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Parliament Says Intelligence Agencies Brought Losses To Iran's Auto Makers

Iranian Parliament deals with an investigative report on intelligence agencies and corruption in the auto industry. May 19, 2020

The Iranian Parliament (Majles) says the existence of several intelligence agencies in Iran has led to corruption and losses in the country's automobile manufacturing industry.

An investigative report read out at the Majles on Monday May 19, added that parts of these factories including Iran Khodro Diesel and SAIPA Diesel have been turned into backyards for "political outcasts" who have been expelled from other sectors.

The investigation paper came out on the same day when the Iranian judiciary sentenced a couple to death and handed jail sentences to two members of the parliament for their involvement in a corruption case affecting the car market.

The Majles added a caveat to the investigation paper saying that the parliament's investigation team was not given access to the financial statements of some of the suppliers and shareholders of these companies. The Majles also said that the Judiciary refused to cooperate in shedding light on corruption cases.

According to the report, "The presence of several intelligence, supervisory and judiciary institutions in the auto industry has created an atmosphere of distrust and lack of coordination in the nature and level of confrontation with the problems of the industry.," adding that "based on evidence, these institutions have given way to financial corruption at a level that has made any action against corruption difficult and at times impossible."

However, the report did not further name the agencies and did not give examples of the corruption cases.

Meanwhile, the report says in certain cases pressure exerted by security organizations on the auto industry have caused losses for the carmakers.

Based on this report: "As the government and its inspection organization forced auto makers to take wrong measures about immediate and advance sales, as well as forcing them to accept the prices they set have led to 300 trillion rials (more than $7 billion) of losses to the two major car makers, which directly and indirectly are subsidized by the government.

The Majles had also conducted investigations in the past about the two car makers and had announced that there were financial corruption cases going on at both companies.

A 2014 investigation by the Majles revealed the government management of these two companies had a political nature and most hiring and firing of their personnel and board members were done at the attestation of senior political actors and sometimes major suppliers.

The investigation added that the rise in the number of employments during the months before the elections which involved appointing non-experts and sometimes financially problematic managers with the intervention of government and security officials has caused major losses and other problems for the industry.

The report also refers to the debts and financial crises of auto making companies and says that the amount of debts incurred by Iran Khodro's parts supplier SUPCO, which amounts to 210 trillion rials ($5 billion), has raised the alarm for Iran Khodro which is already facing a major problem caused by shortages of parts.

Several previous reports have also highlighted the losses made by Iran Khodro and SAIPA and the Iranian government had to rescue the two companies several times by injecting funds.

The crisis in Iran's auto industry has worsened after the U.S. pull-out from the nuclear deal with Iran when most foreign companies working with and investing in Iran's auto industry left the country fearing U.S. sanctions.

The development, coupled with systematic corruption, has left Iran's auto industry in its deepest crisis ever.