Politics

Iran's Great Petrochemical Corruption Scandal, Part VIII: Career Swindler's Takings Stashed in UK and Canada

February 7, 2022
Masoud Kazemi
11 min read
Iran's Great Petrochemical Corruption Scandal, Part VIII: Career Swindler's Takings Stashed in UK and Canada

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.

Some 108 of the original defendants in the case were let off the hook thanks to a combination of bribes, nepotism and political pressure. One of them was the business tycoon Jalil Sobhani, who as IranWire noted last year, has now survived two grand corruption cases in Iran - and in the meantime, has added to his vast international property empire, to the tune of tens of millions of dollars.

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Jalil Sobhani is the ex-CEO of a firm known as SPEC (Supplying Petrochemical Industries Part, Equipment & Chemicals Engineering Company): one of the biggest suppliers to the petrochemical industry in Iran, and a long-time affiliate of the PCC.

On August 10, 2019, the newspaper Shargh reported that a man identified only as JS had been arrested in connection with the PCC case. He was described as the “black box” of the upcoming corruption case. Many assumed that the jig was up for Jalil Sobhani – for it was, of course, he – and the oil magnate would soon be sent to Evin Prison alongside his former fellow swindlers. But once again, Sobhani made it through practically unscathed.

Born in 1964 in Shazand, Markazi province, Sobhani began his career at the Shazand Petrochemical Company complex in Arak. In 1999, by order of long-time cabinet minister and National Petrochemical Company CEO Mohammad Reza Nematzadeh, he started working at SPEC: a then-public firm first created in 1998.

In 2009, both SPEC and the PCC were nominally transferred to the private sector during the controversial privatization of the Iranian economy under Mahmoud Ahmadinejad. Sobhani was picked as CEO of the newly privatized SPEC and remained in this role until 2019.

Sentenced – Then Acquitted

In 2020 the Iranian judiciary was embroiled in unprecedented scandal in the form of the criminal trial of Akbar Tabari, a former executive deputy of the judiciary, and accomplices. Tabari was accused of leading a bribe-taking network that allowed legal cases and judicial matters to be influenced by outsiders.

On September 12, 2020, during a court hearing in the Akbar Tabari case, the prosecutor's representative stated: "The sixth defendant, Jalil Sobhani, who has been released on bail, is accused of providing the means of bribery between Akbar Tabari and [steel tycoon] Rasoul Danialzadeh, paying bribes to Akbar Tabari, and participating in the formation of the multi-member bribery network led by Akbar Tabari.”

Later that same day, announcing the various verdicts in the Tabari case, then-judiciary spokesman Gholamhossein Esmaili said of the sixth defendant: "Jalil Sobhani, charged with aiding and abetting the crime of bribery between Akbar Tabari and Rasoul Danialzadeh, is hereby sentenced to two years in prison and the confiscation of stolen assets, in the government’s favor."

It was a damning verdict, and appeared conclusive. But just eight months later on May 11, 2021, Parviz Sadeghi, Jalil Sobhani's lawyer, announced that the Supreme Court had acquitted him on appeal. Not four months later in the PCC case, there was no need for Sobhani’s attorneys to take this step, because his name had already been removed from the file.

Jalil Sobhani’s Role in the PCC Case

 

According to Judge Masoudi-Magham’s verdict, the PCC’s official purpose was to sell Iranian petrochemical products abroad on behalf of Iranian companies, then return the proceeds to them after deducting its own commission. In practice, however, many of the proceeds were converted to rials on the open market, with PCC directors amassing vast undisclosed profits from the difference.

According to the verdict, Jalil Sobhani was initially charged with collusion in the scheme. But his name was dropped by prosecutors before a full investigation. Page 125 states: “During interrogation on May 18, 2013, Mohsen Ahmadian [a convicted defendant in the PCC case] said this of the transfer of currency gained from petrochemicals exports: ‘Mr. Samimi [another defendant] at SPEC, with the support of Mr. Jalil Sobhani, signed a lucrative contract for €100 million with... Delvar Afzar Company, which belonged to Mr. Samimi.”

