Babak Zanjani: Celebrity Crook and Fall Guy

When Iran’s judiciary condemned oil dealer and money launderer extraordinaire Babak Zanjani to death on March 6, 2016, it came as no surprise. The trajectory of the latest fall guy, part of a long tradition of protecting the Iranian regime and presenting it as virtuous, incorruptible, and impenetrable, was once again set into motion. 

In September 2015, Iran’s courts began examining charges against Zanjani and two of his associates, Mahdi Shams and Hamid Fallah Heravi. The majority of the Iranian public never doubted that Zanjani had been the front man for Iran’s political establishment, enabling it to bypass international sanctions by setting up bank accounts all over the world to launder money, and operating via global underground markets, all of which violated both international and Iranian laws.

Zanjani was charged with the following crimes:  

1.       Disrupting the national economy and corruption on earth (Iran’s most serious crime, which is punishable by death)

2.       Embezzling funds from the National Iran Oil Company (NIOC)

3.       Forging bank wire transfers and receipts from FIIB Bank in Malaysia

4.       Forging several bank wire transfers from Arap Turk Bank to other banks

5.       Forging bank wires from Kent Bank to Iran’s Development Financial Institution

6.       Forging bank documents that presented an artificial fund transfer from FIIB Bank to Iran’s Islam Bank

7.       Forging bank documents from the Central Bank of Iran, and forging the bank’s official seal

8.       Forging transfer documents from FIIB Bank in Malaysia to Bank Maskan in Iran

9.       Laundering 1.9 million euros (US $2.6 million) and publishing false information regarding this sum

 

During Zanjani’s 26 court sessions, proceedings focused mainly on his embezzlement of nearly 2 million euros. Iran’s oil ministry and the NIOC demanded the return of this sum, claiming Zanjani had stolen it. Following on from each session, Zanjani’s lawyers informed reporters that these funds would be returned, a reassurance that was confirmed by spokespeople for Iran’s judiciary. But after a few days had elapsed following each pronouncement, attorneys for the NIOC and the Oil Ministry would routinely announce that no money was forthcoming.

Minimal court time was spent on the first charge: corruption on earth. Few people, including the legal experts, seemed to take the charge seriously, perhaps because Zanjani’s other crimes were so tangible and easy to outline.

Zanjani’s defense was a mixture of bluffing, accusations and threats. At one point, the oil magnate told the court that he was in possession of appalling secrets about Iranian officials, which he had gleaned through contacts he had in the Tajikistani police force. In another instance, he claimed that the 2 million euros under discussion did not even amount to pocket money for him. Speaking directly to the judge, he accused Iranian banks of being incompetent and said that if it had not been for sanctions, he would have transferred the money he owed immediately. Later, in the 17th session of court proceedings, he called the charges of disrupting Iran’s economic order as “the bitterest joke.”

As the series of hearings approached the final stages, Zanjani demonstrated signs of emotional fatigue and stress. He became argumentative with his associates and broke down in tears. In his last defence, he said, “If I were a traitor I would not have invested in Iran.”  He had not expected to be condemned to death.

But this turn of events is nothing new. Since the inception of the Islamic Republic of Iran, the country’s political elite have manoeuvred economic advantages with the help of agents and front men. Behind every scandal, there is always the presence of a powerful member of the clergy or the regime. These influential figures seldom receive any punishment. They are always protected and only receive mild punishment if any at all. Their agents, on the other hand, pay dearly for their crimes.

In the early 1990s, Fazel Khodadad, a businessman and associate of Morteza Rafighdoust — whose brother was a high-ranking Revolutionary Guards commander and head of Iran’s Janbazan Foundation — was hanged, accused of embezzling 123 billion tomans ($4.07 billion).

But Rafighdoust, who had sponsored Khodadad in his dealings with Iranian banks, was only handed down a prison sentence. Soon after his sentencing, he was appointed to serve as the procurement officer at the infamous Evin Prison and worked full-time throughout the duration of his sentence.

Mahafarid Amir Khosravi, who was charged with embezzling 3000 billion tomans ($9.93 billion) from Iranian banks, was hanged for distorting and corrupting Iran’s economy. But his associates, Mohammad Jahromi and Mahmoud Reza Khavari, who as the heads of Saderat Bank and Bank e Melli were both fully aware and supportive of his dealings, remained protected and untouched. Jahromi, a former minister, was not even charged or interrogated. Khavari received a very timely tip and escaped to Canada, where he had acquired a multimillion-dollar mansion in Toronto.

Babak Zanjani is just another fall guy in a long history of financial scandals and corruption cases. The only difference might be that, prior to his prosecution, he had become something of a celebrity. He exploited the media and took advantage of opportunities to create a public image. Perhaps he hoped his celebrity status would protect him. So far, he has been proved wrong.

By eliminating front men such as Babak Zanjani, Iran’s political establishment aims to silence those who witness and possess information about the country’s deeply-rooted corruption, and about the financial excesses of the regime’s most powerful men. Such front men often choose to be silent, hoping their sponsors will come to their rescue. But they never do. Executing fall guys like Babak Zanjani also helps the Iranian regime build its image as an incorruptible force, demonstrating to the public that the highest officials in the land are committed to fighting financial corruption.

As the international community lifted sanctions against Iran, many hoped for opportunities in Iran’s economy to blossom. But to attract investment and investors, Iran must exhibit it is trustworthy and corruption-free, or, at least, is attempting to work toward this end. Instead, the political elite are busy eyeing up new partnerships and reaching out to foreign companies and investors to start new enterprises. For this, they will need a new kind of front man. The era of smugglers and money launderers of Zanjani’s ilk is over. Zanjani will pay for others’ faults, a situation ushered in by his own ambition and greed.

This is not the end of corruption in Iran. It is just the end of a chapter in a very dense, dirty book of tricks. One cannot help feeling a little sorry for Mr. Zanjani, whose journey into the world of power and business started out when he worked as a chauffeur at the Central Bank of Iran. It will end at the gallows.

 

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