Corruption in Iran

Corruption is a serious problem in Iran, being widespread, mostly in the government. Reformists and conservatives alike – routinely criticize corruption in the government.]

In the Islamic Republic

Transparency International defines corruption as "abuse of entrusted power for personal gain". Its Corruption Perceptions Index evaluates perceived corruption in the public sector of 180 countries on a "combination of at least 3 data sources drawn from 13 different corruption surveys and assessments. ... collected by a variety of reputable institutions, including the World Bank and the World Economic Forum". The 2023 Index scored Iran at 24 on a scale from 0 ("highly corrupt") to 100 ("very clean") where 43 was the global average. The least corrupt country (Denmark) scored 90, and the most corrupt country (Somalia) scored 11. Regionally, the average score among Middle Eastern and North African countries was 34. The highest score in the region was 68 (the United Arab Emirates) and the lowest score was 13 (Syria).

Associated problems

As of 2019, corruption, nepotism, cronyism, (along with mismanagement and lack of "much needed" structural reforms), are blamed for country's economic shortcomings such as the 50 to 70% of workers "in danger of falling into poverty", lack of job creation, poor housing, inflation, stagnating incomes and unacceptable rates of poverty. One of the objectives of the Iranian revolution was to have no social classes in Iran. Yet, Iran's Department of Statistics reports that 10 million Iranians live under the absolute poverty line and 30 million live under the relative poverty line. In 2016, then-president Hassan Rouhani linked social ills, including poverty and homelessness, to corruption. (These problems have often been attributed to the economic sanctions imposed by the U.S., but Hossein Raghfar, an economist at Tehran's Alzahra University, has suggested that they may be responsible for as little as 15% of Iran's economic woes.) A study of income inequality (by Djavad Salehi-Isfahani) found levels as discouragingly high (a Gini coefficient of above 0.40) in 2002, over 20 years after the revolution, as during the Shah's time in 1972, "pointing to the lack of inclusive economic growth". Corruption or the uncovering of corruption has led to unrest in the form of riots, strikes, anti-government demonstrations—likely connected with the decline in economic growth corruption brings.

Characteristics

Ali Fathollah-Nejad describes the impediment to economic function and justice as a "political economy that favors regime loyalists... 'insiders' (khodi) or those with access to state resources and privileges also enjoy privileged access to jobs."

According to Iran International, the privatization drive that began around 2007 led mainly not to efficiently run private firms competing for business, but "quasi-governmental firms controlled by powerful insiders who earn economic rent from activities such as blocking competition", using public funds to stay afloat, "insider information to benefit from foreign exchange and gold price fluctuations when the government intervenes in the market", and circumventing sanctions to sell sanctioned goods at high prices.

An example of more explicit corruption in Iran (circa 1990s) came from Nobel Peace Prize winner, Shirin Ebadi, who gave up on the practice of commercial law as a waste of time, because in his words, "What was the point of knowing case law and preparing a defense when decisions were decided by bribes?"

The Islamic Revolutionary Guard Corps has often been cited for its great power and privilege. According to Hooshangt Amirahmadi, director of the Center for Middle Eastern Studies at Rutgers University, "A lot of ministers and governors are from the Revolutionary Guard... They are using the money to buy loyalty and create power bases." Among the questionable activities the Corps has engaged in are the operation of an "an illegal airport" near Karaj City—discovered in 2005—where it imported and exported goods "without any oversight". In 2005, the IRGC forcibly closed the then-new Imam Khomeini International Airport in Tehran, allowing it to reopen under Revolutionary Guard management.

In 2016 then-President Mahmoud Ahmadinejad vouched to fight "economic/oil Mafia" at all echelons of government. He also proposed that lawmakers consider a bill, based on which the wealth and property of all officials who have held high governmental posts since 1979 could be investigated. Out of the $700 billion earned by the state during the presidency of Ahmadinejad for the sale of oil, $150 billion could not be accounted for. On February 3, 2013, President Mahmoud Ahmadinejad played a video tape in the Iranian parliament that tied the heads of two branches of the government, the legislative and judiciary, to a documented financial corruption case related to the Larijani brothers.

