A Danwatch investigation

What is Novo hiding in Iran?

Denmarks pharmaceutical giant Novo has worked its way to the Iranian insulin marked and the top echelons of  Iranian power.
Here Novo promises to invest 70 billion dollars in a local insulin factory 
Foto: IRNA

Editor: Jesper Hyhne

In cooperation with Zamaneh Media
16. September 2020
In order to gain access to the promising Iranian market, Novo has allied itself with a business empire funded and financed by the seisure of land and property belonging to pro democracy activists, persecuted religious minorities, exiled Iranians and others that have fallen out with the repressive religious system of Iran. Novo is reluctant to speak about its business in Iran but insists that ethical guidelines are respected.
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  • For months Danwatch and the Iranian exile media Zamaneh have conducted a joint investigation into Novos business in Iran.
  • This report is based on an extensive research into thousands of Persian, English and Danish language media reports, annual business reports, local and international business registries, statistics, research reports, social media sites, satellite imagery as well as interviews with dozens of experts inside and outside Iran, present and former employees at Novo Nordisk, local diabetes organisations, international NGO’s, diabetes patients in Iran and Novo Nordisk.

If you have additional information that could help qualify this report please do not hesitate to contact us at caa@danwatch.dk or through our secure tip service

Young female nurses with heads neatly covered in black veils are waiting inside the bus with the elegant white and blue interior ready to test your blood sugar or offer advice on diets and lifestyle. 

An elderly man with his cane and a younger guy in a waiter’s jacket are among the visitors eagerly presenting their index fingers for testing. 

Novo’s popular diabetes busses are touring towns and villages all over Iran to raise awareness of the country’s most common disease. More than eight out of 85 million Iranians have been diagnosed with diabetes and numbers are growing daily. 

With an alarming 11 percent of Iranians over 25 years being diabetic, Iran is one of the most promising markets for Novo already earning half the total profit from insulin sales in Iran. 

As a sponsor of multiple awareness and education programmes for diabetics and physicians  as well as sponsoring lots of research conferences, the familiar Novo Nordisk logo of a sacred Egyptian bull with the moon and the sun on its head representing the eternal dualities of day and night, life and death, is seen in connection with nearly every diabetes event in the country. 

Who is Novo?

  • Novo Nordisk is a multinational pharmaceutical company.
    Novo is the largest suppliers of insulin in the world.
  • The company was founded in 1923 and is headquartered in Denmark.
  • Today Novo employs more than 43,100 people in 80 countries.
    The products of Novo are marketed in around 170 countries.
  • In 2019 Novo had a turn over of 122 billion Danish kroner (19,5 billion dollars).
  • CEO of Novo Nordisk is Lars Fruergaard Jørgensen.
  • Novo’s activities in Iran are carried out by NN Pars, a subsidiary fully owned by Novo Nordisk.

But the fair face of the global insulin giant has a darker side as a thorough investigation carried out in cooperation with  the Iranian exile media Zamaneh shows.

Money defeats morale

In order to gain access to the promising Iranian market, Novo has allied itself with companies funded and financed by the confiscation of land and property belonging to dissidents, pro democracy activists, persecuted religious minorities, exiled Iranians and many other ordinary people that have fallen out with the repressive religious system of Iran.  

For fifteen years Novo has worked hard to enter the emerging Iranian market and in the process lost sight of the moral standards, that the illustrious Danish company usually takes such pride in. 

Or at least these are the allegations from former employees, human rights defenders and experts on corporate social responsibility.  

Money has defeated morale making the Danish founded pharmaceutical turn a blind eye to human rights abuses committed right under its nose, they claim. 

“Novo is doing a lot of good in Iran but it is a company that has lost its integrity,” a source with knowledge of Novos business in Iran says, echoing concerns of several high ranking former Novo employees speaking to Danwatch and Zamaneh on condition of anonymity.  

“They had it all, but they wanted more. And then they entered into business with the wrong guys”, the source says, referring to Novo buying land from a company belonging to the Iranian business conglomerate Setad.

Setad is a massive financial empire built on the seizures of property belonging to Iranians opposing the repressive Islamic government according to an extensive Reuters investigation.

Since 1989 the Setad busines empire has been under the  control of Ayatollah Ali Khamenei; the supreme leader of the Iranian republic, responsible for massive human rights abuses according to Amnesty, Human Rights Watch,  the UN Human Rights Council among others.

“Novo does not adhere to their own company values in Iran”, the source says referring to Novos commitment to respect human rights.

At the company webpage Novo Nordisk commits itself to the UN Guiding Principles on Business and Human Rights  (UNGP) – a set of rules that oblige all companies to uphold the respect for human rights throughout the entire chain of production. 

Two former top employees in Novo are echoing the concern but none of them are ready to speak on record about Novos dealings with Iranians authorities. In Iran criticism of the Ayatollah Khamenei or government authorities can carry heavy penalties. 

Problematic friends  

The international human rights organisation Human Rights Watch confirms that Setad, which is also known as EIKO, an abbreviation the organisations English name The Execution of Imam Khomeini’s Order, has systematically violated human rights of dissidents confiscating land and property belonging to opponents of the regime, among them political prisoners, religious minorities and exiled Iranians. 

