Khatam al-Anbiya – Report

Khatam al-Anbiya

# Executive summery

The Revolutionary Guards is one of the Iran’s biggest economic and political forces, spread across the energy, banking and construction industries. Khatam al-Anbiya is an important part of the military organization’s economic empire. In fact, Khatam al-Anbiya was and is one of the IRGC’s main vessels in its takeover over a large portion of the Iranian economy. While in some of its other dealings inside Iran the IRGC may try to conceal its involvement and hide behind a complex network of companies and subsidiaries, the case of Khatam al-Anbiya is different. The organization uses its nationalist and patriotic image to gain grassroots support for the regime as well as carry out Khamenai’s self-sufficiency policy-thus allowing the Iranian regime to be less vulnerable and free from any foreign dependence.

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This policy gathered pace once the nuclear agreement was signed and allowed Kahtam al-Anbiya and the IRGC gain more and more power and influence. The organization’s ability to hold sway over key sectors of industry is such, that every company that wishes to do business in Iran, particularly in the energy and construction sectors, will most likely have to deal, in some way or another, with Khatam al-Anbiya, and therefore with the IRGC.

Khatam Al-Anbiya general infoKhatam Al-Anbiya List of working partnersKhatam Al-Anbiya List of subsidiaries

# Brief History

In wake of the destruction Iran suffered as a result of the Iran-Iraq war, Iran’s Revolutionary Guards Corps received a new mandate from Iran’s supreme leader, Ali Khamenai, to use its manpower and abilities to take part in the country’s reconstruction efforts. The IRGC established the “Headquarters of War Reconstruction and Renovation”, which operated out of the IRGC’s air force, navy, ground force and the Basij. In 1990, the organization became known as Gharagh-e Sazandegi-ye Khatam al-anbiya (literally translated as “Reconstruction Headquarters of the Seal of the Prophets”), often abbreviated as Qorb or Ghorb, the organization quickly became a way in which former IRGC members “transit into civilian life”.

# Main Fields of Activity

Khatam al-Anbiya is an integral part of Iran’s development plans, carrying out projects for various ministries, among them: the Ministry of Energy, the Ministry of Oil, the Ministry of Roads and Transportation, the Ministry of Defense. The organization’s activities range from aerospace and construction to developing oil and gas fields, its main specialty is in carrying out large scale engineering projects such as building dams, water diversion systems, highways, tunnels, buildings, heavy duty structures, building ports, offshore constructions, water supply system, water, gas and oil main pipelines. While, prior to Ahmedinejad’s presidency, the organization’s main field of activity was in carrying out large-scale road and dam projects, once Ahmedinejad was elected (was president between the years 2005-2013) the organization became heavily involved in the energy sector receiving large no-bid contracts from the Iranian Government. Especially, once many foreign companies pulled out of Iran. For example, the ministry of oil announced on April 30, 2011, that Khatam al-Anbiya was given a one billion USD no bid contract to develop the Halegan and Sefid Baghoun gas fields.

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In terms of the transportation infrastructure, Khatam al-Anbiya was responsible for several large scale projects such as building railways (for example the 141 miles long Kerman-Zahedan railway), underground tunnels (for example the no. 7 metro line in Tehran), roads infrastructure (for example the “Shrine to Shrine Highway” connecting Qom to Mashhad).

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The energy sector is probably the organization’s most important field of activity. Khatam al-Anbiya is responsible for various projects related to the energy sector including: maintenance and expansion of oil wells, maintenance and building of refineries (oil and gas), building storage tanks for various petroleum products, laying gas and oil pipelines. The organization is responsible for the country’s most important energy projects. Its flag project in recent years is the expansion of gas wells (it is worthwhile noting that Iran has the second largest gas reserves in the world) in South Pars with the South Pars Gas Complex (a subsidiary of the National Iranian Gas Company).

# Designations and Illicit Activities

# Growing Role in Iran’s Economy in Wake of the Sanctions

While under the presidency of Muhammad Khatami the organization’s progress seemed to slow down. Once Mahmoud Ahmedinejad was elected president, a new age was ushered. Using article 44 of the Iranian constitution, which calls for privatization of the Iranian economy, in order to legitimize their own activities (like other governmental organizations), Khatam al-Anbiya was given highly lucrative contracts, often without having to bid for them.
As sanctions against the country picked up pace during 2009 and 2010, more and more foreign companies began to pullout from Iran. This pullout served as a real boost for Khatam al-Anbiya , as companies owned by it or affiliated with it won, or were given, contracts to carry out very large and very lucrative projects. The organization had essentially filled the void created in wake of the pullout of foreign companies such as Total, Repsol, ENI, Shell and more. According to opposition reports, in the period between the years 2005-2011, Khatam al-Anbiya was given contracts worth roughly 25 Billion US Dollars.
The prominent role the organization plays in several key Iranian industries, in particular the petrochemical and gas & oil Industries, allows the Iranian regime to implement its self-sufficiency policy (decreed by Khamenai). The policy essentially calls for Iran to be self-sufficient and independent in all of its crucial industries. Indeed, one of the organization’s declared goals, is to compete with and prevent foreign contractors from re-entering the market, a position reiterated over the years by various IRGC, Khatam al-Anbiya and government officials.

