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. 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 convicted men were aided and abetted by dozens of others, many in positions of power.
There were 129 people and legal entities named in the original indictment as having played a role in the deception. But more than 100 were never charged or named in public. Among them was a firm belonging to the Islamic Revolutionary Guard Corps’ massive commercial conglomerate, Khatam-al-Anbiya Construction Headquarters.
The verdict on the PCC case lists a vast array of companies that were either implicated in or affected by the PCC scandal. Quite a few of these were either affiliates or sub-contractors of the Islamic Revolutionary Guard Corps. But by far the most important, at least according to what the judge was able to find out, was a firm called Petro Karan Shafagh Kish Co (PKSK).
According to Pages 1,618 and 1,619 of the judgment, the CEO of PKSK, Ali Morad Ettehad, was officially an IRGC employee at the time of the crime and worked “in partnership” with then-PCC boss Reza Hamzelou and transferred some of the embezzled cash to his own concerns.
“Mr. Ali Morad Ettehad,” Masoudi-Magham states, “in partnership with Reza Hamzelou, Ali Ashraf Riahi, the escaped son-in-law of then-Minister of Industry, and Ms. Marjan Sheikholeslami Aleagha [one of the 15 convicted in the PCC case, who now lives in Canada], transferred a sum of around €350m in foreign currency, gained from the export of petrochemical products, from the account of Deniz Company [a private entity used by Hamzelou to siphon off sanctions-busting funds owed to Iranian oil and gas firms] to the account of Petro Karan Shafagh Kish Co.
“This company [PKSK] needed foreign currency for trade outside of the country. In a meeting, the CEO of Hetra Tejarat Co. [Marjan Sheikholeslami] personally suggested that her company could supply part of the currency needed by PKSK abroad. The two companies then concluded an agreement for currency transfer.”
The PCC’s job was and remains to export Iran’s petrochemical products, and either to deposit the proceeds in foreign currency abroad for the government’s use in buying goods from outside, or to satisfy the domestic demand for foreign currency.
Because of economic sanctions and restrictions on the transfer of money to Iran, the PCC and the IRGC’s own Khatam-al-Anbiya Construction Headquarters used hundreds of intermediary and shell companies to bring foreign currency into Iran.
PKSK used Hetra Tejarat Co. and Deniz Co. as intermediaries. The con was that both Hetra Tejarat and Deniz belonged to Reza Hamzelou, CEO of PCC at the time, and Marjan Sheikholeslami. In other words, PKSK had concluded an agreement with none other than the CEO of PCC, who was at that time being awarded a three percent commission for the transferral of currency that belonged to his own company. Much of that money, which by rights belonged to the National Petrochemical Company and individual firms, never made it back to Iran.
“On the pretext of bypassing economic sanctions,” the judge sums up on Page 9, “the defendants bypassed the Iranian nation, appropriating billions that belonged to the people and, by investing it [elsewhere], increased the value of their fortune to legendary levels.
“In the course of doing this, by obtaining the support of certain officials in various areas that were responsible for holding them accountable, [the accused] built a cordon sanitaire around themselves. And by using various threats, they removed anyone in their path who wanted to fight their corruption and report it to the proper authorities.”
What is Sepanir Holdings and What Was Its Role in the Petrochemical Corruption Case?
Petro Karan Shafagh Kish Company is a subsidiary of Sepanir, an oil and gas engineering firm itself run by the IRGC’s Khatam-al-Anbiya Construction Headquarters. It was founded and registered in spring 2010 after the main Headquarters was sanctioned. The firm’s main purpose acquire resources for South Pars, a gas condensate development project in the Persian Gulf shared with Qatar.
At the time, Judge Masoudi-Magham said, “IRGC commanders and government officials were very keen to develop the projects. On the one hand, the country needed them, and on the other, Qatar was extracting more and more gas from South Pars. Therefore, it was necessary to arrange for the purchase of goods in any way possible.
“The biggest concern at the time was how to pay foreign suppliers, who had control over 80 percent of the goods needed for these projects. It was impossible to acquire them without transferring money [outside of Iran]. As a result, various companies went to PKSK and offered their services for transferring money.
“Hetra Tejarat. was one of these companies. It was introduced to Sepanir through Mr. Hamzelou, who was the CEO of the PCC at the time. Because of his standing in the government, Sepanir backed Hetra Tejarat. Consequently, a contract for collaborating to transfer money was signed on March 16, 2011.
“This company had no contract with Deniz Company. But on its request, some of the money was deposited into its account. The total amount deposited by the PKSK into the bank account of Hetra Tejarat was 384,727,013 euros. Around €183m of this was deposited inside the country, and €90 million outside, by Petro Green [a Malaysian company sanctioned by the US Treasury in 2013 for circumventing sanctions] into the accounts of Deniz Company. Additionally, €75m in foreign currency was deposited into its account by Bank Mellat.”
Sepanir Holdings is one of the biggest firms under the umbrella of the Khatam-al-Anbiya Construction Headquarters. At the time the contract between PKSK and Hetra Tejarat was signed, Rostam Ghasemi, the current Minister of Roads and Urban Development, was chairman of its board. According to Page 241 of the verdict, he not only knew about the contract between PKSK and Hetra Tejarat but personally supported it.
In 2019, in a report about the dubious agreements signed between Sepanir and a number of entities named in the case, the website Bultan News wrote: “Sepanir, an affiliate of the Khatam-al-Anbiya Construction Headquarters, unknowingly signed a contract with a shady character by the name of Marjan Sheikholeslami Aleagha. It seems that this individual has escaped to Canada after taking a lot of money.”
How Sanctions on Libya Aided Corruption in Iran
The PCC swindle took place between 2009 and 2013. In 2011, the United States tightened sanctions on the Libyan state under Colonel Gadhafi, newly sanctioning foreign banks that part-owned or wholly owned by the Libyan government. One of them was Arap Turk Bank, based in Turkey. According to Pages 240 and 241 of the PCC verdict, this also disrupted the flow of foreign currency from Turkey to Iran because the sanctions cut Arap Turk Bank off from SWIFT, the international communications platform used by most global banks. As a result, we read, “an agreement was made between Hetra Tejarat and Petro Karan Shafagh Kish... to resolve the problem of the sanctioned Arap Turk Bank in securing liquidity, and to counteract the activities of government companies belonging to the National Petrochemical Company, by importing equipment needed by Khatam-al-Anbiya Construction Headquarters via its agent, the PCC.”
The PKSK’s willing involvement in the PCC scam is clearly evidenced in the verdict. But neither the company nor the CEO were formally investigated.