“Setad was created to confiscate property. There is an official decree that gives them the right to do that but in many cases it happened without due process,” Tara Sepehri Far, Iran researcher at Human Rights Watch says.  

background

What is SETAD

Setad is short for Setad Ejraiye Farmane Hazrate Emam (Headquarter for Executing the Order of the Iman) also known as EIKO, another abbreviation.

Setad was founded by Iran's Supreme Leader Ayatollah Khomeini just before his death in 1989. 

The original purpose of the organisation was to manage and sell property abandoned after the Islamic Revolution in 1979. The income was to be used for charitable purposes.

Setad is fully controlled by Iran's Supreme Leader Ayatollah Ali Khamenei, who also controls the Iranian Revolutionary Guard Corps, a elite military unit involved in massive human rights abuses in Iran, Syria and Iraq and a business conglomerate as well.

Under Khamenei's leadership Setad has morphed into a business juggernaut holding stakes in nearly every sector of Iranian economy.

In the pharmaceutical field its crown jewel is Barakat Pharmaceutical Group.

Novo Nordisk is cooperating closely with Barakat. In 2016 Novo bought 39,000 m2 of land in Barakat Pharmaceutical Town owned by Barakat Pharmaceutical Group.

Since then Novos has built a factory on the ground and is now paying rent to Barakat in order to maintain its right to use the land. 

Sources: Reuters, websites of Barakat Foundation, Barakat Pharmed Investment Corp, Tadbir among others.  

How Setad operates

Setad uses a number of means to take over property belonging to dissident, religious minorities, refugees and others who have fallen out with the regime. Among the means are;

  • Legal proceedings
  • False court orders 
  • Threats and intimidation
  • Bribes and fees 
  • Fines and extortion

When Setad has taken over the property it is either sold on large auctions or resold/hired out to its original owners and profits used to sustain the Setad business empire as well as the 500+ employee office of the Supreme Leader.

Source: Assets of the Ayatollah /Reuters

Novo Nordisk does not deny dealing with Setad, but the company says that Novo has conducted a number of due diligence assessments making sure that its business in Iran is lawful and in line with the ethical standards of Novo.

“Any Novo Nordisk financial transaction or business interaction with companies controlled or affiliated to governmental/state bodies is in compliance with applicable local and international laws and regulations as well as Novo Nordisk’s corporate rules and business ethics standards,” head of communication Charlotte Zarp-Andersson says in an email. 

For more than two months Danwatch and the Iranian exile media Zamaneh have been investigating Novos entry into the profitable Iranian insulin market in order to highlight a part of the business empire that the otherwise transparent pharmaceutical giant is very hesitant to talk about. 

The result is a story questioning whether or not it is possible to do ethically responsible business with one of the most repressive regimes in the world. It is however also a story posing as many questions as it answers since Novo has been reluctant to reveal any details of its dealings in Iran. 

A flower waiting to be picked

Novos Iranian adventure began fifteen years ago when the Danish company first sat up office in the Iranian capital, Tehran. 

With a fast growing population of 70 million people, Iran was a flower waiting to be picked back in 2005. With increasing oil revenues and a well educated middle class, the lifestyle of Iranians was changing fast, pulling a wave of welfare illnesses such as obesity and diabetes in its wake, as Iran expert Rasmus Elling from Copenhagen University explains. 

No wonder Novo had its eye on the emerging market in Iran hoping the country could serve as a commercial bridgehead to the Middle East.

Timeline

Getting close to the Ayatollah

Novo Nordisk is the only Danish company to etablish production in the Islamic Republic of Iran. The quest for the Iranian market started fifteen years ago. Today the Danish owned multinational has a firm grip on the insulin market and has moved as close to political and economic power as you can possibly get.

Novo starts doing business in Iran

Novo Nordisk starts doing business in Iran and establishes the Iranian subsidiary NN Pars, owned 100 percent by Novo. The Iranian subsidiary has offices in Teheran and aim to import Novo-products to Iran. The staff gradually grows to 150 employees

Novo starts coproduction in Iran

Exir, an Iranian pharmaceutical company starts producing medicine for bleeders, based on imported Novos products. Later a cheap human insulin is included, also based on imported raw materials from Novo and marketed as an Exir brand

Novo starts raising diabetes awareness

Novo launches a Diabetes Bus initiative to raise awareness of diabetes in cooperation with and the Iranian Ministry of Health, Teheran Municipality and the Iranian Diabetes Sociely. In 2020 six buses are touring towns and villages, offering free diabetes testing and advice. A diabetes call center for patient education is also launched.

Novo funds diabetes research center

Novo enters into a partnership with the Endocrinology and Metabolism Research Insitute at Tehran University. Professor Bagher Larijani from one of Irans most powerful families heads the institute. Two Larijani brothers are responsible for grave human rights abuses according to the EU. The contribution is belived to be one million dollar, but the exact amount is not confirmed

Iran signs nuclear deal, sanctions lifted

Iran and the largest world powers (US, UK, France, China, Russia, Germany and the EU) sign the Joint Comprehensive Plan of Action imposing a strict control regime on Irans nuclear programme with the aim of preventing Iran becoming a nuclear power. In exchange the US and EU will lift economic sanctions on Iran.

