Accessibility links

Breaking News

Iranian MPs Demand Investigation Into Murky Privatization Deals

Workers on strike at Haft-Tapeh privatized sugar cane factory. November 2018

More than fifty members of parliament in Iran have called upon the Islamic Republic's judiciary to set up a special branch to look into significant "violations" committed in privatization of state-owned industries.

Without going into the details, 55 legislatures maintained that numerous violations have occurred at the Iranian Privatization Organization (IPO) under the leadership of Mir Ali Ashraf Abdollah Pouri Hosseini.

In their letter to the judiciary, the MPs have presented a list of state-owned industries where they say a series of "significant violations" have occurred, including at Al- Mahdi Aluminum, Hormozal Project, Machine Sazi Tabriz (Tabriz Machinery Manufacturing), Tabriz Molding complex, Iran Airtour, Arak Aluminum, Moghan Agro-Industry and Livestock company, Kermanshah Petrochemical company, and Haft Tapeh Sugar Cane industrial complex.

Insisting that there have been major ambiguities in the privatization of these state-owned industrial complexes, the MPs have also noted that lawsuits have already been filed against the head of IPO, Pouri Hosseini.

Following the 1979 Islamic Revolution in Iran, private sector companies set up by entrepreneurs before the revolution were nationalized in the government of Prime Minister Mehdi Bazargan.

Later in the administration led by Prime Minister Mir Hossein Musavi who believed in centralized economy, all major companies and industries became nationalized. However, as war broke out with Iraq, the government of Iran was incapable of running them. Towards the end of the war in late 1980s, an amendment in the constitution called for privatization of those industries.

Hepco is a large metals manufacturing company in Arak, where privatization went wrong. Hepco workers blocking a main railroad in May 2018 to protest unpaid wages.
Hepco is a large metals manufacturing company in Arak, where privatization went wrong. Hepco workers blocking a main railroad in May 2018 to protest unpaid wages.

As the war ended, the government of President Akbar Hashemi Rafsanjani sold all of them to the Islamic Republic insiders, and the Islamic Revolution Guards Corps (IRGC) got the lion's share of those firms.

Later, as many of these insiders proved to be incapable of running large companies, they tried to sell the same companies to the government and the government set up its own "private companies" to take over the factories that practically did not produce anything. These companies were later nicknamed "Khosoulati" which is a combination of the Persian words for private and public.

In many cases the main function of such factories and companies is that their private owners can use them to get subsidized foreign exchange ostensibly to develop them, but instead they use the hard currency to import marketable goods with a guaranteed profit without the hassle of dealing with workers. As a result, many such companies failed to regularly pay workers, especially during the past few years, leading to major labor unrest in industrial provinces such as Arak and Khuzestan.

Earlier, veteran conservative politician and former Tehran MP, Ahmad Tavakoli had also reported that a lawsuit against Al- Mahdi Aluminum and Hormozal Aluminum had already been filed.

Meanwhile, pro-reform representative of the city of Shiraz to Majles (parliament), Bahram Parsaei disclosed that a $237 million-plus violation has occurred in the procedure of privatization of the two Alluvium complexes.

The violation has led to the disclosure of the fact that 50%-60% of Iran's Aluminum market has been practically monopolized by a single family., Parsaei.

Furthermore, Parsaei has accused IPO of holding the bid for selling the two complexes to the private sector with the presence of only one bidder; which is categorically against the law.

Nevertheless, the advisor of the IPO's head, Jafar Sobhani, has fired back, noting that the deal has been endorsed by the judiciary.

In the meantime, the MPs have asserted in their letter that state-owned industries are sold to the private sector for "peanuts", and to the individuals without any qualification.

"Some of the individuals, who have succeeded in buying state-owned industries, have criminal records and who had been arrested for various violations and committing crimes," the legislators have noted.

The mainly conservative MPs have also cited the Minister of Economy as promising that the IPO's head will soon be dismissed and replaced.

Pouri Hosseini was appointed by the so-called pro-reform mid-ranking cleric, President Mohammad Khatami (1997-2005) as the head of IPO, after serving as the representative of Tabriz to Majles.

Later he was dismissed by the hardline President Mahmoud Ahmadinejad, but reinstated by President Hassan Rouhani.

The workers at many privatized industrial complexes across Iran, including giant corporations, Haft Tapeh Sugar Cane plant, Iran National Steel Industrial Group (INSIG) and Hepco have recently gone on strike and holding numerous rallies protesting the privatization of their plants.

For various reasons, most of the privatized complexes are currently on the verge of bankruptcy and incapable of paying their employees.

Nonetheless, Rouhani and his cabinet have repeatedly insisted that the privatization procedure should go on, regardless of widespread protests and strikes.

Many of formerly nationalized industries were sold back to the private sector for unbelievably low prices.

Critics have repeatedly maintained that nepotism and favoritism have been involved in the process.