Former Chief Banker Says Governance In Iran Encourages Corruption
As cases of economic corruption continue to make headlines in Iran, more pundits are speaking out about how the prevailing system makes corruption inevitable.
As cases of economic corruption continue to make headlines in Iran, more pundits are speaking out about how the prevailing system makes corruption inevitable.
In an interview published Sunday, former chief of Iran's central bank Valiollah Seif said the biggest challenge facing the country is economic corruption, mainly due to a government controlled system that that hands out privileges. The government also has a habit of regulating prices, including the subsidized cheap foreign currency given to a cherrypicked group of regime insiders.
Seif said as long as the government hands out dollars below the free market rate, there would be people who find ways to take advantage of it. “Any control mechanism, sooner or later, falls prey to some opportunistic individuals who are tempted by personal gain and ultimately, they devise ways to exploit the existing privilege system," he argued.
Seif headed the bank from 2013 to 2018, during the first six years of Hassan Rouhani’s presidency, but was himself accused of improper foreign currency transactions together with one his deputies, Ahmad Araghchi, nephew of Iran’s former chief nuclear negotiator, Abbas Araghchi. Seif was sentenced to 10 years in prison and a travel ban in 2021 for charges of improperly selling $160 million and €20 million on the open market. The Supreme Court annulled his sentence in 2021, explaining that he was just following the country’s macroeconomic policies.
Referring to the case of Debsh Tea Company -- labeled Iran’s biggest corruption case, Seif said when the free-market exchange rate for the dollar is about twice higher than the dollars provided by the central bank for imports, “it is evident that the likelihood of corruption increases... as some individuals are even encouraged" to exploit the system.
Debsh company, handling most of the country's tea imports, received a staggering $3.37 billion in foreign currency from the government on a preferential exchange rate for tea and machinery imports from 2019 to 2022. However, it allegedly sold $1.4 billion of the currency on the free market at a higher rate. The company also sold low-grade tea imported from Kenya as high-grade tea originating from India, with a $12 difference per kilogram. The embezzlement case of Debsh Tea Company involved officials from both the current and the previous presidential administrations -- including ministers of agriculture, industry as well as the governors of the Central Bank of Iran and the chiefs of Iranian Customs Administration, further proof that the country’s corruption is systematic.
In an article in Etemad daily earlier in the month, Iranian pundit Abbas Abdi said corruption in Iran should not be reduced to a moral or legal matter, noting that such a reductionism is the biggest mistake that institutionalizes corruption.
Abdi said that the Debsh case, which broke all corruption records in terms of the amount and the level of officials involved, shows that the country’s unclear and non-transparent regulations along with a lack of effective supervision or independent oversight pave the ground for widespread corruption. He said that justifications such as the need to circumvent sanctions or reduce prices open the way to corruption.
The rial has lost its value 12-fold since 2018 when the United States withdrew from the JCPOA nuclear accord and imposed sanctions. The government is desperate to control currency rates hoping that it can artificially keep the Iranian rial high. It created multiple exchange rates for rial against the dollar and other foreign currencies, providing subsidies – or cheaper dollars – for the import of essential items. However, the system is manipulated by regime insiders or businesspeople with government connections.
Another former chief banker, Abdolnaser Hemmati, an outspoken critic of the current administration’s economic policies, also said last month that the government has failed to control inflation or the devaluation of the rial. He said that the measures the government has taken to control the economy has led to more corrupt manipulations.
Systematic corruption is not something new in Iran's oil-dependent economy and has been repeatedly highlighted by various officials. Mohammad Sarafraz, the former chief of Iran's state television, who resigned his post in May 2016 has accused the government and banking system of systematic corruption that has led to vast income gaps among Iranians. He has argued that most of this corruption exists in quasi-public companies that enjoy the benefits of private firms but pretend to be government entities when they are paying taxes or reporting their financial status.