Agreement signed with Iran's government

Novo signs a Memorandum of Understanding with the Iranian Ministry of Health. The content is secret but according to press reports and Novo the company promises to invest 70 million US dollars in a new factory in Iran that will produce insulin for the countrys growing number of diabetics

Novo hosts International Diabetes Forum

Novo facilitates the International Diabetes Leaders Forum in Tehran. The participans are Iranian policymakers, government officials, international organisations, Iranian patients organisations, healthcare professionals, patients as well as NGO's and media

Novo buys land from a Setad-company

Novos subsidiary NN Pars purchases four hectars of land from the Iranian company Barakat Pharmaceutical Company, which is a part of the US sanctioned business empire Setad - a multi billion dollar conglomarate controlled by the Supreme Leader of Iran Ayatollah Ali Khamenei. Setad is funded by money from the seizure of land and property belonging to political dissidents, religious minorities and exiled iranians. The price paid for the land is unknown

Construction of factory starts

Construction of Novos Iranian factory starts in Barakat Pharmaceutical Town - a new industrial zone outside the city of Kordan in Alborz province west of Tehran. Nearly 50 government officials and politicians were invited to visit

Disagrement on production scale

The NN Pars CEO Shabazi confirms that the Iranian Ministry of Health would like Novo to run an A-Z production of insulin in Iran, but Novo has declined prefering to limit knowlegde of the insulin formula to its factory in Denmark

US withdraws from nuclear deal, unilateral sanctions reimposed

The US withdraws from the nuclear deal and in november reimposes an almost total economic embargo on Iran, including secondary sanctions on foreign companies doing business with Iran. A few areas are exempted for humanitarian reasons, among them medicine

Construction of Novo factory completed

The factory built by the Iranian contruction company Jalkeh is meant to assemple insulin pens for sale in Iran. Novos most popular brands in Iran are NovoRapid and NovoMix, both sold in pens. Novo earns half the total profit from insulin sales in Iran. 

Novos partner disguises ownership

Novos cooperation partner Barakat Pharmaceutical changes ownership to hide the companys connection to Setad. The majority of shares in Barakat is transferred from Tadbir Development Group which is under US sanctions to an unknown shell company named Karandish Doran Moaser without activities or home page. The company has the same address and accountant as Tadbir

Insulin shortage reported

Iranian media are reporting frequent shortages of insulin in Iran, including Novo products. Social media posts confirm the shortage throughout 2020. Possible reason is Irans lack of foreign currency making the country unable to pay for all imported insulin. According to Novo 500.000 Iranians rely on Novo medicines, the majority being diabetes patients.

Novo starts local insulin production

The factory opens in august. Despite critisim production will be limited to the assembly of insulin pens based on imported insulin and pen parts. According to project plans more than 160 employees will be hired to work at the factory
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According to a Novo briefing that Danwatch has accessed through a freedom of information request into the correspondence between Novo and the Danish Embassy in Tehran, Novo expects 9,2 million Iranians to have diabetes in 2040. 

A very promising number for the world’s largest producer of insulin. 

Jørn Fredsgaard, senior analyst at Danish Export Credit Institution (EKF) offering loans and guarantees to Danish export companies, explains why Novo was and still could be keen to do business in Iran.

“Iran is a giant market for Novo. Iranians have a sweet tooth, the country has a rather high BNP and a large middle class demanding western quality products”, Jørn Fredsgaard says. 

The golden egg

And right from the start, ambitions were high. 

One of the first steps was to set up an Iranian subsidiary fully owned by Novo Nordisk. 

The new branch on Novos global company tree was named NN Pars, short for Novo Nordisk Iran, offices were established in the buzzing capital,  Tehran and a lot of new employees were hired. 

“Novo started out with just five people but expanded quickly. They hired all the brightest heads. All of their employees were doctors or PhDs ready to work for Novo for 600-800 dollars a month”, a source familiar with Novos initial operations in Iran says. 

Right from the beginning Novos aim was to start up production in Iran. 

The successful multinational pharmaceutical did not want to be just an exporter.

The aim was to supply advanced types of modern insulin.

With millions of diabetics and an increasingly unhealthy lifestyle Iran was a well chosen target for Novos usual strategy when conquering a new market.

Finding new friends

In 2012, Novo launched a serious charm offensive. A number of welfare initiatives were launched in line with the two-pronged approach that Novo usually uses to enter a new market offering the cure as well as the remedy as Lars Thøger Christensen, a branding expert at Copenhagen Business School explains it. 

The message to the Iranian public and politicians shows clearly in a Novo presentation that Danwatch and Zamaneh have accessed through a freedom of information request at the Danish Embassy in Tehran.

