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He started out by selling sheepskins but is now a multi-billionaire. He is the outright owner of an airline, two banks and a soccer team and is a key shareholder in many other commercial and financial enterprises both inside and outside of Iran. By all accounts Babak Zanjani has been a very lucky and successful man. But luck is famously mercurial and over the past year his fabled fortunes have taken a grave turn.

First, in December 2012, the European Union blacklisted the 39-year-old Zanjani for helping the Iranian government evade sanctions by arranging illicit oil deals and laundering the profits. Then in April of last year the United States Treasury froze his bank accounts for similar reasons. Now he seems to be heading for trouble in his home country as well.

On 24 December, 12 members of parliament wrote an open letter to the Iranian president, the speaker of parliament and the head of the judiciary demanding that action be taken against Zanjani. They called him a “corrupt” person in the domain of the economy, a term which under the Islamic code of law in Iran is indeed a very serious charge.  Citing a directive from Supreme Leader Ayatollah Khamenei for war against economic corruption, the MPs challenged the heads of the three branches of the state to live up to their responsibilities.

The signatories are well-known and prominent members of the parliament. They also belong to a fundamentalist faction that under the label of  “transformationalists,” claims to be fighting corruption. Most have a very strong political relationship with Khamenei and are his loyal followers.

Zanjani rejected the charges, but at the same time praised the letter-writers for their past deeds, including bravery during the Iran-Iraq war. Emphasizing his loyalty to the Supreme Leader, he called himself Khamenei’s minor but bold soldier. On other occasions he has called himself an “economic Basiji” (a minion of the government-controlled paramilitary force) who is fighting to realize the “economic epic” declared by Khamenei.

Such rhetorical flourishes and declarations of support for Khamanei are common fare in Iranian politics, but what's remarkable is the depth and breadth of what is being said in the Zanjani affair.

 

The Percentage Man

As a businessman Babak Zanjani lived outside Iran but in the past three years has been slowly moving back. Of course, even from outside, he was active in the domestic Iranian economy and was praised by the current President Hassan Rouhani and former presidents Rafsanjani and Khatami. But only in the past two years has his name been invoked as a powerful tycoon.

Outside Iran, Zanjani has been engaged in extensive business activities from Turkey and Dubai to Tajikistan and Malaysia. His main areas of activity have been gold, banking and both ground and air transportation, the precise fields which are directly related to the Western sanctions against Iran. His experience and knowhow in issuing international financial instruments—a substantial part of which are said to have been forgeries—made him especially qualified to engage in the oil trade. He is said to have laundered Iranian oil money and received a percentage.

His exact wealth has never been declared. In an interview with the weekly Aseman this September, he stated that he has more than $8 billion but owes $10 billion. This claim of a $2 billion shortfall, however, should be seen in the light of a statement he issued two days ago in which he declared that the 65 companies in his conglomerate have an annual income of €7 billion.

Zanjani once worked as a driver for the director of the Iranian Central Bank. Seventeen years ago he was imprisoned, two times for bankruptcy and one time for trying to leave Iran illegally. Now, at a relatively young age, he has become the Iranian Roman Abramovich, the famous Russian tycoon and the owner of Chelsea Premier League football team in England. He once said that, given the chance, he would love to become an Abramovich.

Unlike many Iranian businessmen he has talked frequently about his business activities and his personal life. He has showed off his $35 thousand dollar watch to reporters and has bragged about his private jet. He has stated that he wants to transfer €4 billion of his money to Iran and pay his €2.8 billion debt to the Iranian Oil Ministry. He has declared his intention to buy 138 companies that now belong to the Iranian Social Security Organization and has said that he would sign a letter of intent for €4 billion. He has talked about the $10 million that he pays as monthly salaries to his seventeen thousand employees and has claimed that he has transferred more than $17 billion of the oil money to Iran.

