Reuters has reported that a subsidiary of China National Petroleum Company (CNPC), Bank of Kunlun Co. Ltd., has been identified in a seven-page, classified Western intelligence document as a major financial intermediary for the international operations of the Islamic Revolutionary Guards Corps‘ (IRGC) elite Quds Force. According to Reuters, ‘‘‘the Quds provides arms, aid and training for pro-Iranian militant groups in the Middle East, such as Hezbollah, Hamas and Shi‘ite Muslim militias in Iraq. They have also armed and trained government forces in Syria‘s civil war in violation of a U.S. arms embargo, U.S. and European officials say.‘
The U.S. designated the Quds as a supporter of terrorism in 2007 and the EU sanctioned the group in 2011. Bank of Kunlun was itself sanctioned by the U.S. Treasury Department in 2012 for conducting business with Iran and transferring funds to an entity linked to the IRGC, but there was no mention of the Quds Force at that time. The Central Bank of Iran (CBI) holds accounts at the Bank of Kunlun and uses a network of front companies to facilitate funding and foreign purchases for the Quds. The flow of funds from CBI to Kunlun over just the past year has reportedly been in the hundreds of millions of dollars. (Kunlun had assets totaling some $40 billion at the end of 2013.)
These security-related abuses by Kunlun could implicate CNPC, China‘s largest company, and New York Stock Exchange (NYSE)-listed PetroChina. (PetroChina was artificially created by CNPC to divert investor attention away from CNPC‘s massive exposure in then-genocidal Sudan during its initial public offering in New York in 1999–2000). The question is whether the global markets will connect the dots between CNPC and Kunlun after this latest troubling revelation and penalize the offending bank‘s parent company and its NYSE-listed subsidiary, PetroChina.