In the presentation Novo offers to assist Iran in teaching a healthier lifestyle to curb the explosion of new diabetes cases among the younger generations while at the same time providing access to Novos high quality medicines to the millions of already sick Iranians. 

“Our response to defeat diabetes in Iran”.. is to “raise awareness of diabetes, support people with diabetes by improving access to information and support and unite stakeholders for action” the presentation reads. 

One of the popular initiatives is the Novo-colored diabetes busses launched in Tehran in august this year and later on in five other areas teaching ordinary Iranians to deal with the danger of diabetes or the illness itself. 

“Novos commitment to people living with chronic diseases goes beyond providing lifesaving medicines,” as Novo head of communication Charlotte Zarp-Andersson explains in an email.

A diabetes call center for patient education was also launched as well as free of charge educational programmes for nurses and doctors and a sponsorship for the yearly International Diabetes Day event.

All in close cooperation with the Iranian Ministry of Health, the Municipality of Tehran, the Iranian Diabetes Society, the International Diabetes Federation and later also with the University of Tehran.

As professor Lars Thøgersen from Copenhagen Business School explains, the strategy of Novo is a carefully crafted and well rehearsed recipe designed to support the image of a responsible business partner in the fight against a common enemy.

“Novo always engages in these kinds of activities, raising awareness about obesity, diabetes and so on. It is part of a long term strategy making the company appear more sympathetic when engaging in awareness, education and research”, Thøgersen, a specialist in corporate branding, says.

“As a modern company Novo knows that it is important to show responsibility. It is part of the company DNA”, he says, underlining that this approach to image building and sales efforts go hand in hand.

“Of course, Novo will be promoting its products to patients, health care professionals and politicians at the same time. It is part of the package”, he says.

A perfect fit

Novo found friends in many places. 

Among them hundreds of thousands of Iranian patients eager to access high quality products like Novos modern insulin pens offering safe, precise and long lasting blood sugar stabilizers, as well as rapidly working insulin to inject with easy to use pens just minutes before a meal.

Among professionals, Novo came to present a gateway to the West, to doctors and researchers longing to meet western colleagues after decades of isolation due to sanctions,  sources familiar with Novos business in Iran say. 

Jørg  Fredsgaard from Danish Export Credits explains the attraction of Novo like this:

“Iranians have been cut off from European and American products for many years and they have a penchant for quality which may not be what they usually get from China. Iran has a large middle class who are educated in the West and demand Western products, so in this respect, Novo was a perfect fit.” 

Getting close to the Ayatollah

And Novo certainly made a lot of new customers and friends along the way introducing its products to hundreds of thousands of Iranian patients and professionals. 

To put Novo firmly on the national horizon, large scale conferences were held, bringing top representatives from the internationally isolated country in contact with the outside world. 

Among the prestigious initiatives was the 2015 International Diabetes Leadership Forum in Tehran gathering international organisations, patient organisations, healthcare professionals, people with diabetes, NGO’s, media and very importantly also Iranian policy-makers and government officials. 

The aim was “to discuss solutions to the burden of diabetes in Iran and worldwide” as Novo puts it in an email to Danwatch and Zamaneh.  

Novo also entered into a strategic partnership with the Endocrinology and Metabolism Research Institute at Tehran University, headed by professor Bagher Larijani, one of five very influential brothers belonging to the absolute top echelon of public and political life in Iran.

According to a source familiar with the cooperation Novo donated one million dollars to the Endocrinology and Metabolism Research Institute at Tehran University. The exact figure is not publically available and Novo refers to contract confidentiality. 

Associated with the Larijanis

The alliance however brought Novo in close contact with some of Iran’s most powerful people. Bagher Larijanis himself used to be a deputy minister in the Ministry of Health, one brother is a speaker of parliament and another a former vice minister of foreign affairs,now adviser to the Supreme Leader Ali Khamenei.  

A third brother, Sadeq Amoli Larijani, who was then head of the judiciary and directly responsible for human rights violations, among them “arbitrary arrests of political prisoners, human rights defenders and minorities” which “increased markedly” since he took office, according to a EU decision sanctioning him. 

As Head of the Judiciary Larijani “personally signed off numerous death penalty sentences, contravening international standards, including stoning, .. and public executions such as those where prisoners have been hung from bridges.” the EU decision reads. 

“He has also permitted corporal punishment sentences such as amputations and the dripping of acid into the eyes of the convicted. Since Sadeq Larijani took office, arbitrary arrests of political prisoners, human rights defenders and minorities have increased markedly.”

In late 2018, Sadeq Larijani took over as head of Iran’s Expediency Council  the top ruling body directly under the control of Ayatollah Ali Khamenei and has been mentioned as a possible successor to the 81-year old Ayatollah. 

In spite of US and EU sanctions against Sadeq Larijani, Novo entered into a partnership   associating itself with the Larijani family.

Economist Mahdi Ghodsi from Vienna Institute for International Economic Studies is an expert on Iran. He explains the importance of the alliance.

Having business relations with someone like Bagher Larijani, whose family was at that time chairing the parliament and the judiciary in Iran should be quite beneficial and might reduce investment costs for Novo”, he says.   