 

Tempting Numbers and Shady Partners

For many in the Iranian media such numbers are alluring. Many journalists and observers are trying to ferret out collusions or conspiracies that many believe must have helped Zanjani get to where he is now.

What's clear is that Western sanctions against Iran created the fertile soil for the growth of Babak Zanjani. Taking advantage of the inability of the Iranian government to engage in financial transactions, he used the liquidity in his own companies and a small Malaysian bank to break into important sectors such as oil.

His activities were openly suspicious enough to prompt the U.S. Treasury to place him and his companies on its blacklist for helping Iran to evade sanctions, following the EU action a few month earlier.

To shore up his situation, Zanjani has partnered with an economic figure close to Iranian security officials who has been accused of suppressing dissent in the aftermath of the presidential elections of 2009. Some media have accused Zanjani of helping the security organizations secure anti-riot equipment. Such allegations have caused extensive damage to his reputation. Many Iranians consider him a business agent for security organizations which are known to have been active in the economic sphere before. Under Rafsanjani’s administration, the Ministry of Information engaged in security activities under the cover of commercial companies. In recent years the Revolutionary Guards have taken over this duty. In the past three years, certain commanders of the Guards have been named as Zanjani’s partners.

But some Iranians praise him and consider his work a service to the country, arguing that during the long period of sanction  he has helped direct oil money towards Iran, even though some of his big purchases have been for institutions such as the city government of Tehran. Critics respond that he did it for the high profit margins, not out of patriotism.

Zanjani forged close and vast economic ties with the government of Ahmadinejad in the past three years. Under Ahmadinejad, four cabinet ministers supported him: Oil, Foreign Affairs, Industries and Mines, and Economic Affairs.

Ahmadinejad’s Oil Minister, Commander Rostam Ghasemi, was a prominent figure in the Revolutionary Guards. Before the oil ministry, he was the commander of Khatam Anbia “camp” in the southern port of Bushehr, the Guards' engineering and construction company and their most important economic asset. Ghasemi is now an advisor to the First Vice President under Hassan Rouhani and is responsible for expanding economic ties with Iraq.

Zanjani’s other supporter, Ali Akbar Salehi, was Ahmadinejad’s foreign minister and is now the director of Iranian Nuclear Energy Organization and a member of Rouhani’s cabinet.

But these are not his only potential supporters. In recent weeks it turned out that the parliamentary chair of Commission 90—a commission responsible for investigating complaints, fighting corruption — is his supporter as well.

 

Fleeting Ties

Zanjani has loyal supporters in institutions such as the city government and the judiciary as well. They have learned that he is generous and that they can benefit from his financial network. If past experience is any value, however, these ties can prove to be one-sided and fleeting. The moment that the tycoon’s luck turns for the worse, many of his lesser and greater supporters would turn their backs and deny even knowing him.

Babak Zanjani has been active on the public stage as well and has made large investments in sports and movie production. He has appeared next to Ali Daei, a famous footballer in Iran and the manager of Persepolis, a very popular football team.

In addition to providing financial support for producing movies, he has tried to make a prominent name for himself in charity and philanthropy. Despite these efforts, however, Zanjani has not managed to establish a likable public persona.

He has ably used the media to promote his reputation and channel his reactions to various allegations, but few media outlets are considered to be sympathetic to his cause or amenable to publicizing on his behalf. To most loudly respond to his critics Zanjani has turned to his Facebook media, and occasionally issues short statements or grants interviews to certain media outlets.

He has also tried to stop disclosures against himself by filing complaints against some media critics and applying judicial pressure. Altogether, however, media celebrity has not worked to his favor, instead bringing him unprecedented scrutiny.

His personal life has not remained off-limits either. Pictures of him carrying arms,  dancing with Tajik girls, and striding towards his private jet have raised many troublesome questions about his personal life.