Page 375 describes this unusual contract in further detail. “SPEC, a company affiliated with the PCC, with Mr. Jalil Sobhani as its CEO, had the task of working with foreign companies to bring spare parts to Iran. In connection with this task, SPEC signed a contract with Delvar Afzar, where this company belonged to Mr. Samimi [a SPEC employee] himself. Apparently a percentage of shares in this company was given to Mr. Sobhani as well.”

Elsewhere, Page 369 states that SPEC officials including Sobhani had planned to bribe an official at the General Inspection Office, to the tune of one million dollars, to ignore what was going on at the PCC. Though the bribe was supposedly rejected, the GIO never did look into it afterward, and Page 758 goes on to state that the GIO employee in question was indeed “financially supported” by Sobhani.  

Why Was the Minister’s Son-in-Law Afraid of Sobhani?

Ali Ashrafi Riahi, son-in-law of the former Industries Minister Mohammad-Reza Nematzadeh, was convicted in the PCC corruption case. But unsurprisingly at this point, he had already escaped from Iran. “I can help with the corruption case against Jalil Sobhani, but I’m scared,” he is quoted as saying on Page 364 of the verdict.

Later on Page 372, the judge cites Ashrafi Riahi as follows: “Jalil Sobhani’s corruption lay in the project management field. By exploiting the currency the PCC had made available to him by order of Mr. Rostam Ghasemi [the current Minister of Roads and Urban Development under President Raisi], he created a very complex network inside and outside the country, misused and embezzled these funds... Regrettably, I became convinced that the inspector is on his side, and for reasons that we are not aware of, he is covering up Sobhani’s activities...Jalil Sobhani has acted so professionally that all the evidence will be destroyed if something goes wrong. The case of Jalil Sobhani is much bigger than this PCC case.”

Other discrete sections of the verdict give some idea as to how well-connected Sobhani might still be. Page 1600 declares him to be a “mutual friend” of Siamak Nazarinejad, an employee of the Intelligence Ministry indicted in the case, while Pages 1,575 to 1,581 give a deeply unsettling account of how his associates worked to cover up the case.

“The content of the reports [submitted to the court],” Judge Masoudi-Magham writes, “tell a story of wide-ranging, professional crimes and financial abuse by the defendant Mr. Jalil Sobhani and his accomplices, under the cover of an organized network in the oil and petrochemicals industry.

“Individuals claiming to be working with military, police, intelligence, supervisory, security, judiciary and executive institutions of the country created a security barrier around the defendant Jalil Sobhani, both inside and outside the country. This intimidating atmosphere frightened informed individuals and, unfortunately, prevented them from taking action against him.

“By exploiting his connections with certain supervisory, intelligence, security, judiciary and executive agencies, and through his influence with individuals and institutions... he arranged for the transfer of $2 billion in currency in Dubai in cooperation with Reza Hamzelou [the PCC’s CEO at the time], Ms. Masoumeh Dari [the CEO of PCC Fze in Dubai] and Mehdi Sharifi Niknafs [the PCC’s vice president for financial affairs].”

Even these imprecise declarations make it fairly clear why somebody like Ali Ashrafi Riahi, the son-in-law of a member of the Islamic Republic’s establishment, would be scared to talk about Jalil Sobhani’s corrupt conduct – or why he continues to survive criminal investigation.

A Fake Order From the Oil Ministry

The extent of Sobhani’s fraudulent activities in connection with the PCC went beyond the main currency racket. Without the formal permission of the PCC board or the government, Judge Masoudi-Magham states, “by means of collusion and fake invoices sent via SPEC, he [Sobhani] bought cheap equipment from abroad (some through companies affiliated with his friends or members of his family, including his wife), inflated the prices, then sold them for US$2 million to South Pars [a gas-condensate development project in the Persian Gulf, shared with Qatar].”

Even more brazenly, in a separate scheme he had devised earlier on, the verdict states that Jalil Sobhani “penned a handwritten order” under the letterhead of the then-Oil Minister, and forged the minister’s signature underneath. In the letter, Sobhani instructed the PCC’s finance tsar, Niknafs, to act on his behalf in paying $65m for Phases 20 to 24 of South Pars. Niknafs then informed the PCC’s financial team, and the very next day some $45m was duly paid out of PCC Shanghai’s account.

