North Rhine-Westphalia court rejects release of frozen funds for luxury hotel

A German court has blocked the temporary release of frozen funds intended to keep a luxury hotel near Frankfurt operating, warning that the money could ultimately benefit Iran’s power structure.

The Higher Administrative Court of North Rhine-Westphalia rejected an urgent request from the provisional insolvency administrator of the hotel operating company. The case concerns the former Hilton Hotel Gravenbruch in Neu-Isenburg, which is currently undergoing insolvency proceedings.

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There is a considerable risk that the funds could at least indirectly flow to the sanctioned person.

The Cologne sanctions enforcement office had secured the company’s bank accounts under an EU regulation that froze the funds. The measure followed the authorities’ assumption that the hotel company was controlled by a person on the EU sanctions list. Media reports, including tagesschau, identified that person as an Iranian businessman.

According to the court, the businessman is suspected of using a network of companies and foreign banking channels to transfer money from Iran’s oil sector abroad. The sector is described as an important source of financing for Iran’s military and Islamic Revolutionary Guard Corps.

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Concealed asset transfers

The insolvency administrator argued that he, rather than the sanctioned person, controlled the assets and wanted to use them to continue the hotel’s operations and pay employees for August. Both the Cologne Administrative Court and the higher court rejected the request for release before the lower court rules on the pending urgent application.

The higher court said there was a considerable risk of indirect payments to the sanctioned person or concealed asset transfers. It added that the administrator could ask the German central bank, the Bundesbank, to consider a justified and specifically restricted release from the accounts while the Cologne case remains pending.

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It is reasonable.