According to a report by the World Bank, Iran is among the worst countries in the world in terms of the Control of Corruption index, which evaluates the extent to which public power is exercised for private gain. According to Transparency International, which measures Corruption Perceptions Index (CPI), Iran ranked 150 out of 180 countries in 2021, one stop lower than a year earlier. Last month, former member of parliament Heshmatollah Fallahatpisheh claimed that the total embezzlements in major corruption cases in the Islamic Republic have reached a staggering $57 billion.
The sentence was carried out on Wednesday, leading to widespread condemnation, after she posted a touching personal account in a social media post.
“These lashes did not just come down on the body of one woman, they hit all those who dream of a life with normal freedoms alongside each other. Enough is enough. Don't disgust the society any more than this,” prominent political and social commentator Abbas Abdi said in a tweet.
Lashing women for not abiding by the strict hijab rules demanded by religious revolutionaries was very common in 1980s and 90s, but not carried out often in the past two decades.
Many argue that the execution of the lashing sentence violates the law since the recent hijab law passed by the parliament does not include lashing as a punishment.
Persian social media has been flooded this weekend with angry comments since the incident was publicized. People praised Heshmati for her courage to reject the forced hijab, even after her lashing.
In a statement published by its official news website, Mizan, the judiciary claimed on Sunday that Heshmati was sentenced and flogged because she had connections to "an organized group outside Iran" and had received money to defy hijab rules publicly "in a very indecent manner," presumably to encourage others to do the same. The statement added that the sentencing to 74 lashes was confirmed due to the extent of her actions, which were seen as a violation of public chastity and morals.
Some female politicians including prominent female dissident Zahra Rahnavard, who has worn the hijab by choice for decade, and Azar Mansoori who leads the Reformist Front and the People’s Unity Party of Islamic Iran have objected to the lashing of the young woman for hijab.
“You who rule! You whip Roya Heshmati’s body but she, the one with an alert and resilient conscience, laughs bitterly at you. I abhor your manner of governance,” Rahnavard who has been under house arrest since 2011 along with her husband Mir-Hossein Mousavi as leaders of Iran's anti-regime Green Movement said in a message while Mansoori said one could not be a Muslim and stay silent about Heshmati’s flogging for hijab.
The 23-year-old Heshmati, a vocal critic of compulsory hijab, was arrested at her home in April after posting a photo that showed her dressed in a modest red shirt and black skirt from behind while walking in the street without a headcover.
Heshmati who lives in Tehran was held in custody for eleven days on charges of “appearing in public without religiously prescribed hijab”. The charges of “propaganda against the regime”, “violating public decency and order”, “creating indecent social media content and encouragement of people to immorality” were brought against her later.
She was initially sentenced to thirteen years in prison, a cash fine of around $25 and 74 lashes. The appeals court dropped the prison sentence but withheld the lashing order and cash fine.
In a note published on Instagram after being lashed, she vividly described how a man hit her shoulders, back, backside, and legs with a leather whip in a small room, resembling a medieval torture chamber, while she whispered a song named “Rise, for Woman, for Life, for Freedom” under her breath.
She also said court agents kept trying to cover her head because upon entering the courtroom she had refused to wear her headscarf despite threats of harsher flogging and further prosecution.
“[The lashing] was over. We left the room. I didn't let them think I had experienced pain…We went up to the judge in charge of execution of the sentence. The female agent walked behind me and was careful not to let my headscarf drop from my head. I threw off my scarf at the courtroom entrance. The woman asked me to wear the headscarf. I didn't stop and she pulled it over my head again," she wrote.
In the wake of the deadly explosions that targeted a memorial ceremony for slain Revolutionary Guard commander Qasem Soleimani at his grave, the Islamic Republic authorities are in hot water over the intelligence lapses and security failures that led to the incident, claimed by ISIS.
Trying to mend their blemished reputation, senior officials claim that they have arrested tens of people and foiled several other bombing attempts planned for the day, which saw the biggest terror attack since the Islamic Republic was founded in 1979. The blasts were described as "two suicide explosions" that killed about 90 people and injured over 200 others.
