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The Corrupt Dominance of the Foundation for the Oppressed

August 11, 2020
Ali Ranjipour
7 min read
In a recent interview on Iranian television the head of the Foundation for the Oppressed, Parviz Fattah, gave a detailed exposition of the organization's finances in 2019
In a recent interview on Iranian television the head of the Foundation for the Oppressed, Parviz Fattah, gave a detailed exposition of the organization's finances in 2019
Behind this staged interview, the Foundation's huge asset portfolio allows it play an active role in Iran's development – and pay itself huge dividends in the process
Behind this staged interview, the Foundation's huge asset portfolio allows it play an active role in Iran's development – and pay itself huge dividends in the process

A recent interview on Iranian television with Parviz Fattah, a conservative politician and ex-member of the Revolutionary Guards, has made waves in the media and once again pitched the name of the powerful organization he spearheads into the spotlight: that of Iran’s Foundation for the Oppressed and Veterans.

The Foundation for the Oppressed was established on March 5, 1979 by decree of the Supreme Leader, Ayatollah Ruhollah Khomeini, and its statute was approved by the Revolutionary Council on June 28 of that year.

Its initial capital holdings were described as “the property of the Pahlavi family and all those whose property has been ordered to be requisitioned by the Revolutionary Court and accepted by the foundation in the interest of the oppressed; its value will be determined after establishing the inventory its valuation."

The Foundation’s entire portfolio, according to the detailed financial exposition provided by Fattah in his interview, is now worth trillions of tomans. Furthermore, it yields trillions of tomans in annual profit and added value.

According to the third clause of the Foundation’s own statute, this money is supposed to be used in its entirety to improve the material conditions of the “oppressed” – the underprivileged, veterans of the Islamic Revolution and later, those who served in the Iran-Iraq war – and most especially, to ameliorate their housing conditions.

Over the course of 42 years the Foundation for the Oppressed has become the second-largest economic entity in Iran, and the single biggest holding company in the Middle East. It now has financial interests and, in some cases, overall control of vast swathes of Iran’s manufacturing and industry sectors, from oil and gas to transportation and construction, as well as banking, information technology and agriculture.

The Foundation’s ultimate controlling party is Supreme Leader Ayatollah Ali Khamenei, meaning its enormous economic power lies in the hands of the same person who has run the political and economic administration of the Islamic Republic of Iran for the past 30 years. Its share in Iran’s economy is now so vast that it can effectively intervene in social and political spheres, with both the Foundation and its most recent director accused of using the Foundation as a propaganda tool.

Some analysts have read Parviz Fattah’s comments as an attempt to position himself as a champion for transparency. But behind this staged interview, the Foundation has created a vast and complex network of administrative and political leverage that allows it to play an active role in the country’s development – and pay itself massive dividends in the process.

The Foundation’s most recent financial statement claimed that in 2016, it held 24,542 registered properties. These included various residential, commercial, agricultural, and other sites, with some occupied by government institutions alongside independent third parties.

The statement went on: "It has been determined that in the coming years, negotiations will be carried out with the major occupiers of the mentioned properties, including the Islamic Revolutionary Guard Corps, the municipality, the headquarters of the Headquarters of the Execution of Imam's Orders [and the] Imam Khomeini Relief Foundation... to clarify and make agreements in regard to those properties."

With this number of heavyweight institutions in Iran dependant on the Foundation as a landlord, it is natural that this entity has the upper hand when it comes to political debate: so much so that its director has the power to challenge Islamic Republic of Iran Broadcasting and the IRGC.


What percentage of Iran's economy is owned by the Foundation for the Oppressed?

Yahya Ale Eshaq, a member of the Foundation’s board of trustees, has claimed that the foundation owns precisely 2 percent of Iran's GDP. It is not clear how this figure was calculated.

According to the most recent report by the Statistical Center of Iran, Iran’s GDP in 2019 was – at current prices – close to 3,416 trillion tomans. If this is correct, and taking Yahya Ale Eshaq’s words at face value, it would mean that more than 68 trillion tomans [$3.2 billion] lies in the hands this of one entity, and by extension of Ali Khamenei.


Where are the Assets of the Foundation for the Oppressed?

The last available financial statement for the Foundation dates back to 2016. Four years ago, according to this document, the value of the Foundation’s assets was more than 56 trillion tomans. Declared income from its sale of goods and services ran to more  than 28,350 trillion tomans, about two thirds of which was apparently derived from financial and banking services, information technology, and mining and industry.

After operational costs and overheads, the Foundation declared that its overall operating profit for the year had been 2.7 trillion tomans and its annual accumulated profit was estimated at more than 13.8 trillion tomans.

The organization has not filed fresh accounts since then. But in his interview, Fattah claimed that the Foundation’s total revenue in 2019 had been in the region of 36 trillion tomans – including the sale of property and goods – and by reducing its running costs, the Foundation had made a profit of 7 trillion tomans before tax. After tax, the profit was divided between the Foundation, which reaped 60 per cent, and its partners: meaning its share of the net profit for the year was around 3.6 trillion tomans.


How Has the Foundation Performed Economically?

On the assumption that these figures are all correct, it would appear that the Foundation’s economic performance between 2016 and 2019 was, to put it mildly, disappointing.

Despite its staggering level of income from myriad sectors in Iran, the Foundation's total revenue and profits have grown by less than 30 percent in three years. During this same period, the three-year rate of inflation in Iran – according to the calculations of the Statistical Center – has been more than 85 percent.

Meanwhile, the Statistical Center’s recent publications assert, the extent of economic recession in Iran was about seven percent less than it was in 2016. That being the case, it means the Foundation made effective losses in spending power more than four times greater than that of Iran’s economy.

It comes even while the value of its economic assets should have increased significantly due to the increase in the stock market index, as well as that of its real estate portfolio given the three- to four-fold increase in average property prices.

We are thus presented with one of two scenarios. Either Parviz Fattah is lying about the Foundation’s financial status in 2019, or the manner in which the Foundation has been run in the past few years has been a complete disaster.


What is the Foundation's Income Spent On?

According to its statute, the Foundation for the Oppressed is obliged to distribute all of its profits among Iran’s underprivileged and vulnerable veterans. In his interview, Fattah accordingly claimed that all of the foundation's recent income had been spent on drives to reduce deprivation in the country.

The amount of money at stake here is 3.6 trillion tomans. We do not have recourse to the full accounts of the Foundation, nor its contracts, receipts, invoices and expenditure, and as such we have no idea how, where and among whom this money is supposedly being spent.

But if the figures are correct, what we do know is that the Foundation has more cash at its disposal than the entire budget of the Welfare Organization in 2020, which is supposedly enough to provide adequate cover for more than 2.5 million people in need.

The Welfare Organization is an arm of the state and its funds derive from the public purse. Accordingly, its revenues and expenses are also under the general supervision of the Audit Court. But the Foundation has more money than this or any other welfare institution, and despite being ultimately controlled by the Supreme Leader, its position is defined as independent of both the treasury and public scrutiny.

The sporadic publication of financial statements by the Foundation is an attempt to demonstrate transparency to the people. Despite this, it is far from being a healthy civil institution. There is no guarantee for its future economic stability – nor even that it is spending money for the good of Iranians, as its own charter demands.


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