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Tehran Court Links Financial Corruption Case To Circumventing Sanctions

Reza Hamzelou during the second court session for mishandling government oil and oil related funds. March 9, 2019
Reza Hamzelou during the second court session for mishandling government oil and oil related funds. March 9, 2019

The leading suspect in a controversial financial corruption case in Iran alleged that the trial of suspects in the case has unnecessarily disclosed the identity of a number of individuals involved in circumventing U.S. sanctions.

This was the second hearing session in a series of trials the Iranian reformist daily newspaper Sharq has nicknamed "the biggest scam in Iranian history."

Reza Hamzehlou, the former managing director of the Iranian Petrochemical Commercial Company (PCC), was named by the prosecutor as having embezzled government funds in partnership with another suspect, Marjan Sheikholeslami , who owned two trading companies in Turkey.

Sharq reported that 14 suspects in this case have disrupted Iran's economy by mishandling 6.66 billion euros of foreign currency resulting from the export of petrochemical products.

A deputy to Iran's prosecutor-general said at the court on Saturday March 9, "We have tackled sanctions to a great extent, but we have not been as successful in dealing with financial corruption."

He said that the suspects converted the foreign currency into the Iranian currency rial before returning it to the government, making a profit in the process.

However, it is not easy to see a clear picture from the courtroom proceedings. Did the suspects embezzle funds or simply made illegal currency conversions? Who else among officials were involved in any illegal financial acts related to the case?

Reports from Tehran say most of the suspects were the managers of PCC between 2010 and 2013. It was a government enterprise that was privatized in 2009 and Hamzehlou was its first managing director.

At the court session it was said that three of the suspects, including Ms. Sheikholeslami, are currently living abroad. According to Iranian media, she failed to fulfil her commitments as stipulated in her contract with IRGC's Khatamolanbia financial conglomerate, and left Iran for Canada without paying her debts to Khatamolanbia. Ms. Sheikholeslami has still not reacted to these reports.

It is also not clear how she could have left Iran if she owed money to the all-powerful Revolutionary Guards. Exiting Iran through airports is not as straightforward as in other countries. Travelers need to inform authorities in advance about their plans to go broad. Only people who have no pending legal issues or debts are able to exit through airports.

Sheikholeslami and two other suspects living abroad will be tried in absentia, said the court.

Meanwhile, the number one suspect in this case, Amin Qorashi Sarvestani, was arrested in the United States in 2014 for selling satellite equipment to Iran.

During Saturday's session, Hamzehlou defended his performance at PCC and ruled out the accusations and said the main culprit in the case was the National Petrochemical Company of Iran which did not report facts about the case at the time. He said the government should have given him a medal for circumventing the sanctions.

After the first round of international sanctions on Iran in 2011, Iranian officials started non-transparent financial operations to circumvent sanctions and used front companies to sell oil and petrochemical products on the world market.

These non-transparent operations under former president Mahmoud Ahmadinejad administration led to many cases of embezzlement and mishandling of government funds. Most of the financial corruption cases have something to do with failing or refusing to repatriate the government revenues from illicit sale of oil and oil products.

The most well-known case is that of Babak Zanjani who operated through a series of companies he had set up in Turkey, Central Asia, Malaysia and the Persian Gulf states. He has been sentenced to death. Like Hamzehlou, Zanjani also had said that he should have been given an award instead of being sent to jail.

No date has been yet set for the next session of this trial, while media in Iran is making the most of the controversial case during the weeks prior to the Iranian New Year, making up for the slow flow of other news.

In the meantime, Iranian social media have been bubbling with libelous anecdotes and horrendous drama about the case during the weekend.