Well, it's been several years since this was asked, but I also needed the answer, 
and I found a way to create a database using Python.  
I verified that the new database has been created in the SMP.  
I didn't set the directory, but it put the new database in /data/iris/sys/mgr/, 
where `iris` is my instance name. 
The key step to my progress was to get the IRISReference and pass it, 
even though it is empty.

presuming you already have made the connection...
irispy = iris.createIRIS(conn)

Name = "ABC"
db_exists = irispy.classMethodValue('Config.Databases', 'Exists', Name)
if not db_exists:
   ref_object = iris.IRISReference(None);
   status_db = irispy.classMethodValue('Config.Databases', 'Create', Name, ref_object)
   if status_db != 1:
      print(f"Database create failed: {status_db}")