 Neither CEO of Novo Nordisk, Lars Fruergaard Jørgensen, or vice CEO of NN Pars, Ali Mostofi, has been willing to answer questions about Novos business partners in Iran.

In a written statement, head of communication Charlotte Zarp-Andersson doesn’t answer  questions about  Novo Nordisk’s connection to the Larijanis. She does however defend the cooperation with Bagher Larijani’s institute, stressing the legality of the partnership.  

“Before entering any agreement with external partners including donations, we conduct a thorough due diligence on the organisations. In addition, throughout the partnership we continuously monitor and follow up to ensure that all rules and legislation are followed”, she says, referring to “non-disclosure obligations” as the reason for not disclosing the amount donated to the institute. 

The big leap

When Iran signed the nuclear deal with the European Union and the US in may 2015 Novo was ready for the big leap. 

Novo Nordisk had found a new cooperation partner ready to make the plan of establishing its own production in Iran come true. 

The idea of setting up a factory  was presented to the Iranian government already in 2012 and they liked it, a source with knowledge of the negotiations says. 

And then three years later lobbying had paved the way for Novo to be the first international pharmaceutical company to set up its own production in Iran. 

“It is a political priority of the government that production should be local. Since the Iranian Revolution, it’s been the policy and international sanctions against Iran have made it an even higher priority”, another source involved in the deal explains.

So smiles were big when then CEO Lars Sørensen and the Iranian Food and Drug Administration signed a Memo of Understanding at a widely reported ceremony giving Novo Nordisk permission to build a brand new factory producing insulin pens for the Iranian market, an important step in making Iran less dependent on foreign import.

Novo promised to invest 70 million euro (half a billion Danish kroner) providing at least 160 direct jobs for well educated Iranians and an in-house insulin production according to a Novo presentation accessed through a Freedom of Information Request to the Danish Embassy in Tehran.

It was a golden moment of common interest. 

“Everyone wanted to show that surely foreign investment was coming. In that way Novo’s factory was a showcase,” a source with knowledge of the deal says.  

Professor Akbar Abdollahiasl from Tehran University’s Department of Pharmacoeconomics confirms the common interests involved.

“One of the main objectives of the  Iranian Ministry of Health is the protection of domestic production of medicine. In this case, Novo has sustained its policy by establishing a manufacturing plant in Iran,” he says.  

Danwatch and Zamaneh have asked Novo Nordisk to reveal the details of its agreement with Iran but the company declines. 

The advantages for Novo are quite obvious, as the factory establishes the company firmly on the ground in Iran providing Novo with a perfect base for selling its advanced insulin products to the Iranians. 

And in the long run maybe also a bridgehead for further export to neighboring countries, facing similar problems with diabetes.

“Novo’s goal is to introduce expensive products to the Iranian market. The new insulin types, or modern insulin types are much more expensive than the old types, and the profit is higher”, a source with knowledge of Novos products and the Iranian market says explaining that demand for high quality western products is high in Iran.

“They are a lot safer, have a better effect and are much easier to use than the old types, so  many iranians prefer using Novo pens once they have tried them,” he says. 

According to information from Novo more than half a million Iranians are depending on Novo medicines today.

Read also: Novo is exploiting the sweet tooth of Tehran 

Sleeping with the enemy

For Novo the agreement with the Iranian government in late 2015 was a point of no return.

And the management already had its eye on a favorite spot for the new factory.

The seemingly ideal place to build was Barkat Pharmaceutical Town, a new industrial zone under construction outside the small town of Kordan an hours drive west of Tehran.

Here the Iranian Barakat Pharmaceutical Company was establishing an industrial powerhouse for developing and transfer of pharmaceutical know-how to Iran according to its online presentation material

Less than a year after the agreement with the Iranian government was done Novo bought  four hectares of developed land from Barakat Pharmaceutical Group at a price never disclosec .

It all seemed fine had it not been for Barakat being part of the controversial Setad organisation, controlled by Ayatollah Khamenei and accused of systematic landgrapping from ordinary Iranians opposing Iran’s religious system. 

According to a thorough investigation carried out by the reputable British news agency Reuters Setad-e Ejrây-ye Farmân-e Emâm, also known as the Executive Headquarters of Imam’s Directive or EIKO was and still is an Iranian multi billion dollar business conglomerate built with money from land confiscation.

Since its establishment in 1989 Setad has systematically confiscated land and property belonging to dissidents, religious minorities, political prisoners and Iranians who have fled the country citing a special decree that gives the organization exclusive rights to manage so called “abandoned” land and property. 

The Reuters investigation estimated that in 2013 the Setad business empire held assets worth at least 95 billion dollars – at the time of the investigation this amount was 40 percent more than the total oil export of Iran.

No estimate has been done since, and as the Setad business empire is directly under the control of Ayatollah Khamenei, it is by law exempted from any independent or parliamentary oversight. Hence no independent information on the organisation’s economy is publically available. 

As the Reuters investigation shows translating the original decree, Setad was established with the sole purpose of confiscating land and property belonging to people or entities not recognized by the Islamic government of Iran. 

