A Mafia Hitjob on the President's Cronies

Nothing delights Iran’s conservative media more these days than reporting on the salaries of the country’s most influential and powerful government officials and businessmen. Over the last few months, hardliners have relished the chance to report details of the astronomical earnings of bosses of state-run banks and insurance companies, a trend that also lends considerable weight to a broader agenda to undermine President Rouhani’s closest allies. Their salaries would make the news in most countries around the world, but given the average salary of ordinary Iranians, the headlines have been all the more shocking. 

One of the most controversial and sensational stories involved managers of Iran’s Central Insurance (IRC) company. According to receipts leaked to the press, some of the firm’s executives were pocketing more than 80 million toman ($26,500) on a monthly basis. The revelations eventually led to the resignation of IRC general director Mohammad Abrahamian on May 11, 2016.

But the latest media buzz concerns Ali Sedghi, the chief executive of Refah Kargaran Bank (Workers’ Welfare Bank), which is owned and managed by Iran's Social Security Organization. According to leaked documents, his monthly compensation ranged between 180 and 230 million toman ( $59,800-$76,400). Following the news, Esshagh Jahangiri, President Rouhani’s first deputy, ordered an immediate investigation into the scandal. This led some members of parliament to call for the exorbitant salaries of other officials to be scrutinized. 

But more important than the accusations against Sedghi is the man himself, and his influence in Iranian politics. Sedghi is a friend and business partner of Hossein Fereydoon, the brother of the Iranian president. Prior to the revelations about Sedghi’s salary, Raja News ran a headline on May 23 citing the “intense pressure” Fereydoon had exerted on the president to ensure his business partner was appointed as head of the National Bank. The business in question is Sedghi and Partners Joint Liability Company, established in 2011 as a currency exchange. Hardliners claim it was founded at the height of the sanctions era as a way of subverting embargoes and exploiting difficult conditions to manipulate currencies, and have named Sedghi and Fereydoon as key operatives, referring to the latter in particular as a “"the big money changer". The radical press also refers to a privileged circle comprised of four figures: Hossein Fereydoon, Central Bank head Valiollah Seif, Ali Sedghi, and former National Bank (Bank Melli) managing director Abdolnasser Hemmati. Hemmati also has a history with Central Insurance: following the huge scandal at the company, Hemmati was chosen as the company's president and Sedghi replaced Hemmati at national bank Bank Melli. 

With the recent revelations over his salary, it has now become clear that Sedghi’s appointment to the leadership of one of Iran’s largest state-owned commercial banks will invite even greater criticism. 

Fight Corruption Closer to Home 

The decision to highlight this particular case was certainly no accident. The story has yet another twist: On June 11, hardliner news outlet Nasim Online reported that an arrest warrant had been issued for Cyrus Naseri, a member of the President Khatami administration’s nuclear team and a friend of President Rouhani’s, on grounds of national security. On February 16, hardliner MP Alireza Zakani claimed Naseri, who has now fled the country, played a role in setting up an inner circle of economic conspirators. “Mr. Naseri and his ilk have commenced a new domination of the country," Zakani said. "For two and a half years, they’ve conducted weekly Monday meetings in Tehran, with Mr. Naseri traveling every week from Europe to attend.” If President Rouhani intends to combat corruption, he would be advised to not overlook his own brother, he said. “Begin your clean-up efforts with your brother and his office.” 

Then, a week later, on February 23, four MPs wrote to President Rouhani, questioning him over Naseri and the actions of his chief of staff, Mohammad Nahavandian. “What decisions are being made concerning our country’s major contracts in these Monday meetings with Mr. Naseri in attendance?” they wrote. “What role does your chief of staff play in these major contracts and secret sessions conducted with foreign companies?... Have you received word of the 8.5 percent stake allotted for Cyrus Naseri in natural gas sales contracts?” The four MPs declared the total value of the commissions over the 25-year term of the agreements to be 1.65 billion tomans ($541 million). The letter ended by asking Rouhani whether he was aware of the currency exchange activities of his brother and his colleagues, and that they had benefitted from both sanctions and the sanctions relief that followed agreement of the Joint Comprehensive Plan of Action.

On May 15, the newspaper Arman — considered to be one of the most important press advocates for the Rouhani administration —  published an investigation into changes in Rouhani's cabinet, reporting that Nahavandian was one of the shortlisted figures. Earlier, on April 6, Entekhab, another news site with similar political leanings, had previously written that Nahavandian’s footprints were visible across much of the country's “suspicious political-economic developments” and that he wields a “shocking authority” that “appears to be on par with the president himself,” enjoying “an upper hand over even cabinet ministers and deputies.”

At the beginning of May, Saham News, known for its defence of imprisoned reformist leader Mehdi Karroubi, published an article that said Supreme Leader Ali Khamenei had sharply criticized Nahavandian’s activities, specifically his repeated trips to England, and had demanded his removal. The report also indicated Khamenei had requested that President Rouhani’s brother not participate in cabinet meetings. 

It’s not exactly clear whether Khamenei actually made such demands, though media reports indicate that Fereydoun has not taken part in cabinet meetings in the past three months. Prior to this political drama, Fereydoun had been acknowledged as Rouhani’s senior advisor, participating in every meeting on both domestic and foreign affairs. 

Fereydoun’s presence across so many different key meetings was in fact so extensive that conservatives began awarding a “Fereydoun of the Year Award.” The prize is bestowed by the Student News Service (a media organization close to the Basij) to a person who appears in places he or she has no business to be. Recently, however, Fereydoun’s absence has been so noticeable that rumors of his arrest have made the headlines across Iranian media. Judiciary officials and the administration’s spokesperson denied the claims. Soon after, at the end of May, Fereydoun’s absence from a presidential trip to the province of Western Azarbaijan came to light and Mashregh News published a photograph of his visit with reformist politician Mostafa Tajzadeh, who was recently released from prison after being held for seven years. The image enraged Iran’s judiciary officials, with the head of the Tehran court characterizing it as “a slap in the face to the regime.” 

But these are merely peripheral quarrels; the core of the antagonism lies elsewhere. Rumors of Fereydoun’s arrest and Nahavandian’s removal, headlines concerning Naseri’s warrant, and the leaks that damaged Sedghi are just one part of a great economic battle being fought now within Iran's ruling class. The Revolutionary Guards, the media affiliated with it and the judiciary are expending huge efforts to stage a mafia-style “hit” on the Rouhani administration and the president's reputation. Considering the shifts on the political and economic landscape of late, it would appear the mafia is achieving at least a moderate level of success.