 

Secrets and Videotapes

But there are two other vexing events which have proven more serious. In February 2013  then President Ahmadinejad showed a short video to the parliament. In the video, Fazel Larijani, a brother to both the speaker of the parliament and the head of the judiciary, asks Saeed Mortazavi, the director of the Social Security Organization, to introduce him to Babak Zanjani. The conversation happened around the time that Zanjani wanted to make a €4 billion deal with the Social Security Organization.

The publication of the video put the Larijani family in the public opinion spotlight. Earlier another member of the same family had been accused of improper land speculation around Tehran. The accusations against the family of both the speaker of the parliament and the head of the judiciary created a noisy fracas between the Larijani clan and Ahmadinejad, silenced only by Khamenei's direct order.

In recent days, the Iranian parliament has issued a report against Saeed Mortazavi, the former head of the Social Security Organization, accusing him of running a corrupt financial network. Three judiciary courts are investigating the charges against Zanjani, and the name of Ahmadinejad’s First Vice-President is heard regularly in connection with the corruption case involving the company Iran Insurance. These efforts by the parliament and the judiciary are seen as a kind of revenge against Ahmadinejad’s administration and Babak Zanjani is liable to become a victim in the process.

The last event, however, has fallen outside Iran: the biggest corruption scandal in Turkey, a €87 billion case that has resulted in the arrest of scores of Turkish political and business figures, including the sons of three cabinet ministers, the firing of 150 police officers and the dismissal of ten ministers from the Prime Ministers Erdogan’s cabinet.

In the margins of the corruption investigations, the name of a young Iranian man, Reza Zarrab, has been raised. Turkish media have reported that Zarrab—now in police custody on charges of bribery, illegal transfer of money and gold to Iran and the creation of a corrupt business network—has named Babak Zanjani during his interrogations. The two had cooperated in transporting 1,500 kilograms of gold from Ghana to Turkey, Dubai and eventually Iran. According to the Turkish media, however, Zanjani was the boss and, before Zarrab was arrested, was to meet him in Ankara.

In a recent statement Zanjani denied the accusations and praised Erdogan’s character and policies, declaring that he would continue his investments in Turkey.

 

A Serious Trap

These troubles make clear that one of Iran's sole international tycoons appears to have fallen into a serious trap. The international community accuses him of evading sanctions by illegal activities. In Iran he is accused of being a government agent or a security operator in the business arena. And members of the parliament see him as a symbol of corruption. He himself, however, claims to be a hero.

In the past three decades, political and economic crises in Iran have always claimed victims. After the 1979 revolution, the properties of many politicians who were accused of cooperating with the Shah’s regime were confiscated. The properties of many wealthy Baha’i were plundered for idelogical reasons. There have been numerous cases where businessmen such as Afrashtehpour brothers, Fazel Khodadad, Shahram Jazayeri, Mah Afarid Amir Khosravi and many others have been put on trial and condemned to prison or death on charges ranging from financial corruption to money laundering, bribery, embezzlement and so on. During judicial investigations of these cases, some prominent political figures have been implicated as well.

In the famous Shahram Jazayeri’s case, for example, not only the speaker of parliament and many MPs were named, but there was also talk of Jazayeri trying to bribe Khamenei’s office. In Amir Khosravi’s case, a few cabinet ministers and Ahmadinejad’s First vice-President were accused of involvement in a million-dollar corruption scheme.

In Iran, business events are not confined to the business domain; they can signify a political conflict inside the government. In such conflicts political figures are typically protected from the court of law but business people more vulnerable to conviction. This might be the fate that Babak Zanjani is facing and he might be sacrificed as a pawn which has been discarded—an event that would not affect the main storyline.

In the past three decades, corruption cases in Iran have grown bigger and the actors have become more prominent. The Supreme Leader issued his call to arms against poverty, corruption and discrimination many years ago but, since then, the network of corruption has spread, discrimination has expanded and poverty has deepened. This crowded theater always needs actors to play parts, actors who frequently fall into infamy and bad luck.

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