Massive Corruption At Steel Plant Rocks Iran’s Political System

Kambiz Nazerian, head of Tehran Electricity Distribution Company, said on Monday that the energy-guzzling devices were discovered by inspectors in different districts of the capital.

In recent years, Iranian authorities have regularly announced the discovery of illegal cryptocurrency mining machines in different parts of the country. Many of these operations were based in public locations such as schools and mosques that receive free or heavily-subsidized electricity.

Cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is highly energy-intensive, often relying on electricity generated by fossil fuels, which are abundant in Iran.

Iran has a complex relationship with crypto-currencies, which have helped hide various kinds of illicit trades banned by US and other European sanctions.

However, many reports in Iranian media have indicated that large scale crypto mining has been taking place by influential or well-connected networks and some Chinese companies have also been present in Iran using cheap, subsidized electricity.

A 2021 study found that 4.5 percent of global Bitcoin mining – worth around $1 billion then – was in Iran, leading to pressure on electricity supply in peak times and to repeated government assurances that the sector would be better regulated.

While many Iranians including some lawmakers complain about growing poverty, officials such as IRGC Commander Hossein Salami insist that people's economic situation is satisfactory and "Iran can now send satellites to the space, crack atoms, use artificial intelligence and Quantum and Nano technologies and be a part of the digital age."

Meanwhile, information leaked from a meeting between chief nuclear negotiator Ali Bagheri and Iranian reporters indicate that Iran's oil revenue may soon be doubled if a nuclear deal is reached, and Tehran can find access to billions of dollars of its frozen assets in other countries.

Nonetheless, Iran's former nuclear chief Fereidoun Abbasi who is a member of parliament (Majles) says Iranians should not expect a positive impact on their livelihoods if a nuclear agreement is reached with the United States and sanctions lifted.

Probably based on insider information, Abbasi told Entekhab news website that the agreement with the United States does not include a clause about easing Iran's international banking operations. That probably is the reason why he thinks the agreement will not be followed by an economic breakthrough.

Earlier, former government Spokesman Ali Rabiei, and centrist commentator Saeed Leylaz had pointed out that financial corruption could still adversely affect Iran’s economy even after an agreement. Meanwhile, Iranian social media users speculate that Iran might spend the lion's share of any financial windfall on strengthening its militant proxy groups in the region.

Abbasi also noted that even with an agreement at hand, international companies may still avoid coming and investing in Iran fearing another US unilateral withdrawal from the deal.

On Sunday, hardline cleric Hossein Ebrahimi, a member of Tehran's notorious right wing clerical association told the press, "An agreement will not solve our problems. The people of Iran should be patient and help the government to solve the country's economic problems."

He added, "Although a large part of sanctions against Iran will be lifted as a result of the agreement, it does not mean that life will be a rose garden for Iranian people from the morning after. Certainly, many problems will be solved, but many challenges will also remain."

Ebrahimi particularly pointed out that prices which have skyrocketed are not going to come down because of the agreement. Another cleric had said earlier on Sunday that many things may become available in the market, but still at a high price.

Iran is facing a 54-percent annual inflation rate and food prices have risen by more than 100 in the past year.

Meanwhile, in a report about the impact of an agreement on Iran's economy, Rouydad24 news website quoted economist Ehsan Soltani as saying that an agreement will not totally fix Iran's economy as there are many who benefit from the rising prices. He said those who benefit control the government and they are unlikely to allow the government to bring prices down.

Soltani said the Iranian government also benefits from the rise in prices as it collects inflation-induced tax from the lower and middle-classes.

Soltani also added that despite the probable real and psychological impact of an agreement, one should note that the main problem with the Iranian economy is financial corruption and the government inefficiency.

The UAE's foreign ministry said in a statement on Sunday that the decision was made "in line with UAE efforts to strengthen relations with Iran and as part of a previous decision to increase diplomatic representation to the rank of ambassador.”

Noting that the decision followed a recent phone call between the two countries’ foreign ministers Sheikh Abdullah bin Zayed Al Nahyan and Hossein Amir-Abdollahian held on July 26, 2022, the ministry said the move contributes to “further advancing bilateral relations in cooperation with officials in Iran to achieve the common interests of the two countries and the wider region.”

The UAE had recalled its ambassador from Tehran in 2012 after the then-President Mahmoud Ahmadinejad visited Abu Musa island as part of a tour of Iran’s Persian Gulf coast. Located 60 kilometers off the UAE, the Persian Gulf country claims it as sovereign territory along with the Lesser and Greater Tunb Islands near the Strait of Hormuz. Iran, which claimed control of the islands in 1971, at various points provided documents that indicate the islands were rented out to Arabs during the British colonial period.