Since Ayatollah Ali Khamenei took over as Supreme Leader in 1989, the organisation has slowly morphed into this gigantic network of interlinked companies of which Barakat Pharmaceutical Town is just one small corner.

But the confiscation of land and property continues as one recent case shows. In mid May 2020, the Iranian human rights network HRANA reported that Setad had confiscated a house and shop belonging to a couple who are political prisoners. 

According to a report by the US funded exile media Radio Farda, Fatemeh Muthanna and Hassan Sadeghi had their property confiscated in connection to a joint prison sentence of 30 years on a charge of  “waging war against the state by working with an opposition group,” the Human Rights News Agency HRANA reports. 

The couple lost their family home where they were living with two children and Mrs. Muthannas 89-year old mother, according to Radio Farda.

In another recent case, property belonging to an entire village was confiscated by Setad.

According to the international organisation of the Baha’i religious minority, an Iranian court ordered the confiscation of all properties belonging to Baha’is in the village of Ivel some 400 km northeast of Tehran.

The Baha’i is an unrecognized religious minority in Iran that is teaching the essential worth of all religions, and the unity of all people. The Baha’i are considered heretics by the Islamic republic and with their spiritual headquarter situated in Haifa, Israel, Bahais have been subjected to continued persecution by the Iranian government since the Islamic revolution in 1979. 

According to the court order dated november 2019, the justification for confiscating the properties is that Baha’is have “a perverse ideology” and therefore the court finds “no legal merit” for leaving the properties in the possession of the “perverse sect of Baha’ism in the village of Ivel.” 

Tara Sepehri Far, Iran researcher at Human Rights Watch, confirms that religious groups like the Baha’i are being discriminated against and feel targeted by Setad.

“Setad has the mandate to take over property and in many cases it happens without due process “ she says. 

“One of the groups that face bureaucratic obstacles that result in losing land, property or businesses are the Baha’i. The official reason given is often a missing permit or another kind of bureaucratic problem, but the Baha’i definitely  feel discriminated against by Setad,” she says.

OVERVIEW

Novos relations in Iran

Ayatollah Ali Hosseini Khamenei
Supreme Leader of Iran

Since 1989 the spiritual leader of Iran has controlled and developed Setad into a gigantic business empire worth at least 95 billion dollars (2013 estimate). Irans Supreme Leader Ayatollah Khamenei is responsible for massive human rights abuses in Iran. He also controls the Iranian Revolutionary Guards Corps, an elite force responsible for possible war crimes inside and outside Iran. Ayatollah Khamenei is under US sanctions.

The Execution of Imam Khomeini's Order (EIKO) or SETAD

The full name of the business empire is Setad Ejraiye Farmane Hazrate Emam, also knowns as EIKO. The organisation owns and controls businesses in all wakes of life in Iran; investment, banking, energy, agriculture, mining, telecommunication and pharmaceuticals just to mention a few. Setad is under US sanctions aiming to curb all income of the Iranian State, especially all the income controlled by Ayatollah Khamenei.

Tadbir Economic Development Group
- 2018

Tadbir Economic Development Group is a Setad holding company. Untill 2018 Tadbir was the main shareholder of Barakat Pharmaceutical with more that 70 percent of the shares. In 2019 the majority of shares was transferred to a shell company named Karandish Doran Moaser with the aim of disguising the relationship between Setad and  Barakat. Tabir now owns only 8,2 percent of Barakat Pharmaceutical. As part of Setad, Tadbir is under US sanctions.

Karandish Doran Moaser
2018 -

Karandish Doran Moaser replaced Tadbir as the main shareholder of Barakat Phamaceutical Company in 2019, now owning around 60 percent of the shares. It is apparently a shell company created to disguise the ownership of Barakat. The company has the same address as Tadbir, the same accountant, no home page and no apparant activities. Karandish Doran Moaser is not on the US sanctions list.

Barakat Pharmaceutical Company

Barakat Pharmaceutical Company is an Iranian pharmceutical company established by Tadbir Economic Development Group. Barakat Phamaceutical Group owns Barakat Phamaceutical Town, an industrial zone dedicated to pharmaceuticals.
Barakat Pharmaceutical Company is part of Setad but is not under US sanctions as pharmaceuticals are exempted

Barakat Pharmaceutical Town

Barakat Pharmaceutical Town is a special economic zone reserved for pharmaceuticals. It is 100 percent owned by Barakat Pharmaceutical Company. The zone is located in Alborz Province west of Tehran. In 2016 NN Pars bought 39.000 square meters (four hectars) of land from Barakat Phamaceutical Town, price unknown. The company is part of SETAD but is not under US sanctions as pharmaceuticals are exempted. 

Novo Nordisk Pars (NN Pars)

NN Pars is an Iranian subcidiary, 100 percent owned by Novo Nordisk. The company was established in 2005 and has 150-300 employees. In august 2020 it started production of insulin pens in Iran based on raw materials and pen parts from Denmark. The production takes place in the new Novo factory in Barakat Phamaceutical Town

Under sanctions or not?