Iranian Supreme Leader Ali Khamenei has stated that although there “are cases of corruption; it is not systematic” in Iran. On the other hand, a Reuters special investigation found Khamenei controls a massive financial empire built on property seizures worth $95 billion. He also said in 2023 that malpractice and corruption were "contagious" and leading to instability in the Judiciary.

Causes

Some explanations suggested for corruption in Iran by Mohammad Hossein Ziya include:

• the lack of freedom of information undermining the ability of independent media to expose corruption;
• the lack of power among civil society and non-governmental organizations active in reporting and attempting to fight corruption;
• the lack of transparency in state-owned and semi-state-owned companies;
• the so-called circumvention of sanctions, which involve a small group close to the government and who are major culprits in corruption.

Pahlavi era

The Imperial State of Iran, the government of Iran during the Pahlavi dynasty, lasted from 1925 to 1979. Corruption was a serious problem during this period.

Stephanie Cronin of the University of Oxford describes corruption under the rule of Reza Shah as "large-scale". As oil prices rose in 1973, the scale of corruption also rose, particularly among the royal family, their partners and friends. According to Manouchehr Ganji who created a study group for Farah Pahlavi, Mohammad Reza Pahlavi was not sensitive to the issue, but addressed every now and then petty matters of low-ranking officials. As Ganji writes, the group submitted at least 30 solid reports within 13 years on corruption of high-ranking officials and the royal circle, but the Shah called the reports "false rumors and fabrications". Parviz Sabeti, a high-ranking official of SAVAK believed that the one important reason for the success of the regime's opposition was corruption.

According to a report of a journal associated with The Pentagon, "By 1977 the sheer scale of corruption had reached a boiling point.... Even conservative estimates indicate that such [bureaucratic] corruption involved at least a billion dollars between 1973 and 1976."

In Michel Foucault's view, corruption was the "glue" that kept the Pahlavi regime, despotism and modernization together.

After the revolution, the Central Bank of Iran published a list of 178 prominent individuals who had recently transferred over $2 billion out of the country, among them:

• Jafar Sharif-Emami, $31 million
• Gholam Ali Oveisi, $15 million
• Namazi, $9 million,
• Nasser Moghadam, $2 million
• "Mayor of Tehran", $6 million
• "Minister of Health", $7 million
• "Director of the National Iranian Oil Company", over $60 million

Corruption among the royal family and court

Piaget Building, located in Manhattan, New York was designed for Pahlavi Foundation

Built up by forced sales and confiscations of estates, Reza Shah was "the richest man in Iran" and "left to his heir a bank account of some 3 million pounds and estates totalling over 3 million acres. A 1932 report of the British Embassy in Tehran indicates that Reza Shah developed an "unholy interest in land" and jailed families until they agreed to sell their properties.

In the 1950s, Mohammad Reza Pahlavi founded the Pahlavi Foundation (now the Alavi Foundation) which "penetrated almost every corner of the nation's economy". Bostock and Jones unambiguously declared of the Pahlavi Foundation that this "nominally charitable foundation fostered official corruption". According to Houchang Chehabi and Juan Linz, the Alavi foundation's $1.05 billion assets, $81 million capital and its declared devined $4.2 million was the "tip of the iceberg of official and dynastical corruption, outside and inside Iran". The foundation, which was one of his main wealth sources alongside estates left from Reza Shah and Iran's oil revenue, was a tax haven for his holdings.

Many members of the Pahlavi clan were among the chief perpetrators of corruption in Iran. The royal court was described as a "center of licentiousness and depravity, of corruption and influence peddling" in a mid-1970s CIA report. Prime Minister Amir Abbas Hoveyda who served from 1965 to 1977 had no choice but to facilitate or condone "the ubiquitous corruption of the Pahlavi Clan" and ignore "the corruption that saturated the regime".

In 1960, there were rumours that Princess Ashraf, the Shah's twin sister was arrested in Geneva carrying a suitcase containing $2 million worth of heroin. She was regarded as Iran's main drug dealer until 1979. A 1976 CIA report declared that she has a "near legendary reputation for financial corruption" and her son Shahram controls some-twenty companies that serve as "cover for Ashraf's quasi-legal business ventures". Prince Hamid Reza, the Shah's half-brother, was ostracized from the royal family because of his widespread scandals of promiscuity, addiction and involvement in drug trade.