Earlier in the month, Kuwait also appointed an ambassador to Iran, more than six years after recalling its top envoy to Tehran in solidarity with Saudi Arabia after it severed ties with the Islamic Republic in 2016. Ambassador Bader Abdullah Al-Munaikh handed his credentials to Amir-Abdollahian on August 13, as Riyadh works to improve ties with the Islamic Republic. 

During his address at a conference attended by a selection of clergymen on Sunday, Ebrahim Raisi said, “We will not back down on the nation’s rights at any meeting or negotiation” alluding to the ongoing talks on restoring the nuclear accord, known as the Joint Comprehensive Plan of Action (JCPOA).

Claiming that his administration has achieved many of its goals, he said his government “will not tie people’s livelihood to any external factor and will persevere in its effort to solve the problems facing the country and people.”

Raisi made the remarks amid speculations about the fate of the JCPOA after Iran conveyed its response to an EU-proposed draft to conclude the Vienna talks. 

However, Nour News, a website affiliated with the secretary of Iran's Supreme National Security Council (SNSC), Ali Shamkhani, said on Sunday that although in recent days many speculations and statements were made about the nature of Iran's response and US views, until parties present in Vienna Talks speak officially, none of this can reflect current realities. 

Mohammad Marandi, who acts as de facto spokesman for Iran's nuclear negotiating team, also said on Sunday that final steps remain to be taken to achieve an agreement, but "evidence shows that the US reaction is clear, and they know they should cooperate with Iran and our negotiating team in these final steps."

Mahmoud Goudarzi, chief executive of the Tehran Stock Exchange (TSE), said Saturday that trading of the company’s stocks has been suspended and will not resume until further information on the company's financial affairs become clear. With an estimated value of nearly 2,940 trillion rials (around $10 billion in current exchange rate), Mobarakeh Steel is the second largest company in TSE.

The report which was released Thursday has revealed massive corruption and mismanagement in Mobarakeh Steel Company, the largest steel producer in the Middle East and Northern Africa, which is located near the city of Mobarakeh, Esfahan Province. According to the parliament's report, the company's revenues amounted to nearly 15% of the country’s budget last year.

The over 250-page report says Mobarakeh Steel Company paid astronomical sums of money to various government entities including the Revolutionary Guard (IRGC), ministry of intelligence, police, state broadcaster (IRIB), Friday prayer imam’s offices, religious seminaries, and bribed others such as certain media outlets, individuals, and social media influencers.

The company which has a share of around 1% in Iran's GDP employes around 350,000 people directly and indirectly and feeds over 2,800 other large and small enterprises across the country.

Mobarakeh Steel is nominally private, but it is a quasi-governmental company with most of its shares owned by the Mines and Mineral Industries Development and Renovation Organization, various private and public joint stock companies, and quasi-state banks. The company's management is appointed by the government.

“Semi-Prublic” (Khosoulati in Persian) is a term coined by fusing the Persian words for private and public, and refers to companies that are sold to the private sector on the surface, but are owned by the government, IRGC entities, or entities under the control of the supreme Leader in reality.

Iran scored 25 points out of 100 on the 2021 Corruption Perceptions Index (CPI) reported by Transparency International, five points down since 2017. Iran's new ranking put it among very corrupt countries including Guatemala, Guinea, and Tajikistan (26), Pakistan, Miyanmar (28), and Laos and Paraguay (30). The CPI ranks countries and territories based on how corrupt their public sector is perceived to be.

Parliament’s investigative report, covering the period 2018-2021, accuses officials of the administration of former President Hassan Rouhani, including vice-president Es’haq Jahangiri, former Vice-President Mohammad Nahavandian, and others for using their influence in appointing top officials of the company including its board members.

It is worth noting that the current parliament is dominated by hardliners who have repeatedly called for prosecuting members of the former ‘reformist’ government.

The report also claims that during the previous administration, the company granted contracts to family members of government officials and influential politicians.

Tweeting with “systematic corruption” hashtag, Reformist politician and commentator Abbas Abdi said this means the company’s total financial violations was equal to 10 million rials per every Iranian citizen plus a few billions paid to the IRIB state broadcaster (IRIB) and hardliner news agencies to cover up.

In an editorial Saturday, the conservative Resalat newspaper argued that the report isn't the finalstatement and individuals can only be considered guilty of corruption after all the stages of legal prosecution have been completed before which revealing their names and even alleged corruption figures will only “impair the mental sanity of the accused and the people.”