The primary court investigating the case of a notorious financial and credit institution, Samen al-Hojaj, that “lost” almost $3 billion of its depositors, has issued its verdict, local news outlets in Tehran reported.
While the managing director of the insolvent institute, Abolfazl Mir Ali, was sentenced to 15 years, the other two individuals accused in the case were acquitted.
Based on a ruling by Judge Mostafa Baqeri on August 30, Mir Ali was sentenced to 15 years in prison (taking his previous term into account), while his wife, Robab Amir Ebrahimi, and one of the authorities of the currently bankrupt institution, Mehdi Ramazani, were acquitted.
Mir Ali and his lawyers have 20 days to appeal.
The court also decided to leave the question of almost $3 billion in “lost” assets of depositors and its repayment to another special court.
As the court proceeding took place in camera, a pro-reform daily E’temad disclosed it on July 18.
Samen al-Hojaj Finance and Credit Institution, launched in 2001, was one of several similar institutions in Iran that offered unusually high interest rates to depositors, but failed to honor its commitments due to the mishandling of funds.
Subsequently, when these institutions proved unable even to return the original investments, thousands of depositors poured into the streets staging protests across the country.
Samen al-Hojaj was one of the biggest of these institutions that no one had regulated or supervised.
On July 18, after nine sessions at the court, the local media revealed it was an “illegal” financial institution.
It was licensed to operate in Sabzevar, a town in the province of Khorasan, northwestern Iran. Nevertheless, it opened nearly 500 branches all over Iran and managed to attract hundreds of millions of dollars from middle- and working-class Iranians who wanted to make ends meet in the country’s difficult economic situation by gaining interest on their deposits.
Finally, the head of Tehran’s Justice Department admitted 10 days ago that the first defendant in Samen al-Hojaj’s case had been sentenced to long-term imprisonment.
The third defendant, Ramazani, was primarily introduced as a “fugitive” until his attorney came forward to defend him at the 11th session of the court. Local media have admitted they knew nothing about him or his background.
The verdicts issued for the three accused have been followed by shock and anger on Iranian social media.
A Canada-based Iranian analyst, Alireza Namavar Haghighi, compared the acquittal of the second and third defendants with the sentencing of prominent lawyer and human rights activist Abdolfattah Soltani to 15 years, and sarcastically tweeted, “It’s a big picture clearly displaying the judiciary’s resolve at the beginning of the season for combatting corruption.”
Samen al-Hojaj was launched by the son in-law of the former Sabzevar Friday Prayer leader in 2001, offering high interests to its depositors.
Paying and receiving interest money is prohibited under Islamic law; however, banks and financial institutions compete with one another to pay higher interest disguised under the name of “profit” to lure customers to deposit their hard-earned cash.
Some of these institutions offer up to 27 percent “profit” on investment in monthly instalments -- for a while, that is. The normal interest rate for a short-term deposit at Iranian banks is around 6 percent and a long-term investment would get a maximum 15 percent.
As the economy failed under pressure from sanctions, most institutions found it difficult to earn enough out of banking or industrial investment to pay interest to their customers.
A year of outcry by investors that sometimes turned violent contributed to general protests last December and again in June. Last week, Supreme Leader Ayatollah Ali Khamenei ordered the government and judiciary to “deal with the institutions that took advantage of the people’s trust and failed to deliver on their promises.”
According to the verdict against Mir Ali, the now-insolvent finance and credit institution, worth 120 trillion rials (roughly $2.9 billion), has 360 complainants.