The 3,000 billion toman

embezzlement Embezzlement (from Anglo-Norman, from Old French ''besillier'' ("to torment, etc."), of unknown origin) is a type of financial crime, usually involving theft of money from a business or employer. It often involves a trusted individual taking ...

scandal in Iran (also 2,800 billion embezzlement; approximately US$943.5 million) was a corruption scandal involving the use of forged documents to obtain credit from at least seven Iranian state and private banks to purchase recently privatized state-owned companies. The fraud reportedly extended over a four-year period, but became more serious in the months before the scandal broke in September 2011. According to Iranian newspapers, Iranian businessman Mahafarid Amir Khosravi (also known as Amir-Mansour Aria) masterminded the scam, and as of late October 2011, at least 67 people have been interrogated and 31 of them have been arrested, with Aria being executed in 2014.Iran Makes New Arrests in Fraud Case
Rick Gladstone. ''The New York Times'' 25 October 2011 Mostafa Pour Mohammadi, the head of a judicial investigations unit, has called the case "the most unprecedented financial corruption case in the history of Iran." The scandal has also been called "politically sensitive", involving

Esfandiar Rahim Mashaei Esfandiar Rahim Mashaei (; born 16 November 1960) is an Iranian conservative politician and former intelligence officer. As a senior Cabinet member in the administration of President Mahmoud Ahmadinejad, he served as Chief of Staff from 2009 to ...

, a close aide to President

Mahmoud Ahmadinejad Mahmoud Ahmadinejad (born Mahmoud Sabbaghian on 28 October 1956) is an Iranian Iranian principlists, principlist and Iranian nationalism, nationalist politician who served as the sixth president of Iran from 2005 to 2013. He is currently a mem ...

, opposed by conservatives.

Overview

According to

Iranian government The Government of the Islamic Republic of Iran (), known simply as ''Nezam'' (), is the ruling State (polity), state and current political system in Iran, in power since the Iranian Revolution and fall of the Pahlavi dynasty in 1979. Its Const ...

newspapers and TV channels, the fraud was planned within seven state-owned and private banks, including Saderat Bank of Iran, and is the largest corruption scandal in Iranian history. The fraud was first identified at Bank Melli, Iran's largest commercial bank. According to ''

The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'' and ''

The Washington Post ''The Washington Post'', locally known as ''The'' ''Post'' and, informally, ''WaPo'' or ''WP'', is an American daily newspaper published in Washington, D.C., the national capital. It is the most widely circulated newspaper in the Washington m ...

'', the embezzlement was a "scheme to use forged documents or letters of credit to acquire assets, "including major state-owned companies" or "privatized government assets", (such as the Khuzestan Steel Company, a major steel producer"Iran Accuses Businessman of Bank Fraud"
Associated Press. ''The New York Times'' (12 September 2011)) at one of Iran's largest banks, Bank Saderat. Iranian state prosecutor

Gholam-Hossein Mohseni-Eje'i Gholam-Hossein Mohseni-Eje'i (, ; born 29 September 1956) is an Iranian Iranian Principlists, conservative politician, Faqīh, Islamic jurist and prosecutor who currently serves as Chief Justice of Iran. He was Ministry of Intelligence and Natio ...

said 19 people had been arrested for being involved in the embezzlement scandal. ''The Washington Post'' reports that 22 suspects, "including businessmen and bank officials" have been arrested, and the chiefs of two banks have been dismissed. On 27 September 2011, Mahomud-Reza Khavari abruptly resigned as the managing director of Bank Melli and fled to Canada after the bank was implicated in the fraud. However, a spokesman for the bank stated that Khavari had gone to Canada for "ordinary business reasons"."Iran: Banker's Return Sought in Bank Scandal"
''The New York Times'' (29 September 2011) According to the

Globe and Mail ''The Globe and Mail'' is a Canadian newspaper printed in five cities in western and central Canada. With a weekly readership of more than 6 million in 2024, it is Canada's most widely read newspaper on weekdays and Saturdays, although it fall ...

