Iran’s recent execution of two men convicted of illegal currency trading is an example of the establishment’s scapegoating and refusal to take responsibility for Iran’s economic woes.
State TV reported that Vahid Mazloumin, labeled by the Tehran police chief as the "Sultan of Coins" and his alleged accomplice, Mohammad Ismail Ghasemi, were hanged early on November 14 following their convictions in late September for currency manipulation and for "spreading corruption on Earth.”
The conviction was part of Tehran’s a crackdown on alleged financial crimes in the face of economic hardships heightened by U.S. financial sanctions.
In August, special courts targeting economic crimes were established with the approval of the country's highest authority, Supreme Leader Ayatollah Ali Khamenei. At least seven death sentences have been delivered by the courts since the crackdown, with many of the trials being broadcast live on national TV.
This is not the first time authorities have harshly punished currency traders during an economic downturn. In October 2011, after months of turmoil in the foreign exchange market, the government announced an official rate of exchange, and then the police took to the streets of Tehran to arrest unauthorized foreign exchange dealers.
Then Vice-President Mohammad Reza Rahimi chose currency trader Jamshid Besmellah as the fall guy. Besmellah and his brothers were arrested, but exchange rates kept rising. When he was freed after two years, he told a local economic daily, "A money changer is always in danger.” He has recently expressed gratitude that at least he avoided the hangman’s noose, unlike Mazloumin and Ghasemi.
Mazloumin had been arrested several times in the past for his money changing activities, but this time he was charged with “spreading corruption on Earth," a crime that carries a death sentence in Iran.
More precisely, he was accused of disrupting the country's economic and monetary order, allegedly for buying thousands of gold coins from Iran's Central Bank.
Nemat Ahmadi, a lawyer in Tehran, says the charge of “spreading corruption on Earth” is commonly handed down without much evidence to those accused of various financial crimes, including bribery, fraud, and corruption.
The “Sultan of Coins” and his assistant were hanged within 43 days of their arrest. The haste involved in their hanging casts a shadow of doubt over the hearing process.
For example, it is still unclear how buying up thousands of gold coins by itself constitutes a crime, since there were previously no official limits on the amount one can buy.
"The two men were accused of buying and selling gold coins, buying and selling foreign currencies, and running a network that sent foreign currency abroad,” said Ahmadi. “It was the last charge that authorities say amounted to a disruption of Iran’s economic order by illegally sending foreign currency to other countries."
Judiciary Spokesman Gholamhossein Mohseni Ejei was quoted by local media as saying, "in 2011 and 2012, Mazloumin was arrested on the same charges, but was released after Central Bank officials defended him." Ejei said Central Bank officials confirmed that Mazloumin was the bank's agent and injected the bank's foreign currency into the market with the bank’s permission.
However, it is not clear why the Central Bank of Iran would use a money changer in order introduce foreign currency onto the domestic market. It is also not clear who made the decision to use him as the bank's agent.
We do know that some Central Bank officials have been accused of manipulating exchange rates. A former Central Bank deputy governor is currently in prison, and the former governor of the Central Bank, Valiollah Seyf, is barred from traveling abroad.
More To The Story
“This can’t be the end of the story,” said Ahmadi. “Gold coins and foreign currencies originate from the Central Bank."
Jamshid Besmellah and the “Sultan of Coins” come and go, but the sad story Iran's economy continues. It is the failings of Iranian economy that create disruptors and financially corrupt individuals.
Paris-based economist Fereidoun Khavand says the current approach is reminiscent of 18th century Iran, when bakers would be lashed if the price of bread went up. When looking for the culprit, Iranians in old times sought to attack the symptoms rather than the cause of what ailed the economy.
"We need to see why a large number of Iranians look for easy and quick fortunes by converting their assets into gold coins and foreign currency. One reason could be the government's 70 percent share in the economy and the golden signatures that can distribute opportunities based on discrimination," said Khavand.
"Often exclusive economic privileges allocated to military and security organizations are the root cause of this kind of corruption," he said, adding that "lack of transparency, an artificial pricing policy, and widespread money laundering as well as the inefficiency of the judiciary system contribute to corruption."
According to Khavand, "fingers should be pointed at politically powerful high-ranking officials and the country's oligarchy. Otherwise, executing people like Mazloumin will not affect the root causes of the problem. Nor will it win public support."