Politics

Iran's Great Petrochemical Corruption Scandal, Part II: Buying Off the Intelligence Ministry

January 31, 2022
Masoud Kazemi
10 min read
The €6.6bn fleecing of the Iran Petrochemical Commercial Company is one of the largest cases of grand corruption recorded in the history of the Islamic Republic
The €6.6bn fleecing of the Iran Petrochemical Commercial Company is one of the largest cases of grand corruption recorded in the history of the Islamic Republic
IranWire has now gained access to the 2,000-page judgment, which unusually went unpublished
IranWire has now gained access to the 2,000-page judgment, which unusually went unpublished

The verdict in a massive corruption case involving the Iran Petrochemical Commercial Company (PCC) was announced on September 5, 2021. But nearly three years after proceedings first got under way, the details remained shrouded in mystery.

We were told at the time that 15 named defendants had been sentenced to a total of 180 years in prison, linked to the embezzlement of around 6.6bn euros. But curiously for Iran, none of them were in custody at the time the sentences were issued. Most were out on bail, and a handful had even managed to leave the country.

IranWire has now gained access to the 2,000-page judgment, issued by Judge Asadollah Masoudi-Magham in Branch 3 of the Special Corruption Court. The contents shed light on the sheer extent of mafiosi behavior, graft, cronyism and money laundering in Iran’s still-lucrative petrochemical industry – and on how far the 15 were aided and abetted by dozens of others, many in positions of power.

The verdict begins by complaining that although 129 individuals and legal entities were suspects in the case, the prosecution had offered an opinion on just 21 of them. In other words, all the others escaped judicial investigation. Who were the unnamed parties, and what do we know about them? Part two of our series on the judgment focuses on suspects connected to the Intelligence Ministry.

The Silent Defendant

Page 6 of the first part of Asadollah Masoudi-Magham’s verdict on massive corruption in the Iran Petrochemical Commercial Company (PCC) deals explicitly with Intelligence Ministry staffers. “At the time when the crime was taking place,” Masoudi-Magham writes, “no action was taken regarding the charges against defendants Siamak Nazari, known as Sajjad, the Intelligence Ministry’s representative to Iran’s petrochemical industry, Seyed Mansour Saleh Ebrahimi, an employee of the Intelligence Ministry, Seyed Reza Bagheri, director-general of the Intelligence Ministry’s Bureau of Fuel, Energy and Economic Affairs, Rasoul Lahijanian, a terminated employee of the Intelligence Ministry, or Mohammad Hossein Shirali, an employee of the Intelligence Ministry.”

He also notes on Page 4 that a letter, dated August 4, 2013, was sent by the internal security department of the IRGHC’s Intelligence Unit to counterparts at the Intelligence Ministry, warning that some of its employees were suspected of corruption. The ministry, we read, appeared to ignore the letter and took no investigative or disciplinary action.

It got worse. Elsewhere, Masoudi-Magham complains: “Numerous letters sent by this court to the public prosecutor’s office of Branch 6 of Tehran’s General and Revolutionary Court, and even to judiciary officials, got nowhere. No investigation was conducted into the open case. It seems that the prosecutor’s office of this branch has no structure in place to investigate that element of a case where the defendants have government or supervisory positions.”

Who are These Officials?

Only one of the officials linked to the Intelligence Ministry was named in media coverage of the case. It might be for this reason that the final verdict was suppressed, where others in major Iranian corruption cases have been published in full.

Mohammad Hossein Shir-Ali was named in court as one of the 15 principal defendants. In the end he was sentenced to six years in prison and a permanent ban from government for his role as an “accessory” to the scam.

The verdict describes him thus: “Mr. Mohammad Hossein Shir-Ali, son of Ghalandar, born in 1960 in Khuzestan, birth certificate 191, national ID 5279605425, Iranian, Shia, literate, no prior record, married, retired... free on bail. Charged with (A) accessory to harming the country’s economy, (B) accessory to gaining wealth through illegitimate means, (C) illegitimate gain of $8 million...”

Shir-Ali is not in jail, nor even in Iran. According to court officials, he was able to leave the country during investigations and now resides in the United Arab Emirates. Page 791 of the second part of the verdict tells us that he invested the bribes and commissions he received in his dealings with the PCC in the US, British, Emirate and Japanese stock markets.

