An IRANIAN court has sentenced four people to death for a $2.6 billion-dollar bank fraud, described as the biggest financial scam in the country’s history, which has tainted the government of president Mahmoud Ahmadinejad.
Iranians, hit by international sanctions and soaring inflation, were shocked by the scale of the bank loan embezzlement that was exposed last year and by the allegations it was carried out by people close to the political elite or with their assent.
Of the 39 people tried for the fraud – the biggest in the Islamic Republic’s history – four were sentenced to hang. Prosecutor general Gholam-Hossein Mohseni-Ejei told state news agency IRNA: “According to the sentence that was issued, four of the defendants in this case were sentenced to death.”
Two people were sentenced to life and others received jail sentences of up to 25 years, Mr Mohseni-Ejei said. Some were also sentenced to flogging, ordered to pay fines and banned from government jobs.
Mr Mohseni-Ejei did not name the defendants and Iranian media have identified them only by their initials. State TV broadcast parts of the trial, but blurred out their faces.
The man described by Iranian media as the mastermind of the scheme, businessman Amir Mansoor Khosravi, is said to have forged letters of credit from Iran’s Bank Saderat to fund dozens of companies and buy a state-owned steel factory.
He was among those charged with a potential capital offence. In February, state TV said he was accused of being “corrupt on Earth,” an Iranian legal term that means that the defendant is an enemy of God, and which in practice is a catch-all term for a variety of offences. The charge carries the death penalty.
Mahmoud Reza Khavari, the former head of Iran’s biggest bank, state-owned Bank Melli, resigned over the affair and fled to Canada. Records show he owns a $3 million home there.
The case has been politically awkward for Iran’s leadership; raising questions about whether the government’s privatisation drive has largely benefited friends of the political elite.
Mr Ahmadinejad has rejected claims the investment company at the heart of the scandal has links to his closest aide, Esfandiar Rahim Mashaie, who has become the prime target for the president’s adversaries within the hardline ruling elite.
Mr Ahmadinejad’s economy minister, Shamseddin Hosseini, survived an impeachment vote last year, where members of parliament accused him of lax banking supervision.
Acknowledging the political damage, Iran’s Supreme Leader, Ayatollah Ali Khamenei, while criticising financial corruption, said in televised comments last year that the media should not “drag out the issue”.
He said: “Some want to use this event to score points against the country’s officials. The people should know the issue will be followed up on.”
Mr Mohseni-Ejei has held up the case as a demonstration that Iran can deal appropriately with high-level fraud. Earlier this month he said: “The government, parliament, and all available devices were used to pursue the issue so that corruption can be fought in an open manner.”
But one of the defendants complained that, while the judiciary had pursued some low-level players in the fraud vigorously, senior officials involved had gone unpunished.