Iran’s Supreme Leader Ali Khamenei (left) during an event in 2006

Iran's Biggest Corruption Case Rattles Ruling Hardliners

Thursday, 12/07/2023

The Iranian government is reluctantly acknowledging one of the most significant cases of financial corruption in Iran, displaying a matter-of-fact attitude.

Several government offices in both the current and previous presidential administrations are alleged to be involved in the nearly $3.5 billion corruption case. These include the ministers of agriculture, industry as well as the governors of the Central Bank of Iran and the chiefs of Iranian Customs Administration.

However, Supreme Leader Ali Khamenei, who has not yet commented on the case, has consistently rejected statements about systematic corruption in Iran. The scandal comes at a time when the government has failed to lower inflation hovering above 50 percent and people face shortages of medicines and powdered baby formula.

Last week, Iran’s Inspection Organization disclosed that a prominent tea importer is under scrutiny for questionable financial practices. 

The company, handling most of the country's tea imports, reportedly received a staggering $3.37 billion in foreign currency at discounted government rate for tea and machinery imports from 2019 to 2022. However, it has allegedly sold $1.4 billion of the currency on the free market at a higher rate.

A tea processing factory in Iran

Several Iran watchers and analysts, including Leyli Khameneh, have told Iran International TV that this indicates systematic corruption, with several high-ranking government officials implicated. Media reports have also implicated top officials, including Vice President Mohammad Mokhber. Ms. Khameneh has also noted the apparent reluctance of the Iranian Judiciary to address the case.

Government spokesman Ali Bahadori has referred to the case as an ongoing routine matter, stating that several low and mid-ranking officials have been arrested. However, he questioned why the case became publicized in the media.

The former head of the Iranian parliament's National Security and Foreign Relations Committee Heshmatollah Falahatpisheh has described the case as "One of the biggest embezzlement cases in Iran and accused the Iranian parliament of being silent about it without paying attention to their supervisory role. He found it peculiar that, with conservatives in control of both the government and the Majles (parliament), both entities are silent about a scandal primarily attributed to the current government and its officials.

The Debsh Tea Company received US dollars from the government based on a preferential rate of exchange without checks and balances. However, the case has other dimensions including selling low-grade tea imported from Kenya as high-grade tea originating from India. Meanwhile, the company has been also involved in what has been described as fraud by re-importing cheaper Iranian tea and pocketing the difference in foreign currency.

Falahatpisheh argued that the corruption case exposes the parliament's "big failure" in supervising the activities of the executive branch, emphasizing that the government has never previously ignored the Iranian parliament.

Meanwhile, Habib Jahansaz, the head of the Iranian government's Tea Organization called the corruption case "unprecedented" and said Iran's annual need for import tea is limited to only $300 million. He added that the government’s Tea Organization was not involved in the case in any form whatsoever!

Moderate news website Rouydad24 suggested that the corruption case is the result of a lack of transparency in the government's allocation of low-rate foreign currency to well-connected importers, potentially resulting in significant financial losses for the country.

Iranians on social media, including former Vice President Abdollah Ramezanzadeh have criticized Khamenei and President Ebrahim Raisi without explicitly naming them for denying that there is systematic corruption in the country's executive branch.

Some reports say that until 2020 the annual budget allocated for importing tea was around $300 million, but the budget was suddenly tripled in 2021 without any justification.

Criticizing the government and the parliament for their part in the case, commentator Ali Mojtahedzadeh called on officials to at least accept that there is something wrong about the way the parliament and some government organizations operate. 

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