ifmat - IRGC and the economy - a complex web

The Islamic Revolution Guards Corps (IRGC) is a military organisation whose duty, under Iranian law, is to protect the Islamic Revolution. But in addition to this role, the influential body is also intricately involved in Iranian politics and the economy, meaning that the future of Iran’s Islamic system, especially in the post-Khamenei era, is likely to be highly dependent on the IRGC.

The IRGC’s access to enormous resources has granted it unrivalled influence over both politics and the economy. Although the government allocates funds to the IRGC in annual budgets, the IRGC has been engaged in economic activities since the end of the Iran-Iraq war in 1988. Indeed, it was the late President Akbar Hashemi-Rafsanjani who first called on the IRGC to deploy its resources and capacity in the economy.

Apart from military industries, the IRGC is also active in diverse sectors, including housing development, dam and road construction, oil and gas projects, food, transportation and even educational and cultural activities.

Iranians are aware that the IRGC uses its political influence to win tenders. Even President Hassan Rouhani has openly criticised the Guards for their involvement in the economy. Speaking in June 2017, he described the IRGC as “a government with a gun”, adding “no-one dares compete with them”. (See BBC Monitoring report: https://monitoring.bbc.co.uk/product/c1diznin)

An example of this was the IRGC’s successful 2009 bid to gain 51 per cent of the shares in Iran’s Telecommunications Company – the largest tender in the country’s history. On that occasion, a rival company withdrew its bid at the last minute under mysterious circumstances, leaving the IRGC-sponsored Etemad Mobin Consortium as the sole bidder. This led to widespread rumours in the media that the rival company was put under pressure to withdraw its bid.

The website ireconomy.ir, which belongs to Sadeq Kharrazi, Iran’s former ambassador to Paris, published a report on the IRGC’s economic activities in 2012. The report said the IRGC has registered 812 companies and controls up to one-third of Iran’s economy.

The IRGC itself has said it only carries out large projects which are worth more than 1000bn rials (about 2.5m dollars).

Though the IRGC’s role in the economy is widely known, the level of this involvement is not clear, and the Guards keep key information – such as the names of stockholders and how the dividends are distributed – off the books. Therefore, it is difficult and sometimes impossible to establish how exactly the IRGC runs its economic empire.

Notices published in the Official Gazette (rrk.ir – the Iranian equivalent of Companies’ House in the UK) and high-circulation newspapers provide some clues, but they are mostly “notices of changes” not “notices of establishment”. They are therefore silent on the shareholders – if indeed any exist other than the IRGC itself – or the distribution of dividends.

Most of the companies do not have a website. Those that do, do not include the names of shareholders.

IRGC’s economic arms

The IRGC carries out its economic activities through two economic arms: the IRGC Cooperation Foundation (IRGC-CF), and its twin IRGC Basij Cooperation Foundation; and the Khatam ol-Anbia Construction Base (see graphic above). This report will focus on the IRGC-CF. A subsequent report will cover the activities of the Khatam ol-Anbia Base.

IRGC Cooperation Foundation (IRGC-CF)

ifmat - IRGC and the economy - a complex web1

The IRGC-CF was founded in 1986. In its constitution, it describes its objectives as “providing housing and loans for the permanent personnel of the IRGC, supporting IRGC housing cooperatives by providing land… and providing personnel with legal support, as well as producing and supplying construction materials.”

The constitution states that the initial capital was provided by Supreme Leader Ali Khamenei, and that the entire assets of the IRGC-CF belong to the Leader and will be transferred to him should the enterprise be dissolved.

IRGC-CF’s highest body, its board of trustees, includes the commander-in-chief and commanders of the IRGC’s three branches (Ground, Air and Naval forces), the head of the IRGC’s Intelligence Organisation and Supreme Leader Ali Khamenei’s representative in the IRGC.

The board of trustees appoints a board of directors and a managing director. That post is currently held by Brig-Gen Majid Khorasani who, according to Mehr news agency on 22 August 2017, replaced Brig-Gen Ahmad Vahid-Dastjerdi.

Key members

A legal notice on Iran’s Official Gazette lists past and present members of the board of directors and includes the following:

Ali Asghar Nowruzi, Ahmad Vahid-Dastjerdi, Seyyed Parviz Fattah, Seyyed Aminollah Emami-Tabtabaei and Masoud Mehrdadi – who was linked to the controversial bid for Iran’s Telecommunication Company (see above).