Another of the accused was Seyed Mansour Saleh Ebrahimi, an employee of the Intelligence Ministry at the time the embezzlement was unfolding. Years later in December 2017, he was appointed the Minister of Petroleum’s special inspector. In the letter confirming his new role, Bijan Zangeneh, petroleum minister under presidents Khatami and Rouhani, wrote that the title had been awarded “in recognition of your commitment and record”.

Meanwhile Rasoul Lahijanian, the “terminated employee of the Intelligence Ministry”, has had a longer managerial career in the Islamic Republic than that brief description might suggest. He served as a deputy minister of construction in 1989 and CEO of the Iran Fisheries Organization, receiving a third-class “Work and Efficiency Medal” from Akbar Hashemi Rafsanjani. He then served as top advisor to then-Minister of Petroleum Bijan Namdar Zanganeh under both the Khatami and Rouhani administrations, holding onto the role even after he was implicated in the PCC corruption case. He is currently chairman of Tabdil Energy Paya, a Ministry of Petroleum subcontractor.

Still another defendant hailing from the Intelligence Ministry was Masoud Forouzandeh, author of the four-volume Photographic History of Iran’s Petroleum. He is the brother of Mohammad Forouzandeh, a former commander of the Revolutionary Guards, Minister of Defense under President Hashemi Rafsanjani and head of the Mostazafan Foundation for 15 years. According to Page 1,605 of the verdict, Masoud Forouzandeh “participated” in receiving a $30 million kickback from foreign companies that bought Iranian oil.

The “Proper Authorities” Turn a Blind Eye

The judgment is studded with shocking revelations about the role of members of the Intelligence Ministry in covering up the crime.

First, Page 9 of Masoudi-Magham’s verdict states that an ex-Intelligence Ministry agent was actively employees to intimidate employees of the PCC, presumably in a bid to stop them from speaking out. “Ezzatollah Abdollah Khani, a retired Intelligence Ministry employee, was hired by the company under the fake identity of Engineer Alireza Pour-Ahmad, and by faking a title belonging to the Office of the Supreme Leader. This resulted in a security environment at the company and created a sense of insecurity among employees.

Then, on Page 131, the judge states that the Ministry was aware of the wider goings-on within the PCC but opted not to investigate. “Within the PCC, individuals such as Abbas Samimi, [Reza] Hamzelou, Alireza Rahmani, Mostafa Tehrani-Safa and Ali Naghi Khamoushi were seeking to personally gain through any means, from exporting products, to obtaining loans through customs release forms for petrochemical products, to exploiting currency [deposits] abroad. Their blunders were so visible and obvious that they were reported to the proper authorities such as the CEO of the National Petrochemical Company, the Ministry of Intelligence and the General Inspection Office. But no action was taken against them.”

Pages 145 and 146 of the first part of the verdict also quote a defendant as saying that they fully expected the Ministry to back them up once the swindle became known. “Mr. Shir-Ali,” they state, “introduced to me a person by the name of Seyed Reza Bagheri, and indicated to me that the top directors of the Intelligence Ministry would support me through this person so I’d retain my position.

“Mr. Shir-Ali kept telling me that the Administrative Infractions Commission wanted to remove me. But after a month, he told me he had followed up on the matter with this commission via Mr. Seyed Mansour, and had put an end to it. He also sent me the Intelligence Ministry’s confirmation of this.”

Another witness from within the PCC, cited on Page 287 of the verdict, made a specific allegation of bribe-taking on the part of Intelligence Ministry officials. “When 750 million euros of currency from exports was deposited into the account of Deniz Company (a legal entity owned by Reza Hamzelou and Marjan Sheikholeslami, two of the defendants), all the information about this was given to the representative of the Intelligence Ministry. We put together a full report. But the Intelligence Ministry didn’t respond to this report in any way.”

The reason for this is then surmised as follows:  “With regard to the absence of any action related to the case against Reza Hamzelou, the CEO of PCC at the time, Ahmadian [one of the accused] told the Intelligence Ministry that Shir-Ali had told him Sajjad [Siamak Nazari] had been offered 500 million tomans [more than $118,000] to leave the case dormant – and so in the end, the Intelligence Ministry did not pursue the case.”