Finally, the judgment notes, Sobhani colluded with individual directors in sending funds to their personal concerns. “Without the permission of PCC’s or SPEC’s boards of directors, Jalil Sobhani transferred the sum of €750,000 from the sale of petrochemicals to the company POROT in Germany, owned by the defendant Mostafa Tehrani Safa.”

Luxury Property in Europe and North America

Sobhani, his wife and his daughter together with business partners have spent part of the proceeds of his serial scams on houses and property overseas. The judge states witheringly of his known purchases: “The defendant, Mr. Jalil Sobhani, has acquired properties worth CA$50m in Toronto and £6.5m in London. He has also spent enormous sums on properties in Los Angeles, Germany, Dubai and Turkey. An employee at the managerial level in either the government or private sector could never have earned enough to buy properties in so many locations outside Iran, and own several companies inside the country as well.”

Among the firms newly said to be owned by Sobhani were the Takht-e Jamshid Petrochemical Complex, a supposed catalyst-manufacturing company called New Elixir, and Jame Financial. Some of these were the subject of a report sent separately to the Attorney General in Iran, which includes, amongst other things, an allegation of making counterfeit catalysts.

Importantly, the verdict also names a conduit named Asghar Sadeghi as being tasked with buying and selling overseas assets on Sobhani’s behalf, and a man named Alireza Ghaffarian, under whose name companies owned by Sobhani were registered in Canada and Malaga, Spain.

It also lists a number of the properties Sobhani managed to buy abroad with his ill-gotten gains:

  • A property jointly purchased in Toronto for CA$2,101,000;
  • A property purchased in Toronto for $1,970,000 in the name of Jame Financial;
  • A property purchased in Toronto for $2,130,000 in the name of Jame Financial;
  • A property jointly purchased in Toronto with Alireza Ghaffarian for $757,000;
  • A property purchased in Toronto for $855,000;
  • A property purchased in Toronto by Asghar Sadeghi on behalf of Jalil Sobhani for $2,749,000;
  • A property purchased in Toronto by Asghar Sadeghi on behalf of Jalil Sobhani for $462,000;
  • A property purchased in Toronto by Asghar Sadeghi on behalf of Jalil Sobhani for $13,850,000;
  • A property purchased in Toronto by Asghar Sadeghi on behalf of Jame Financial for $462,000;
  • A property jointly purchased in Toronto with Alireza Ghaffarian for 999,000 dollars;
  • A property purchased in Toronto for $2,750,000 in the name of Elham Khajehpour Dezfuli, Jalil Sobhani’s wife;
  • A property purchased in Toronto by Jalil Sobhani for $930,000 that was then sold to Mashhad Sobhani, his daughter;
  • Two properties purchased in London in the names of Mashhad Soltani and Elham Khajehpour Dezfuli.

Not all the properties bought by or on behalf of the Sobhani family are listed separately in the judgment. But it states that the cumulative value of all their properties in Canada is

51,018,000 Canadian dollars, and 6,855,000 pounds in London.

 

Related coverage:

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

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

Iran's Great Petrochemical Corruption Scandal, Part III: The General (Non-)Inspection Office

Iran's Great Petrochemical Corruption Scandal, Part IV: Sanctions-Dodging and the IRGC

Iran's Great Petrochemical Corruption Scandal, Part V: The Irancell Hustle

Iran's Great Petrochemical Corruption Scandal, Part VI: The Partner Who Fled to Canada

Iran's Great Petrochemical Corruption Scandal, Part VII: The Regime's Favourite Fat Cats

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

Rich and Well-Connected Prisoners Enjoy Extended Furloughs in Their Luxury Villas

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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Politics

Iran's Great Petrochemical Corruption Scandal, Part VII: The Regime's Favourite Fat Cats

February 7, 2022
Masoud Kazemi
9 min read
Iran's Great Petrochemical Corruption Scandal, Part VII: The Regime's Favourite Fat Cats