Apart from being involved in land grabbing, Setad is also under sanctions by the US since 2013 because of its close link to the Supreme Leader and the alleged transfer of profit to the Iranian government. 

In the press release accompanying the decision to sanction Setad, confiscation of property is mentioned and 37 specific companies belonging to the Setad network were designated.

One of them was the holding company Tadbir, the major shareholder of Barakat Pharmaceutical Group when Novo bought its plot of land. 

The US Treasury describes the Tadbir Group as “one of the main holdings companies” belonging to Setad and has published a chart showing the connection between Setad and the Tadbir Group. 

However, as pharmaceutical products are exempted from the US sanctions for humanitarian reasons the purchase of land from a Setad-controlled company might not be a legal problem for Novo.

Or at least that was the view of Novo. 

“A thorough investigation and legal compliance and technical due diligence was conducted by external lawyers and Novo Nordisk’s in-house team which led to the decision of purchase”,  Novos head of communication Charlotte Zarp-Andersson states in an email to Danwatch and Zamaneh.

“Barkat Pharmaceutical Industrial City (Park) is not on any international sanctions list, nor was it at the time of land purchase and contract signing.” 

The US sanctions list confirms this, but it may not be that simple. Buying land from a Setad controlled company might pose a problem, even for a pharmaceutical exempted from sanctions, Iran expert Rasmus Elling from Copenhagen Univeristy says.

“Although European companies are allowed to cooperate with Iran, they risk damaging their reputation  in the US.  Therefore most companies traiding with Iran would like to keep a very low profile on their cooperating with Iran” he says.

A recent fact sheet confirms that the official aim of the US sanctions are to deny “the Iranian regime the funding it needs to continue its ongoing violent and destabilizing activities around the world” and clearly states that the eksport of medicine and medical equipment is exempted.

Whether the rules for foreign companies allow for the purchasing of land from a Setad controlled company is not clear. 

Danwatch and Zamaneh have asked the US Treasury whether Novo has a license that allows it to buy land from a Setad-controlled company. But the Treasury declines to comment on specific companies or licenses. 

As close to power as you can get 

For Novo, working with a Setad company is however a big advantage according to sources familiar with the deal as well as independent experts.

“The cooperation with Barakat is definitely beneficial to Novo. Setad represents the highest power in Iran. It belongs to the Supreme Leader who is the most powerful person in Iran, his power exceeds even the power of the government,” says a source familiar with the land deal.

The cooperation with a Setad-company means that Novo will get a lot of benefits and advantages when they do business in Iran, he explains.

“It is a lot easier to get a share of the Iranian insulin market if you have these kinds of connections. Working with Setad means getting everything you need. Leverages, market access, the best distribution, the best price, support for any kind of business you want to enter. It is heaven for any pharmaceutical company to have these kinds of connections.”

Economist Mahdi Ghodsi explains the advantages of working with Setad.

Like in any other country lobbying government-affiliated businesses and having joint-ventures with them is very fruitful. It is easier to bend rules and regulations especially in Iran.  In general, doing business becomes easier with such state-owned or semi-public companies”, he says.

Too much for some

Not everyone in Novo agreed about the benefits and risks involved in working with Barakat.

In fact some were not at all happy about the alliance and argued vehemently against the land deal with Barakat, according to sources familiar with the deal.

The argument of the critics was that aligning itself with an organisation built on the confiscation of land and property belonging to Iranian dissidents was not in line with Novo’s ethical standards.

“Novo has been doing a lot of fantastic things in Iran, but the land deal with Barakat was a mistake”, as a source with knowledge of the deal puts it. 

“The deal brought Novo into close relations with the Supreme Leader. It was like getting engaged to a criminal. Everyone knows the brutality of the Supreme Leader, how he is anti democratic and how Setad is involved in human rights violations. The Supreme Leader is the source of everything Setad has done. If you enter into any relationship with an organisation like this you are condoning these actions,” the source says.

Novo has taken a great risk working with Barakat” another source with knowledge of Novos dealings in Iran conseeds.

“At the time I was asked by a journalist if working with Barakat was the right thing to do. Did I think it was right to pay money to the Supreme Leader indirectly supporting the Revolutionary Guards Corps that he also controls? Did I think it was right to pay money risking that it would be invested in warfare in Yemen or Syria? I responded that Novo was focusing on saving patients’ lives. This was the official company line, but it did not feel right. Taking risks is not a bad thing. But this was too much. Money is not everything,” the source says.  

Nice words from Novo

Apart from a general pledge to respect human rights Novo specifically points out on its  website that companies cooperating with Novo are expected to uphold the same standards.

“We expect our business partners and other parties directly linked to our operations, products or services to meet their responsibility to respect human rights as described by the UN Guiding Principles on Business and Human Rights; including committing to respect all human rights, carrying out human rights due diligence and providing access to remedy when needed”, it reads.