According to William Shawcross, hundreds of call girls from Madame Claude's establishment in Paris passed through Tehran for Mohammad Reza Shah and members of his court.

Impact on the 1979 revolution

Further information: Background and causes of the Iranian Revolution

Some scholars have raised the point that widespread corruption among officials and royal court led to the public dissatisfaction and helped the Iranian Revolution.

In Handbook of Crisis and Emergency Management, the Pahlavi dynasty is described as an example of governments losing legitimacy because of corruption and facing a public service crisis as a result. According to Fakhreddin Azimi, Professor of History at the University of Connecticut, "the unbridled misconduct of the Pahlavi clan undermined the Shah's proclaimed commitment to combating corruption and seriously damaged his credibility and Stature".

Right before the revolution, in a 1978 National TV appeal to the nation, Shah said :

I pledge that past mistakes, lawlessness, injustice, and corruption will not only no longer be repeated, but will in every respect be rectified... I guarantee that in future the government in Iran will be based on the Constitution, social justice, and the will of the people, and will be free from despotism, injustice, and corruption.

On the other hand, Khomeini repeatedly argued that the only way to eliminate corruption was through a revolution.

See also

• Economy of Iran
  • Cryptocurrency in Iran
• Crime in Iran
  • Smuggling in Iran
    • Fuel smuggling in Iran
• History of the Islamic Republic of Iran
• Aghazadeh

Notable cases

• Banking cases
  • 2011 Iranian embezzlement scandal
• Fatemi Circle
• Shahram Jazayeri
• Marjan Sheikholeslami Aleagha
• Mahafarid Amir Khosravi
• Mahmoud Reza Khavari
• Mehdi Hashemi Rafsanjani
• Babak Zanjani

Institutions in charge of fighting corruption

• General Inspection Office
• Supreme Audit Court of Iran
• Islamic Revolutionary Court

References

• Abbas Milani. Eminent Persians, Syracuse University Press, 2008, ISBN 0815609078
• Stephanie Cronin. The Making of Modern Iran: State and Society under Riza Shah, 1921-1941, Routledge, 2012, ISBN 1136026940
• William Shawcross. The Shah's Last Ride, Simon & Schuster, 1989, ISBN 067168745X
• Ali Farazmand. Handbook of Crisis and Emergency Management. CRC Press, 2001, ISBN 1420002457
• Ervand Abrahamian. Iran Between Two Revolutions. Princeton University Press, 1982, ISBN 0691101345
• Ervand Abrahamian. A History of Modern Iran, Cambridge University Press, 2008, ISBN 1139471597
• Fakhreddin Azimi. Quest for democracy in Iran: a century of struggle against authoritarian rule. Harvard University Press, 2009, ISBN 0674020367
• Richard Morrock. The Psychology of Genocide and Violent Oppression: A Study of Mass Cruelty from Nazi Germany to Rwanda. McFarland & Company, 2010, ISBN 0786456280
• Manouchehr Ganji, Defying the Iranian Revolution: From a Minister to the Shah to a Leader of Resistance, Greenwood Publishing Group, 2002, ISBN 0275971872
• The Pahlavi Dynasty: An Entry from Encyclopedia of the World of Islam. Edited by Gholamali Haddad Adel, Mohammad Jafar Elmi, Hassan Taromi-Rad. EWI Press, 2012, ISBN 1908433019
• Houchang E. Chehabi, Juan J. Linz. Sultanistic Regimes, Johns Hopkins University Press, 1998, ISBN 0801856949
• Sandra Mackey. The Iranians: Persia, Islam and the Soul of a Nation, Penguin Group, 1996, ISBN 0-452-27563-6
• Desmond Harney. The Priest and the King: An Eyewitness Account of the Iranian Revolution, I.B. Tauris, 1999, ISBN 1860643744
• Janet Afary and Kevin B. Anderson. Foucault and the Iranian Revolution: Gender and the Seductions of Islamism, University of Chicago Press, 2010, ISBN 0226007871
• Mohammad Gholi Majd. Resistance to the Shah: Landowners and Ulama in Iran, University Press of Florida, 2000, ISBN 0813017319