One of Iran’s biggest cash cows, the Mobarakeh Steel Company, is reeling from the release of a lengthy parliamentary investigation that alleges corruption amounting to $3 billion tied to the administration of former President Hassan Rohani.

Since the Iranian parliamentary investigatory commission read out its damning allegations on August 18 following a three-year investigation, the Iranian stock exchange suspended trading of Mobarakeh shares and hard-line President Ebrahim Raisi has called for company personnel implicated in the report to be fired.

The allegations have sent shockwaves reaching the upper echelons of power in Iran, which for years has pledged to tackle endemic corruption as it suffers from an economic crisis that has fueled public unrest.

In targeting the Mobarakeh Steel Company, located near the city of Mobarakeh in the central Isfahan Province, investigators have taken on Iran’s largest steelmaker and producer of about 1 percent of the country’s gross domestic product. The release of the report also comes at a time when hopes are high that the revival of the 2015 nuclear deal between Iran and world powers might put an end to strict export sanctions imposed against the steel giant and other major industrial enterprises.

The readout of the 300-page investigation contained a number of bombshells, many implicating the administration of Rohani, a relative moderate who was in office from 2013 to 2021.

Based on more than 3,000 documents and 1,200 files, the report alleged that senior officials in Rohani’s government received illicit payoffs and intervened in granting state contracts to the company, and that huge sums were funneled to branches of Iran’s military, regional police in Isfahan Province, and leaders of Friday Prayers.

The report also alleges that illicit rent payments were among the 90 infractions uncovered, as well as payments to consultants who never provided services, illegal stock transactions involving subsidiaries, and the signing of a bloated contract with an undisclosed and unqualified Chinese company hired to construct a steel-rolling platform.

The investigative committee also accused Mobarakeh of making mysterious payments to the state broadcaster, Islamic Republic of Iran Broadcasting (IRIB), and spreading information on social media and via other outlets that “created an atmosphere against the parliament’s investigation.”

Possible Criminal Prosecution

The parliament, dominated by hard-liners, overwhelmingly voted to refer the findings to the judiciary.

On August 22, Gholamhossein Mohseni, the head of the judiciary, promised quick action. He said that, because such allegations “create a negative mentality” among the public, it was necessary to handle the next step of possible criminal prosecution with “extreme precision and speed.”

As of August 23, the judiciary had not yet received the results of the investigation, which had been welcomed recently by Mobarakeh as a way to streamline its operations. Parliamentary representatives told Iranian media that, if necessary, those accused of crimes would be prevented from leaving the country and would be questioned in an independent investigation.

Raisi, who lost to Rohani in the 2017 presidential election and succeeded the two-term president after winning office in August 2021, wasted little time in publicly calling for heads to roll.

While thanking the Industry, Mining, and Trade Ministry for implementing “management changes” at the steel giant in the year since he took office, Raisi said on August 21 that “all those responsible for violations found at Mobarakeh Steel should be fired and charged.”

“The government is increasing the transparency and supervision of state-owned companies and considers itself obliged to deal with any cases of corruption,” he added.

The Mobarakeh Steel Company is a “semi-public” company, with most of its shares owned by government entities as well as various private and public joint-stock companies. It employs about 350,000 people and its management is appointed by the government.

The alleged corruption amounts to about one-third of the value of the company’s estimated worth of $10 billion. Trading of Mobarakeh Steel Company shares was suspended on August 20 by the Tehran Stock Exchange, which said trading will not resume until the company’s financial situation becomes clearer.

Woeful Corruption Record

Iran has a woeful track record when it comes to corruption, ranking 150th out of 180 countries in Transparency International’s latest Corruption Perception Index that charts public-sector graft.

Ehsan Mehrabi, a Berlin-based journalist who previously covered the Iranian parliament, told RFE/RL’s Radio Farda that corruption in Iran has become a “systemic phenomenon” and that the Mobarakeh proceedings could reveal the judicial system’s weakness in taking it on.

“The difference with this case is that there is a legal structure in place,” Mehrabi said. “They will say that they were allowed to give these bribes, and money was not spent on personal matters but rather governmental institutions.”

Mehrabi explained that the parliamentary investigation, which began at the start of Rohani’s second term, can be considered a political matter. He also noted that Raisi himself was a former head of the judiciary, and may have been in a position to benefit from the alleged corruption.

Supreme Leader Ayatollah Ali Khamenei has publicly acknowledged his country’s difficulties with corruption, calling recently for judicial authorities to root out graft.

“The issue of fighting corruption should be taken seriously,” he told judicial officials during a meeting in June. “In the judiciary, in the executive branch and elsewhere, there are some structures that naturally create corruption. Those structures have to be broken down.”

Previous governments and presidential candidates have touted efforts to combat corruption, and it has become a trend for new governments to pin the blame for graft and the country’s economic woes on their predecessors.

Former President Mahmud Ahmadinejad, who as a candidate leveled accusations against “corrupt officials” and private “plunderers,” himself was accused of running a corrupt administration after he left office after two terms.

Rohani embarked on economic reforms upon taking office in 2013. He listed ending government corruption as a way of revamping the country’s subsidies program, which has been crucial for Iranians hit hard by an economic and unemployment crisis brought about in part by international sanctions imposed over concerns surrounding Tehran’s nuclear program.

Rohani also sought ways to get relief from international sanctions, many of which were dropped after Tehran and world powers signed a landmark deal in 2015 that limited Iran’s sensitive nuclear activities in exchange for the retraction of many of the crippling punitive economic measures.

In 2018, the United States unilaterally withdrew from the accord, restoring sanctions and imposing new, stricter, punitive measures targeting metals exports, Iran’s largest non-petroleum related source of export revenue.

Accused of being used as a revenue stream for an alleged Iran-based terrorism network, the Mobarakeh Steel Company was among the companies blacklisted by the U.S. government in 2018 and was subsequently targeted by additional sanctions.

As months of negotiations between world powers and Tehran appear to be on the cusp of reviving the stalled nuclear deal, Iran’s stalled economy could get a major boost. Even then, economists have said that endemic corruption and mismanagement are likely to hinder Iran’s economic recovery.

Despite the sanctions against Mobarakeh, Iran has touted the company’s growth as an exporter. But the country has suffered from shutdowns due to electricity shortages and low supplies of domestic steel slated for export, and cracks in the steel industry overall began to show following Russia’s full-scale invasion of Ukraine in February.

In May, the World Steel Association estimated that Iran’s steel production had fallen by 18 percent over the previous month, and by nearly a further 11 percent in June.

The falloff was widely attributed in the Iranian media to Russia’s efforts to boost sales for its steel due to international sanctions introduced after its invasion of Ukraine.

In July, steel output in Iran, the world’s 10th largest producer, was up 34 percent over the previous month.

After the suspension of Mobarakeh steel trading on the Tehran Stock Exchange, one of four in Iran, the exchange fell heavily on August 22.

Source » rferl