Society & Culture

Iran’s Very Own Al Capone

December 2, 2015
Behrouz Mina
5 min read
Zanjani's Qeshm Airlines
Zanjani's Qeshm Airlines
Some of former president Ahmadinejad's allies congratulate Zanjani for his work
Some of former president Ahmadinejad's allies congratulate Zanjani for his work
Zanjani and his gun — the most famous photo of the billionaire
Zanjani and his gun — the most famous photo of the billionaire
 Following official regulations, the media have referred to him only by his initials, “B.Z.”
Following official regulations, the media have referred to him only by his initials, “B.Z.”

Over the past eight weeks in Tehran, a tall, pale man has defended himself in court against charges of financial corruption, embezzlement and dishonesty with public funds. Following official regulations, the media have referred to him only by his initials, “B.Z.”

Despite restrictions imposed by the court, everyone in Iran knows Babak Zanjani, a glamorous oil dealer and controversial billionaire, and a self-styled “economic jihadist” who claims to have saved Iran’s economy during a time of increased western sanctions.

Iran’s Oil Ministry is suing Zanjani for millions of euros in oil revenues.

Court proceedings have revealed a new low in the business ethics of Iran’s political establishment, as well as their alarming approach to financial discipline. Zanjani has talked of paying vast sums to shadowy figures, but without showing any records or receipts.

Zanjani has threatened Iranian officials by claiming to own a huge computer server in Dushanbe, Tajikistan, which he uses for surveillance. He has said, “If I let those stories out, your faces will turn black and blue from shame.”

If Zanjani resembles any historical character, it must be Al Capone, the gangster who made millions by flouting the laws that prohibited alcohol in the United States from 1920 to 1933.

Like Capone, Zanjani has aspired to be larger than life. Whereas Capone started soup kitchens in Chicago to feed the unemployed, Zanjani fed hundreds during religious ceremonies in Tehran. Whereas Capone could neither believe nor understand the tax fraud charges that eventually ended his criminal enterprise, Zanjani has accused the court of being unjust and unfair.

Both men portray themselves as victims of the system, but have left a trail of dirty money behind them.

It is unclear exactly how much Zanjani owes the Iranian government. Estimates vary from 600 million euros to 2.8 billion euros (Iran began reporting foreign trade in Euros rather than US dollars during the presidency of Mahmoud Ahmadinejad).

Zanjani has told the court he is ready to start paying installments, but bank notes that his lawyers have provided have turned out to be false. Zanjani has told the court that he has money to pay his debts, but lawyers and experts reject his claim, since banks in which he claims to have accounts either do not exist, or cannot verify the amounts he claims to hold.

Zanjani has claimed that Bank e Maskan in Tehran has stolen his money, and has threatened it with a lawsuit. He told the judge, Abolghasem Salavati, “I will make them sell their chairs and desks.”

Little is clear about Zanjani, but it appears he had access to the executives of the Iranian National Oil Company. His business plan was simple: to bypass international sanctions and sell Iran’s oil to bring in revenues. He claims he used a network of banks to do this.

Yet Zanjani does not appear to understand the complex legal matters involved in multilayered international transactions. Many believe that the political establishment, including former President Mahmoud Ahmadinejad’s administration, was aware of Zanjani’s activities.

Zanjani represents a group of people the Islamic Republic has always called upon for support in tough times. Iranian leaders refer to these groups as “Committed Young People.” They do not have any expertise or capital of their own. With little to lose, they become fanatically loyal to the political establishment. For them, loyalty is the only way to climb the social ladder.

Iranian leaders like Supreme Leader Ayatollah Khamenei often choose this group, rather than experts or well-established businessmen, to conduct government business.

In court, Zanjani has taken pains to insist that he is utterly loyal. He calls himself an “economic Basiji,” invoking the memory of the young volunteers who fought in the Iran-Iraq War, whose successors have subsequently put down public demonstrations on the streets of Iran.

Zanjani portrays himself as a businessman. His Facebook fan page is full of comments about his savvy approach to business. Yet he does not impress anyone as a businessman. His boasting in court demonstrates his lack of basic knowledge about capital and business ethics.

His proclamations have bordered on fantasy, as when he claimed, “Two billion Euros isn’t even my pocket change,” or “If I wanted to, tomorrow I could fill government coffers with millions.”

One Iranian journalist, Ebrahim Nabavi, dubs Zanjani “The Ahmadinejad of the economy.” Zanjani follows Ahmadinejad’s example though his boasting and evasion of questions.

No one calls Iran’s judiciary soft. It has been handing severe sentences to political activists, independent businessmen, journalists and students ever since the earliest days of the Islamic Republic.

Yet Zanjani has turned his court hearings into a media spectacle, and he has attacked the authorities as he pleases. His antics have harmed the credibility of Iran’s judiciary in its stated aim of fighting corruption.

Zanjani is said to be the former chauffeur of Mohsen Nourbakhsh, a former head of the Central Bank of Iran, who died in 2003.

Some Iranians ask how Zanjani, a man of such modest social status, has been able to collect 1 trillion tomans in a business environment closely monitored by Iran’s intelligence and security agencies.

Iran’s judiciary is in a tough position. Officials have tried to force Zanjani to pay back part of his debt, but it is hard to make him pay while his bank accounts are inconsistent with his claims.

Statements from the judiciary, announcing that Zanjani is paying his debt, have been followed by statements from the Oil Ministry, saying that Zanjani has not paid.

Corruption remains Iran’s main barrier to economic growth, but Zanjani’s trial has raised doubts as to whether Iran has the political will to combat it.

Zanjani has gambled that there is no such will.

If Iran’s economy is to grow, Iranians need to feel confident in their economic future. This will not happen as long as Iran’s Zanjanis go free. 

 

Related articles:

IranWire Exclusive: The Case of Babak Zanjani — and its Fallout

Babak Zanjani: Tycoon or Pawn?

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