A Political Insider In Iran Gets Jail Sentence For Bank Fraud

A nephew of the late Mahmoud Hashemi-Shahroudi, Iran’s chief justice from 1999 to 2009, has been sentenced to ten years’ prison for fraud.

Zabihollah Khodaeian, the judiciary spokesman, told reporters Tuesday that Ahmad Hashemi-Shahroudi was also liable for "returning the funds" in the case involving Sarmayeh Bank. But some media have claimed Hashemi-Shahroudi fled to Iraq when a business partner, Mohammad Emami, was arrested in 2016. Emami has been sentenced to a 20-year prison term, according to Khodaeian.

Another defendant in the case, Shahabeddin Ghandali, former chief executive officer of the Iran Teachers’ Reserve Fund, was arrested in 2016 on charges of embezzling $2.5 billion. The fund, which has 800,000 members and is run by the education ministry, was an investor in Sarmayeh Bank.

According to a confidential report of the Iranian parliament leaked by reformist lawmaker Mahmoud Sadeghi in December 2020, Hashemi-Shahroudi and Emami took loans from Sarmayeh between 2012 and 2014 to invest in property. They subsequently sold the properties to Sarmayeh at far higher prices, with the bank − according to the report − waiving penalties for late repayment.

Nationwide protests in November 2019, partly against corruption by well-connected insiders

The fund lost nearly $3.5 billion of its investments in Sarmayeh Bank as a result of fraud perpetrated by, according to judicial officials, over 400 individuals.

Parviz Kazemi, minister of labor and social welfare under President Mahmoud Ahmadinejad's cabinet, Ammar Salehi, son of army commander Ataollah Salehi, and Hadi Razavi, son-in-law of Mohammad Shariatmadari, minister of labor in Hassan Rouhani's cabinet, were among defendants in the case.

Corruption and cronyism, often associated with political figures and groups, has plagued Iran for over a decade. There have been several massive fraud and embezzlement cases since then, including in major banks and other financial institutions.

In 2017 and 2018 corruption in the financial sector and rising prices sparked the biggest wave of anti-government protests since the unrest over a disputed election in 2009.

In October 2020, Spain extradited Sarmayeh’s former chief executive officer (CEO), Alireza Heydar-Abadipour, who had been arrested in 2019 following a "red notice" to Interpol issued by Iranian police. Heydar-Abadipour had been sentenced in absentia to a 12-year prison sentence for fraud and embezzlement.

Lacking an extradition agreement with Canada, Iran was unable to pursue Mahmoud-Reza Khavari, the former CEO of the state-owned Melli Bank, who fled to Canada in 2010, after being accused of embezzling billions of dollars.

In 2017 and 2018, protesters who lost their deposits in the Samen al-Hojaj Finance and Credit Institution in Khorasan province held rallies in front of banks and other financial institutions. Samen al-Hojaj, which went into liquidation, had lent tens of millions of dollars at a very low interest rate and paid high salaries to some officials, while not paying dividends to small investors lured with promises of high returns.