There are several other instances of bribe-taking detailed on the report. Based on a confession by one of the defendants, Mohsen Ahmadian, on page 37 the judge concludes that in all likelihood: “Mohammad Hossein Shi-Ali received around $3 million for a deal with the Philippines petrochemical company [thought to be the Bataan Polyethelene Corp] and paid around one million dollars of it to Seyed Reza Bagheri, Director General of the Intelligence Ministry’s [Bureau of Fuel, Energy and Economic Affairs].”

Bribes: Business as Usual

Pages 755 to 758 provide a wealth of information about Shir-Ali’s own cosy connections with the Intelligence Ministry, as given in evidence by Reza Hamzelou, the then-CEO of PCC. Shir-Ali is said to have paid some $300,500 in “commissions” (bribes) from PCC customers to Seyed Mansour at the Intelligence Ministry between 2009 and early 2011. From 2011, when Seyed Mansour retired, Sajjad/Siamak Nazari received the “commissions” instead.

Pages 1,600 to 1,607 of the second half of the verdict continue the story. “The accused, known as Sajjad, an employee of the Intelligence Ministry at the time, is a friend and contact of both [PCC] defendants Mohsen Ahmadian and Jalil Sobhani.

“He was involved in procuring a $30 million ‘percentage’ [kickback] from foreign companies and depositing the sum into private business accounts abroad. He was also involved in transferring percentages received from the purchase of [the Iranian] Dalahu Petrochemical Company... Mohammad Hossein Shir-Ali received the complete information about the customers of the PPC from the defendants, Mohsen Ahmadian, Sajjad, Seyed Reza Bagheri and Seyed Mansour Saleh Ebrahimi, and held meetings with customers such as MB Barter [a Swiss company], Hazel [a Dubai-based distributor], Tufail [Chemical Industries Ltd in Pakistan], etc. These meetings took place with the cooperation and participation of Mohsen Ahmadian.”

The verdict then adds: “Seyed Reza Bagheri received commissions from trading with Gatchalian in the Philipines project, and Seyed Mansour received commissions from the PCC’s customers from 2009 to early 2011. What is noteworthy is that, according to the IRGC’s Intelligence Unit, five billion rials [more than $118,000] were paid so that the case against defendant Mr. Reza Hamzelou would remain closed at the Intelligence Ministry.”

Mansour, the report concluded, had “used the ministry’s leverage for his own financial gain” while Rasoul Lahijanian, the well-connected former deputy minister then at the Intelligence Ministry, received part of the €30m and received and shared out kickbacks from the acquisition of Dalahu Petrochemical Company.

The judgment states that Shir-Ali, meanwhile, received $3 in bribes per ton of high-density polyethylene and €5 per ton of PET [polyethylene terephthalate or polyester] from the Swiss firm, MB Barter. He also received a €10 million “commission” for brokering the sale of 40 percent of the same company to the PCC. He was also found to have received $3 per ton of polyethylene, totalling $1.5m, from emGULF Power Company, and another $1.5m from Interplast. He also pocketed $1 per ton of methanol sold to Hazel, totalling around $7m.

The brazen collusion of multiple serving and ex-Intelligence Ministry officials in grand corruption at the PCC should have been scandal enough in itself. But several of them also went on to enjoy positions of high office, taking their ill-gotten gains with them. The next article in this series will examine how far this was also true of officials at the General Inspection Office.

 

Related coverage:

Iran's Great Petrochemical Corruption Scandal, Part I: The Ones That Got Away

Who's the Mysterious Survivor of Two Grand Corruption Cases in Iran?

From Luxury Villas to Defrauded Banks: The Mother of All Corruption Cases Gets Under Way in Iran

Government Report Reveals More Corrupt Privatization Practices in Iran

Corrupt to the Core: The Long List of Corrupt Iranian Officials

Sanctions on Iran’s Petrochemical Products: A Heavy Blow to the Economy

How the Corruption Mafia Took $30 Billion out of Iran in One Year

The IRGC Commercial and Financial Institutions: Khatam-al-Anbiya Construction Headquarters

Petrochemical Corruption Scandal Grips the Nation

Corruption is Here — Get Used to It

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