, Mahmoud Reza Khavari owned a $3 million house in Toronto under his own name, and according to Iran News Update, Khavari allegedly acquired

Canadian citizenship Canadian nationality law details the conditions by which a person is a national of Canada. The primary law governing these regulations is the Citizenship Act, which came into force on February 15, 1977 and is applicable to all provinces and ...

in 2005. The investigation determined that businessman Mahafarid Amir Khosravi had masterminded the scheme, with his Aria Investment Development Company being the primary recipient of the loans. Khosravi was convicted of

money laundering Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money) such as drug trafficking, sex work, terrorism, corruption, and embezzlement, and converting the funds i ...

, and

bribery Bribery is the corrupt solicitation, payment, or Offer and acceptance, acceptance of a private favor (a bribe) in exchange for official action. The purpose of a bribe is to influence the actions of the recipient, a person in charge of an official ...

. He and three of his closest associates received the death penalty in July 2012. A total of 39 people were convicted of fraud in the case. On 24 May 2014, Khosravi was executed by hanging, while Khavari remains a fugitive. However, Khosravi’s lawyer said that he was made unaware of Khosravi’s execution, according to the IB Times. According to the

BBC The British Broadcasting Corporation (BBC) is a British public service broadcaster headquartered at Broadcasting House in London, England. Originally established in 1922 as the British Broadcasting Company, it evolved into its current sta ...

, the Iranian chief prosecutor said that two other defendants were sentenced to life in prison, whereas 33 more are set to receive prison sentences as high as 35 years.

Reaction

Supreme Leader

On 3 October 2011, Supreme Leader Ayatollah Ali Khamenei told the viewers of Iranian state TV, "People should know all these (responsible) will be pursued. ... God willing, the traitorous hands will be cut." The leader also stated the media should not use the case to "strike at officials."Iran's supreme leader calls for ‘cutting traitorous hands' in huge bank scam
Associated Press,. ''The Washington Post'' (3 October 2011)

Parliament

The speaker of the

Iranian parliament The Islamic Consultative Assembly (), also called the Iranian Parliament, the Iranian Majles (Arabicised spelling Majlis) or ICA, is the unicameral national legislative body of Iran. The parliament currently consists of 290 representatives, an i ...

Ali Larijani Ali Ardashir Larijani (born 3 June 1958) is an Iranian politician and former military officer in the Islamic Revolutionary Guard Corps, who served as the Speaker of the Parliament of Iran from 2008 to 2020. He has been a member of the Expediency ...

, said that all three branches of the government were determined to deal with the recent banking scandal.

Ahmad Tavakkoli Ahmad Tavakkoli (; born 5 March 1951) is an Iranian conservative and principlist politician, journalist. He is currently member of the Expediency Discernment Council. Also he is currently managing-director of ''Alef'' news website and founder of ...

, a member of parliament, said on 18 September 2011 that the embezzlement of 28 trillion rials (3,000 billion toman) is an intolerable scandal, adding that if administration officials are not able to handle the affairs, they should step down. In addition, he said that a number of members of parliament have introduced a motion, which envisages the establishment of a special committee to pursue the embezzlement case. With reference to top ranking Iranian government officials, the judiciary mentioned earlier that such a high level of corruption couldn’t have occurred without the support of various people, according to the Reuters report. According to

Al Jazeera Al Jazeera Media Network (AJMN; , ) is a private-media conglomerate headquartered in Wadi Al Sail, Doha, funded in part by the government of Qatar. The network's flagship channels include Al Jazeera Arabic and Al Jazeera English, which pro ...

, a defendant argued that senior officials associated with the scandal had walked away, while individuals with low-level involvement had been intensely prosecuted by the judiciary.

Mahmoud Ahmadinejad

On 16 September 2011, Iranian President

rejected the accusations against some of his administration's officials. Conservative critics of Ahmadinejad have accused his close aide,

(whom the conservatives strongly oppose) of having connections with Amir-Mansour Aria. According to CNN, the allegation linked to the president concerning the embezzlement of over $2.5 billion is one out of many allegations by Islamists.

References