Top-level corruption in Iran in spotlight as US pressures regime

Khamenei is not the only member of the Iranian leadership who is reported to control vast sums.
Sunday 29/07/2018
US Secretary of State Mike Pompeo speaks at the Ronald Reagan Presidential Library, on July 22. (AP)
Maximum pressure. US Secretary of State Mike Pompeo speaks at the Ronald Reagan Presidential Library, on July 22. (AP)

ISTANBUL - High-level corruption in Iran is in the spotlight as the Trump administration steps up efforts to undermine the legitimacy of the leadership in Tehran.

“The Iranian economy is going great but only if you’re a politically connected member of the elite,” US Secretary Michael Pompeo said in a speech to an Iranian-American audience July 22 in California.

Pompeo spoke of an alleged $95 billion slush fund of the Iranian supreme leader and a prominent politician with more than 60 bank accounts to his name, not to forget a former Islamic Revolutionary Guard Corps (IRGC) commander who is nicknamed the “billionaire general.”

Pompeo called Iran’s religious leaders “hypocritical holy men” who had “devised all kinds of crooked schemes to become some of the wealthiest men on Earth” while the rest of the country suffered economic hardship.

“The level of corruption and wealth among Iranian leaders shows that Iran is run by something that resembles the mafia more than a government,” he said.

Analysts say the fact that there is widespread corruption in the Iranian government is not new. “What’s new is the US instrumentalising it as a tool for fomenting instability in Iran,” Ali Vaez, director of the Iran Project at the International Crisis Group, said via e-mail.

Ali Fathollah-Nejad, an Iran expert at the Brookings Doha Centre, said “there is huge wealth in the hands of Iran’s leaders,” a fact that Iranians were well aware of. Personal enrichment is only one dimension of the phenomenon.

“The money is also used to create a social base and to fortify structures of cronyism,” Fathollah-Nejad said. “We are dealing with an oligarchy in which political and economic power cannot be separated from each other.”

Part of the funds made available because of corruption fuel Iran’s foreign policy aims. “Some of the money is surely being channelled into regional political projects,” such as Syria, Iraq or Lebanon, Fathollah-Nejad said.

A 2013 investigation by Reuters described how Setad, a $95 billion organisation controlled by Iranian Supreme Leader Ayatollah Ali Khamenei, makes huge sums by taking over real estate, sometimes against the will of the owners, and has “stakes in nearly every sector of Iranian industry, including finance, oil, telecommunications, the production of birth-control pills and even ostrich farming.” Reuters reported there was no evidence Khamenei was filling his own private pockets.

Pompeo cited Setad as a prime example of corruption in Tehran. “Seizing land from religious minorities and political rivals is just another day at the office for this juggernaut,” he said about the organisation.

Khamenei is not the only member of the Iranian leadership who is reported to control vast sums. Sadeqh Larijani, the head of Iran’s judiciary, has been accused of holding more than 63 bank accounts totalling millions of US dollars, reportedly money from defendants in court cases. Larijani has said the accounts belong to the judiciary, not to himself. Other officials and ayatollahs have reportedly benefited financially from the sugar trade and mining contracts.

Iran’s IRGC, which controls parts of the Iranian economy, has also been named in connection with cases of corruption. Last year, several IRGC members were arrested over alleged graft. “President [Hassan] Rohani has convinced the top commanders that if systematic corruption and favouritism are not taken seriously, the pillars of the regime will be undermined,” Saeed Laylaz, an economist close to the government, told the New York Times at the time.

Some IRGC members have become very rich. Sadeq Mahsouli, a former IRGC commander, has been called “general billionaire” by an Iranian lawmaker. Mahsouli reportedly told parliament in 2005 that Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic, had only banned “the attitude and demeanour of living in palaces, not living in palaces itself.”

When the international community tried to isolate Iran with economic sanctions before negotiating a nuclear treaty with Tehran in 2015, corruption in the country flourished, Vaez said. “Corruption reached astronomical scales during the previous sanctions regime as the Iranian government abetted those who were trying to circumvent sanctions.”

Recent waves of unrest in Iran demonstrated that citizens are angry about the state of the economy and the inability of the government to deliver basic services. “Corruption is one of the main sources of popular grievance in Iran,” Vaez pointed out. “The fact that it is now more than ever in the public eye has turned it into an issue of national debate.”

The question is whether Washington can weaken the Tehran government by pointing the finger at allegedly corrupt officials in Iran. “Washington is clearly trying to add fuel to fires of popular discontent in Iran,” Vaez pointed out. “Highlighting the corruption of Iranian officials is one way of achieving that objective. The fact that Washington’s allies in the region stand guilty of the same crime seems to be only an afterthought.”

Fathollah-Nejad said he was sceptical about what the United States can achieve. “I don’t think it will have much of an impact among Iranian society,” he said about Pompeo’s speech.

The Trump administration, which withdrew from the Iran nuclear accord in May, wanted to force Tehran to accept new talks about Iran’s nuclear programme, with the aim of enacting stricter rules for the Iranians than those under the old treaty, Fathollah-Nejad added. “While depicting the regime as lacking legitimacy, Pompeo also stated that the maximum pressure policy still leaves the possibility for a deal to be struck between Washington and Tehran,” he said.