Iranian Bank Report Reveals Shady Lending, Huge Losses
A new report says an Iranian governmental bank has given over 150 trillion rials – roughly $500 million – in loans to foreign entities likely to those of Lebanon, Syria, and Venezuela.
A new report says an Iranian governmental bank has given over 150 trillion rials – roughly $500 million – in loans to foreign entities likely to those of Lebanon, Syria, and Venezuela.
Bank Melli Iran, known as the first national and commercial retail bank of Iran, has recently published an advertorial on its financial statements for the first six months of the Iranian year (started March 21, 2022) as a way to promulgate its achievements and advertise the conduct of its manager, Mohammad-Reza Farzin who was recently appointed the governor of the Central Bank of Iran (CBI).
In February 2022, Farzin had claimed that the accumulated losses of the bank fell from $2.3 billion to $2.2 billion (based on exchange rate at the time) with him at the helm.
However, according to the 99-page report, the accumulated losses of the bank increased again in 2022 to roughly $2.5 billion.
Despite these losses, by late July of last year, the bank had paid over 182 trillion rials (roughly about $600 million) of loans to individuals and companies abroad. The figure was about 20 trillion rials in the previous year. Considering the sanctions and the lack of access to SWIFT banking system, it seems that these funds are mostly related to countries like Venezuela, Syria and Lebanon, wrote economic journalist Hirsh Saidian in an article published on Aftab News on Saturday. The report said that from March to July about 18 trillion rials – or about $60 million – was paid to a small bank called the Federal Bank of Lebanon, which seems to be under US sanctions.
The bank has not yet confirmed or denied this issue, nor provided any details about the recipients of the funds. In addition to lack of transparency in the country’s banking system, the government has been criticized for giving free aid to projects in Hezbollah-controlled southern Lebanon and Houthi-controlled parts of Yemen despite high inflation and lack of investment in Iran's own domestic projects.
Lebanese media reported late in December that Hezbollah is facing financial problems due to the current protests across Iran, as it cannot import Iranian goods to sell at a discount to its supporters. Makram Rabah, a Lebanese political activist, emphasized in an interview with Iran International that the consequences of the uprising of Iranians against the regime could now be seen in Lebanon. He said the dire situation of the Islamic Republic, as the biggest financial and political supporter of Hezbollah, causes this group to lose the ability to stand on its own feet.
The Bank Melli report did not elaborate on why and how a bank with such a huge amount of loss is still providing loans to entities linked with its proxy forces in the region. The report provides a rare glimpse into the opaque workings of Iranian banks, which usually serve the foreign and domestic policies of the Islamic Republic.
Moreover, some experts have claimed that the accumulated loss of the bank is actually 2 quadrillion rials (over $6 billion), which has been the result of years of corruption, mismanagement and giving loans to influential people and projects without economic justification, the article added. Such losses have caused banks to rely more on the resources of the central bank, making it print money that fuels the over 50-percent inflation rate.
On Sunday, Azerbaijan’s foreign ministry labeled the attack, in which a security guard was shot dead and two others were wounded, as an "act of terrorism," adding that the embassy will be evacuated immediately.
A video has been released on social media, showing a truck outside the embassy loading furniture at night. It is not yet clear whether the embassy will continue to function.
Police in Tehran says it arrested the attacker at the scene and authorities condemned Friday's incident, claiming that the gunman appeared to have had a personal, not a political, motive. But Azerbaijan summoned the Iranian ambassador and media in Baku seemed eager to portray the incident as a terror attack, claiming the assailant was a member of the Revolutionary Guard.
Azerbaijani media outlet Trend News Agency reported on Friday that “the perpetrator of the incident, identified as Iranian citizen Yasin Hosseinzadeh, and there are suspicions that he is related to Iran's special services, especially the IRGC.” It added that Iranian security forces guarding the embassy did not try to stop the attack.
Earlier, the Azerbaijani foreign ministry said the shooting was the result of Tehran failing to heed its calls for better security. CCTV footage of the incident showed the attacker forcing his way into the embassy building and shooting at two men before a third embassy employee grappled him away.
According to an article in Trend, the incident at the embassy occurred as “part of Iran's policy of hostility towards Azerbaijan.” A deputy of the country’s parliament said, "Iranian televisions and radios continuously promote hostility towards Azerbaijan. This once again shows that the Iranian state has a hand in the terrorist incident at the embassy, because it is known that Iran has always been a nest of terrorism and is one of the main countries that support terrorism. The terrorist incident against our embassy proved this once again."
Iran’s state media broadcast confessions by a grey-haired man identified as the assailant, who claimed he attacked the embassy believing that his wife was held inside the building. The embassy staff had given him a written statement attesting that she was not there, but the man said he was sure his wife was in the building and attacked the embassy to prove that.
Apparently his wife, who was an Azerbaijani citizen, left him ten months ago and he believed she found refuge inside the mission.
The Islamic Republic’s state broadcaster also talked to the seven-year-old son and 14-year-old daughter of the family, who purportedly were in the car outside the embassy. The girl said she had told her father that their mother was not in the embassy, adding that she was in contact with her mother in Azerbaijan and spoke to her on the phone about 10 days earlier.
Iranian President Ebrahim Raisi called for "a comprehensive investigation" of the incident and sent his condolences to Azerbaijan and the family of the dead man, identified as First Lieutenant Orkhan Rizvan oglu Teymurov. During a phone call with his Azeri counterpart late Saturday, Raisi said Tehran and Baku have inseparable historical relations and will not allow those relations to be affected by the two countries' ill-wishers.
Member of the Iranian parliament’s presidium Ali Nikzad has promised that necessary investigations will be done regarding the attack. The Iranian foreign minister also held a phone call with his Azeri counterpart, calling for the return of the country’s ambassador to Iran.
The incident came amid increased tensions between the neighboring countries triggered by territorial conflict between Azerbaijan and Armenia and Yerevan as well as over Baku's decision this month to appoint its first ever ambassador to Israel. Iran is dangerously implicated in regional tensions centered on Azerbaijan-Armenia that are exacerbated by fall-out from Russia’s war in Ukraine.
In November, at a Baku conference ‘Along the Middle Corridor,’ Azeri President Ilham Aliyev launched a broadside against Iran, his toughest so far since relations soured over Iran’s role in the 2020 Azerbaijan-Armenia war, when adjacent Iranian military exercises followed the Azerbaijanis capturing areas around the disputed Nagorno-Karabagh enclave and along the Iran border. Tehran-Baku tensions have simmered since the 2020 war, when Iran moderated its past support for mainly Christian Armenia due partly to domestic pressures from both ethnic Azeri and Shia clerics supporting fellow Muslims.
“We worked with three presidents of Iran, [Mohammad] Khatami, [Mahmoud] Ahmadinejad, and [Hassan] Rouhani,” Aliyev said. “For all these years there was no situation similar to the current one. Never has Iran had two military exercises near our borders within a few months. There have never been such hateful and threatening statements against Azerbaijan,” he said, referring to warnings from President Ebrahim Raisi and other leaders against any border changes or threats to Iran’s transit route to Armenia, which is vulnerable since 2020 changes. Iran carried out more military drills along the border October, when Foreign Minister Hossein Amir-Abdollahian also visited Yerevan.