Iran uses released funds in South Korea to settle debts to 40 companies

A South Korean newspaper report says funds belonging to Iran and frozen in two bank accounts in the country have been used to pay back debts to dozens of companies who had exported goods and services to Iran before the country came under US sanctions in 2018.

17 July 2021
ID : 32944
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A South Korean newspaper report says funds belonging to Iran and frozen in two bank accounts in the country have been used to pay back debts to dozens of companies who had exported goods and services to Iran before the country came under US sanctions in 2018.

The Thursday report by the Korea JoongAng Daily said that the funds had been distributed between a total of 40 South Korean companies as of last month to settle some $70 million of their claims related to exports to Iran.

“We understand there were 40 companies in total who were paid back some outstanding accounts,” the report quoted an unnamed diplomatic source as saying.

The source said that total Iranian outstanding debts to South Korean companies had amounted to $90 million of which the $70 million are now settled.

The payments had been made from accounts in the Industrial Bank of Korea (IBK) and Woori Bank where Iran holds around $7 billion worth of funds for sales of crude and energy products to South Korea before May 2019.

Iran came under US sanctions in May 2018 after a former government in Washington pulled out of a 2015 international agreement on the Tehran's nuclear program known as the JCPOA.

The news of debt payments in South Korea comes exactly a day after US authorities announced they had allowed Seoul to use the funds for the sole purpose of settling Iran’s outstanding debts to South Korean businesses.

US State Department authorities said the move was meant to appease South Korea rather than to give a positive signal to Tehran amid ongoing international talks aimed at reviving the JCPOA.

Iran has been unhappy with South Korea’s lack of independence in dealing with the issue of frozen funds.

Iranian authorities have warned the case could negatively impact bilateral ties even after a potential revival of the JCPOA in future.

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