Head of the Armed Forces' Judicial Organization in Kerman, Ali Tavakkoli, claimed that over 64 bombs were discovered nationwide, intended to detonate during the fourth anniversary of the death of Soleimani, the former commander of IRGC’s extraterritorial force who is seen as the architect of Iran’s network of proxy militias and was killed by a US drone in 2020.
Claiming that they had intel on enemy threats, Tavakkoli said that “16 explosive devices” designed to target the gathering at the cemetery were neutralized in Kerman prior to the January 3 attack.
Echoing the clams, Mehdi Bakhshi, the prosecutor of Kerman, said that each of the 16 bombs discovered in Kerman province had a greater explosive power than the vests worn by suicide bombers in the twin blasts.
Bakhshi also claimed that, in recent months, 32 people, including 23 ISIS members related to the explosions, have been detained. He did not elaborate on how the individuals already in custody were involved in the attack. Additionally, he stated that two other suicide bombers who had planned to attack the funeral procession of the blast victims were also arrested.
Meanwhile, the public relations office of Sarallah of Kerman, IRGC’s regional headquarters in charge of the security of the city, rejected reports of “neutralizing any bombs in recent days” in a statement on Sunday, labeling the reports as “rumors and fabrications.” It did not specify if the report about 16 discovered bombs mentioned by authorities is true or false.
Bakhshi said that based on a series of on-site inspections and meetings with various security entities, including the Intelligence, IRGC, law enforcement, and army, “there has been no negligence” on the part of those responsible for the security of the event. “Our inherent duty is to address any deficiencies or negligence... We have no bias, and our approach is impartial, but as of now, we have not encountered any such findings."
However, critical voices are growing in Iran calling for punishment of senior authorities responsible for the security of the event. Jomhouri-e Eslami, a conservative Iranian newspaper, published an editorial Sunday saying that “security and intelligence officials must be accountable for every incident that occurs.”
“Certainly, it is not the case that a crime as significant as the terrorist incident in Kerman occurs, and no one is found to be negligent or at fault,” said the daily, noting that one of the country's problems is that no one is held responsible for such incidents. “As soon as a major incident happens, officials start chanting slogans and delivering speeches aimed at directing all attention towards the enemy... Security is not ensured through speeches."
Former lawmaker Mohammad-Javad Haghshenas said Sunday that "There is no doubt about the negligence on the part of the Interior Ministry and security authorities in Kerman province,” calling on both the administration and the parliament to take punitive actions including impeachment.
The failure that led to the Kerman attack has laid bare serious gaps in the country’s intelligence apparatus, which has intensified measures to silence any critical voice that defies the regime’s narrative of the incident.
In addition to arresting dozens of people who discussed the incident online in recent days, Iran has also launched a targeted campaign on X (formerly Twitter), with cyber agents revealing the identities of anonymous dissident users and threatening them against sharing their thoughts about Soleimani’s bloody legacy for Iranians, who question how many more casualties the commander would cause even after his death. During Soleimani’s burial procession in 2020, about 60 people were crushed to death in a stampede. A few days later, the IRGC shot down Ukraine's flight PS752, killing 176 people onboard, as it was expecting retaliation for firing more than a dozen missiles at Iraqi bases hosting US troops to avenge Soleimani’s killing.
Iran’s cyber police report that more than 500 people have been summoned to court over their online posts about the incident. Generally, questioning the efficacy of the security and intelligence services that had not seen the attack coming is not allowed and suggesting that the authorities were aware of the threats beforehand is also prohibited.
Generally, no one is allowed to question the efficacy of the security and intelligence services, nor can one suggest the authorities were aware of the threats beforehand.
The absence of high-ranking officials and the Soleimani family at the ceremony remains the elephant in the room and nobody dare describe the attendants of the memorial as supporters of “a terrorist” -- as labeled by former US president Donald Trump who ordered his killing.
But questions now surround the atrocity which has left Iran with serious demands for answers.