdoing in every case.

Whatever their outcome, the lawsuits should prompt UK authorities to investigate more closely before allowing Mazzagatti to take control of critical national assets, said Steve Goodrich, head of research at Transparency International.

The North Sea Transition Authority, the regulator that would approve Mazzagatti’s UK investment, applies a “fitness test” for licence holders. Its criteria include taking into account any investigations or court cases against a buyer.

“This raises serious questions about the due diligence being done on those buying significant UK energy assets,” Goodrich said. “There are certainly grounds to investigate the award of these licences, and whether they’ve been awarded to a fit and proper licensee. Given the significance of North Sea oil and gas, this is both an environmental and a national security issue.”

Responding to questions from SourceMaterial, a spokeswoman for Viaro said Mazzagatti’s dealings with Mehr did “not violate any US economic sanctions”. He said that Mazzagatti’s business partner was in “sole managerial control” of the company during the relevant period, adding that Mazzagatti had made “all appropriate disclosures” to the NSTA 

The NSTA said it does not comment on individual licence-holders.

Refinery stake

As Viaro seeks a higher profile at corporate events where Mazzagatti has rubbed shoulders with politicians including the EU energy commissioner, Kadri Simson, and Ed Davey, the leader of Britain’s Liberal Democrat Party, one chapter of the entrepreneur’s career is absent from his official biography.

In the summer of 2018, Mazzagatti acquired a controlling stake in the Mehr refinery, a maker of high-density polyethylene, a plastic used in everything from toys to food packaging, corporate documents show. 

Mazzagatti controlled 60 per cent of Mehr through a holding company in Singapore, with Iran’s state-owned National Petrochemical Company holding the remainder.

In 2020 he transferred half of the shares in the Singapore holding company, Alliance Petrochemical Investment, to a family active in Iranian petrochemical exports, according to the documents. 

On 14 March last year Mazzagatti’s involvement in Mehr ended when he transferred his remaining shares to a Dubai-based company, Sonic Investment. Its owner, Najla Baccouche, is a friend of Mazzagatti, and its only director is the manager of a health food cafe in Abu Dhabi. 

No money changed hands, and the switch came just five days after the US imposed sanctions on Mehr as part of a crackdown on a “network of front companies” used by Iran’s state petrochemicals to evade detection.

In court, Mazzagatti’s former partners alleged that the transaction was a sham aimed at concealing his continuing control and that he had previously tried to transfer the shares to her months earlier for a “nominal consideration”. 

Mazzagatti and Baccouche maintain that she is the genuine owner, and that she was unable to pay Mazzagatti because sanctions meant she was “unable to gain access to API’s profits”. 

US sanctions

Mazzagatti first acquired a controlling stake in Mehr in 2018.

At the time, US sanctions had relaxed slightly after a deal on Iran’s nuclear programme. But President Trump had already signalled tighter measures and a week after Mazzagatti’s acquisition, the US banned trade in Iranian petrochemical products. 

The following year, additional restrictions targeted the state-owned Persian Gulf Petrochemical Industries Company and its trading arm, PCPICC. The US would later accuse Mehr of acting as a front for PGPICC to conceal sanctions-busting sales.

“A vast network of front companies operating in Hong Kong, Singapore and the UAE, run by foreign exchange houses in Iran and the UAE, enable PGPICC to orchestrate the sale of billions of dollars’ worth of petrochemicals from Iran-based companies such as Mehr, the US Office of Foreign Assets Control said.  

In 2022, PGPICC had marketed Mehr’s products worth millions of dollars while “concealing its involvement in these sales”, it said.  

In court, Mazzagatti has claimed that corporate records give an inaccurate picture of his stake in Mehr. In reality, he said, he was holding the shares on behalf of Baccouche and Arshiya Jahanpour, a close friend until he sided with Mazzagatti’s ex-wife in a bitter divorce. 

Mazzagatti said he had intended to complete the sale to the Jahanpour family and Baccouche “before the sanctions took effect” but failed to do so because Jahanpour objected to Baccouche’s involvement.  

Mazzagatti and Jahanpour, whose mother had become a shareholder in API in 2020, treated each other “almost as brothers”, holidaying together and frequently staying at each other’s houses, according to a document presented by Mazzagatti’s lawyers to the High Court in London.

Bank accounts bearing Mazzagatti’s signature and used to transfer money from API were actually opened by Jahanpour, Mazzagatti’s lawyers said. The Italian agreed to let his partner “use his name or signature if required” as Jahanpour was worried about using his own name because of his US citizenship, they said. 

Lawyers for the Jahanpour family’s company dispute this version of events. 

Export profits

Corporate filings, court papers and leaked records show that companies controlled by Mazzagatti profited from Mehr’s exports.

Leaked customs documents posted on the website WikiIran record 25 shipments of plastic products from Mehr to Mazzagatti’s Hong Kong entity in 2019. Another 13 shipments between late 2019 and June 2020 were directed to Alliance Petrochemicals Trading in Dubai, owned outright by Mazzagatti at the time, corporate records show. 

Mazzagatti’s Hong Kong business generated $229 million in revenue and $18 million in profit in 2019, with similar income booked in Dubai, Viaro later disclosed to investors.

In response to SourceMaterial, Viaro’s trading spokeswoman disputed the Hong Kong entity’s links with Mehr and said that the beneficiary of the Dubai business was Jahanpour, not Mazzagatti.

Meanwhile, fallout from US sanctions on Mehr has already cost others millions.

Earlier this year, the Thai company from which Mazzagatti bought his stake in Mehr agreed to pay US authorities $20 million after admitting it had “caused US financial institutions to process $291 million in wire transfers” in 2017 and 2018. 

“There is such a high risk of derailing the transition away from fossil fuels and leaving the UK taxpayer exposed”

In the settlement agreement, Mehr’s former owners admitted that the refinery hid the Iranian origin of its exports by lying about the original loading port, listing it as “any port in the Middle East” or “Jebel Ali, UAE”.

Leaked emails from September 2020, when according to corporate records Mazzagatti still held a majority stake in Mehr, show Iranian petrochemical officials apparently discussing how to use the refinery to mask the Iranian origins of their goods by investing in storage facilities in Fujairah in the UAE. 

“This move allows for changing the origin of the goods to that region, which could enhance the export process to destinations such as India, China and Southeast Asia,” one official wrote in a draft memo to Mehr’s managing director.

In its 2019 accounts, one of Mazzagatti’s companies, Napag Trading, outlined a plan to invest in “100 kilotons of tank space in Fujairah”—though the project was later “delayed due to the implementation of anti-sanction policy in the Middle East”. 

Viaro’s spokeswoman said: 

“Mazzagatti was not aware of Mehr’s alleged role in concealing the true origin of US-sanctioned petrochemical goods at the time of his investment, nor has he ever been closely familiar with Mehr’s activities.” She added that Mazzagatti invested in Mehr for a short period and that “primary responsibility” for its actions lies with Jahanpour. 

The Fujairah plan related to “an opportunity in the Middle East that had never materialised and had never involved Iran or any sanctioned entity or jurisdiction,” she said.

Taxpayer risk

As Mazzagatti awaits the green light to buy Shell and Exxon’s gasfields in his biggest deal to date, there are questions for regulators about their checks on buyers of critical infrastructure, said Helen Taylor, senior legal researcher at Spotlight on Corruption. 

“There is such a high risk of derailing the transition away from fossil fuels and leaving the UK taxpayer exposed to serious costs if things go wrong,” she said. “It is essential that robust checks are carried out.”

Headline picture: Matthijs Wetterauw / Alamy