Documentation

Novos pledge 

Novo Nordisk is committed to meeting its responsibility to respect human rights as defined by the UN Guiding Principles on Business and Human Rights.  As such we will: 

  • Identify potential and actual adverse human rights impacts that our operations may cause, contribute to or be directly linked to;
  • Use or establish processes to prevent or mitigate potential adverse impacts on human rights, where identified;
  • Seek to best remediate or participate in the remediation of any actual adverse human rights impacts that our business causes or contributes to;
  • Account for how we address our potential and actual impacts on human rights, where it will not put the people concerned at risk or damage legitimate requirements of commercial confidentiality;
  • Expect our business partners and other parties directly linked to our operations, products or services to meet their responsibility to respect human rights as described by the UN Guiding Principles on Business and Human Rights; including committing to respect all human rights, carrying out human rights due diligence and providing access to remedy when needed;
  • Use leverage to make other parties directly linked to our operations, products or services cease actions or omissions that lead to adverse impacts on human rights once we become aware of such impact. 
Source: novonordisk.com 

Danwatch and Zamaneh have asked Novo numerous times how the company defends working with a company belonging to an organisation involved in possible human rights violations. 

But Novo has not responded to the question or commented on Setad allegedly being involved in land grabbing and persecution of religious minorities and others at odds with the Iranian government.

In its written statement the head of communication only responds that Novo did not see anything wrong in dealing with Barakat. 

“Based on our due diligence, we concluded that there were no salient adverse human rights impacts. We investigated land rights and obtained documentation that the land was government-owned and there have not been residents on the land,” Charlotte Zarp-Andersson writes.

“We investigated the integrity of our business partners and concluded that our chosen partners met all the requirements regarding compliance with legislation and international standards.“ 

Sworn to secrecy

In connection with this investigation, Danwatch and Zamaneh have asked to see the assessments made in connection with the land deal. But as Novo is a private company and no public money is involved, the company is not obliged to make its due diligence assessments public.

And in Iran, Freedom of Information requests are only considered if you are an Iranian citizen. 

Danwatch and Zamaneh have repeatedly asked for an interview with either CEO Lars Fruergaard Jørgensen, head of NN Pars Ali Mostofi or any other representative that the company sees fit. But all interview requests have been turned down or remain unanswered.  

Neither of the Iranian companies involved have any information about the land deal with Novo available on their home pages or in their annual reports. 

And Novo only gives a short statement in their Annual report to the US Stock Exchange, confirming that they have dealings with companies, banks and organisations that belong to og may belong to the Government of Iran (GOI).

“In 2016 NN Pars purchased land from a GOI-controlled holding company in order to construct a manufacturing facility in Iran,” Novo says in the so called F-20 statement  published in february 2020.

“Novo Nordisk expects to invest approximately DKK 520 million over the course of 5years, which started in 2015, to build the manufacturing facility, which will be used for assembly and packaging of insulin pens for use in Iran.”  

No mention is made of Novos contribution to the Larijani-run institute at Tehran University, 

Ethical dilemma  

Due to the lack of accessible information, a lot of questions about Novos dealings in Iran remain unanswered and the potentially controversial cooperation with the Larijanis and with Ayatollah Khamenei’s business empire is still shrouded in secrecy.

No concrete evidence of Novo violating US sanctions or international law has been unearthed. But the question whether it is possible to do business in Iran without compromising ethical standards. 

Ali Alfoneh, Iran expert and senior fellow at The Arab Gulf States Institute in Washington, does not think so. 

“It is not possible to do business in Iran without working closely with governmental or semi-governmental companies,” he says.  

“It is impossible to act ethically sound in Iran. Partly because you end up contributing to the survival of a dictatorship, partly because you cannot avoid paying corruption money. In that respect Iran is no different from Pakistan or Turkey” Alfoneh says. 

Lars Thøger Christensen professor at Copenhagen Business School thinks doing business in Iran poses a difficult dilemma, especially for a pharmaceutical like Novo providing essential drugs to Iranians.

“I do not think you can avoid collaborating with problematic people or organizations when doing business in countries like Iran. It is the same dilemma you are facing in China or Russia,” he says, mentioning two other controversial states, where Novo is very active. 

“Before going there you have to make your mind up whether you want to work in such countries at all. For a pharmaceutical like Novo, the dilemma is even bigger. You have to look at who will benefit, if Novo does not work in Iran. If you leave Iran, Iranian patients will pay the price and the same will your shareholders. Which interest is the most important?,” he says.

Rasmus Elling, associate professor at University of Copenhagen acknowledges the dilemma too. 

“Supporters of rapprochement towards Iran have always said that all trade except arms trade will help promote interaction with the international community and pave the way for political solutions,” he says.

“They do not believe that anything good will come from boycotting trade with Iran. If the EU refuses to trade with Iran, China and Russia are ready to take over. There is a chance that you support members of  a dictatorship if you are trading with Iran.”

For Novo the dilemma boils down to providing life saving medicine but at almost any cost.

As professor Lars Thøger Christensen puts it.

“It is a difficult balancing act. And after all, the Iranians have not chosen their rulers as we have in the West. So why should they be deprived of access to essential drugs like Novo’s?”

A Danwatch Investigation

The investigation divided into articles. You decide where to begin.

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