I missed the stories in the papers last week about Alphasteel, David Mills and some Iranians. Alphasteel was a Welsh steel rolling mill which was rescued by an Iranian investor called that Mr Rostami-Safa through his Swiss holding company, Satico. The original purchase seemed kosher enough. The Anglophile Mr Rostami's family had run a large and profitable mill for many years in Saveh and at the time were building another mill in Abu Dhabi, which would no doubt be powered by Qatari gas and Bangladeshi labour, which shows Mr Rostami is no fool.
The purchase of Alphasteel in 2003 though was misguided, and the company folded just before 2007. In that sense it was just another business failure and one that was likely to occur even if Mr Rostami had not bought it for £40 million.
But what caught my eye in the whole deal is the fact that the purchase was partly financed by a loan from Rosbank. Actually only one third of the purchase price, a £13 million credit facility, which might have been for working capital purposes. But the really eye catching part was the £4.7m paid in fees to Summit Development General Trading, a Dubai-registered company, for "counter-guarantees".
The administrators to Alphasteel are trying to reclaim those fees and the courts have frozen the assets of Dr Shahram Shirkhani, a 24.5% shareholder in Summit. They are also trying to recover other "substantial" professional fees from Dr Shirkhani, a lawyer.
Guarantee fees for 36% of the principal? So the net borrowing was only £8.6m with £13 million to repay, plus interest, and lawyers fees on top. No wonder Islamic law forbids usury.