Vahid-Dastjerdi is an influential figure and a former deputy defence minister. He is a member of the directors of the Kish Island Free Zone Organisation, Saipa car industries and the Sadra ship building company. Under former president Mahmoud Ahmadinejad, Vahid-Dastjerdi was appointed chairman of the Oil Industry Pension Fund, but was dismissed by Oil Minister Bijan Namdar-Zanganeh in 2013.

Seyyed Parviz Fattah served as energy minister under Ahmadinejad. He has since left the IRGC-CF and now heads the Imam Khomeini Relief Committee, Iran’s largest state charity organisation, which is active in a number of countries.

Apart from the board members, other names are often mentioned in media reports on the IRGC-CF’s economic activities: Akbar Ranjdideh (a commander in the Quds Force, the external arm of the IRGC), Hasan Pelarak (the head of a big institution that manages the reconstruction of Shia holy sites in Iraq and who served as an adviser to First Vice-President Eshaq Jahangiri).

In terms of auditing, the name of Sohrab Taqipour-Ahangar appears as the auditor of many IRGC-linked companies. Very little information is available, but a message posted last year on a provincial website under the same name gave the title of “Managing Director of Amin Mohaseb Daqiq Auditing Company, IRGC Brig-Gen Sohrab Taqipour-Ahangar”. This title would indicate that the IRGC carries out is own auditing.

IRGC-CF’s complex web

Senior IRGC figures use a complex network of board members and representatives to wield their influence in the decision-making process of companies affiliated to the IRGC-CF (which we shall refer to as “Orbit 1”) or linked with it (“Orbit 2”).

Say company A is in Orbit 1, directly affiliated to the IRGC-CF, and company B is seemingly an ordinary private company in Orbit 2.

Company A will have a senior IRGC figure on its board of directors. That senior figure is not a member of the board of company B, but he ensures there is at least one member from company A who also sits as a board member in company B, so be in a position to do their bidding.

Such dynamics cascade out in numerous ways across the economy, creating a complex network of relations and inter-relations.

The list below shows the companies in Orbit 1. The list is not exhaustive, as other firms with well-known connections to the IRGC are not registered and no information is available in the Official Gazette.

1. Pahneh Mines Development Company

2. Shahabsang Mining Industries Company

3. Behsaz Banagostar (construction)

4. Ofogh Towse’eh Saberin (electronics; under US sanctions since 2013)

5. Pardis Sabz Metal (investment)

6. Baharan (informatics, telecoms, web networking)

7. Ferdows Agro-Industry Company

8. Chaharmahal-Bakhtiari Food Company

9. Khalij Fars Fishery Industries

10. Puya Electronic Researchers Company

11. Mowj Nasr Gostar (communication and security)

12. Ayandesazan Farda-ye Kowsar (insurance)

13. Shahrak Mahallati (cultural/educational institution)

14. Naserin Vahid (trades in military and non-military products)

15. Dastvareh Logistical and Educational services

16. Puya Aflak Sepehr (very little information available)

17. Samen al-Aemeh Air Travel services

18. Talieh Sabz Jahan (transportation services)

19. Sanjesh Gostar Dana Inspection and Quality Control

20. Navid Bahman Shoe Company

21. Laleh Leisure Services

The graphic below shows the companies in Orbit 1 and their links.

Orbit 2 companies

Companies in Orbit 2 are those in which the IRGC-CF is not directly represented in the board of directors. There are many companies in Orbit 2 with complex ties among themselves and Orbit 1 companies. The example below shows how two Orbit 2 companies are influenced directly by an Orbit 1 company, in this case Ofogh Towse’eh Saberin:

IRGC-CF has Masoud Ouraei as its representative on the board of directors of Ofogh Towse’eh Saberin. Other board members are Hossein Makaremi from Baharan Gostar Kish (an Orbit 2 company involved in IT and telecoms), Mohammad Dehghani from Mowj Gostar Company (security, networking, electronics), Kamran Salehi from Baharan Company (informatics, telecoms), Ramazan Pirouz from Saberin Kish Company (whose interests are vague, but possibly involved foreign trade) and Seyyed Ali Yazdinejad from Laleh Company (leisure).

Baharahn Gostar Kish (bgk-co.ir), which is involved in IT and communications, is an Orbit 2 company. The IRGC-CF does not have a member on Baharan Gostar Kish’s board of directors, but two of its board members are from Baharan and Mowj Nasr Gostar, which are both in Orbit 1.

In a subsequesnt report, we will focus on the Khatam ol-Anbia Construction Base.

Source » BBC Monitoring 26 Sep 18