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This position, also allows the organization to bolster their patriotic and national image as well as intimidate, dissuade and better their chances to compete overvarious bids. For example, Khatam al-Anbiya commander, Sardar Abdallah Abdollahi, criticized the progress made in the construction of the Tehran North freeway (Tehran-Shomal Freeway). Work on the freeway, which is meant to connect Tehran to the cities of western Mazandaran, began around 20 years ago; and has since turned into a major concern for the government as the project ran into problems over financing and implementation. On April 30, 2016, a few days before a memorandum of understanding was signed with a Korean Company to complete the project worth zone billion USD, Abdollahistated that ‘as far as I can recall, this project started nearly 25 years ago and still hasn’t reached its desired destination’. He went on to say that such procrastination when it comes to a national project is ‘tantamount to betrayal’.
Abdollahi attacked those in charge of the project, the Ministry of Roads and Urban Developmentand Bonayd Mostazafan, for preferring Chinese companies over local ones, and added that Qorbis willing to finance 40% of the construction cost of the project. On May 8, it seemed that the pressure was working as Ali Nourzad, CEO of the Ministry of Roads and Urban Development’s “Construction and Development of Transportation Infrastructure Company” stated that should the Koreans not live up to their commitments to carry out the project, he is ready to sign a deal with Khatam al-Anbiya in their stead.
In recent years, Khatam al-Anbiya was the target of growing criticism in Iran, as many claimed that the organization’s activity is ruining the private sector. In response, IRGC officials, as well as Khatam al-Anbiya officials, have consistently claimed that the organization does not impede the private sector’s growth, but rather encouragesit. For example, Mohammad Ali Jafari, the IRGC’s commander claimed on October 2014 that Khatam al-Anbiya is forbidden from entering bids that arelower than under 100 Billion rial (approximately 32 million US Dollars), and even then, if there are companies in the private sector that are able to compete in such bids, then the IRGC will not compete over them.
Today, with over 2,000 projects carried out, the organization is one of Iran’s largest contractors, if not the largest, in industrial and development projects (while continuing to act as the IRGC’s engineering arm). An indication of Khatam al-Anbiya exponential growth over the years can be seen in the number of its employees and those who are indirectly employed by it. In late 2009, former IRGC commander, Sattar Vafaei, stated in an interview that about 25,000 engineers and staff work for Khatam al-Anbiya when 10% of those are IRGC members. In late 2014, Qorb’s commander, Sardar Abdallah Abdollahi, stated in an interview to the Fars news agency that the organization’s personnel numbers somewherearound 135,000 (of these 2,560 are official IRGC members). In addition, Abdollahi added that the number of those who are indirectly employed by the company is around 500,000.

# Lack of Transparency, Political Clout and Ties to Government, Irregularities and Corruption

Khatam al-Anbiya’s unique position as a quasi-governmental organization which incorporates both military and civilian aspects, allows it to conduct its affairs without transparency or supervision.
In addition, the IRGC’s infiltration into all of the country’s nodes of power, especially during Ahmedinejad’s term, only strengthened the organization’s hold overthe country. This hold allows Khatam al-Anbiya to conduct its affairs at its own pace. For example, Akbar Torkan, President Rouhani’s chief adviser, criticized Khatam al-Anbiya claiming that many projects remain unfinished due to the organization’s dishonest and negligent conduct. According to Torkan, Khatam al-Anbiya commit to large scale and expensive projects, even if they don’t have adequate funds. As a result, many projects are delayed for years. According to Torkan, because Khatam al-Anbiya ‘is so powerful, we [the government]are unable to face up to it’.

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Under the term of President Rouhani some steps were taken to curtail the organization’s hold over the economy and, at least ostensibly, make it appear more accountable for its profits. In December 2015, a bill was even passed by the Iranian Parliament forcing Khatam al-Anbiya (as well as other organizations such as Astan Qods Razavi) for the first time to pay taxes. Under the approved bill, all entities and companies affiliated to Kahatam al-Anbiya should pay taxes. Rouhani even spoke negatively about the IRGC’s control over the Iranian economy, an act which brought about much criticism from IRGC officers as well as senior conservative politicians chief among them the Iranian Parliament Chairman, Ali Larijani, stated the Iranian Majles will support transferring various projects to the organization and if need be, the Majles will make exception for the organization.
However, in spiteof Rouhani’s criticism, he still needed to muster the IRGC’s support or at least its mild acquiescence to the nuclear agreement. Therefore, even after the bill was passed, Khatam al-Anbiya continued to gain large scale lucrative contracts. In addition, the organization’s budget for the year 2015/2016 was doubled and reached 3.7 billion USD.

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A prominent aspect of this lack of transparency is that, thanks to its tremendous political influence, Khatam al-Anbiya winsprime contracts without bids. This position of power and the organization’s vast resources are also used sometimes as leverage in order to obtain lucrative assets. For example, in November 2015, it was reported that Khatam al-Anbiya bought 75,000 thousand meters of prime land in Tehran’s Abbas Abad neighborhood. According to Rahmatullah Hafezi, head of the city’s Health and Environment Council, this acquisition was an infraction by the municipality which sold the lands to Khatam al-Anbiya for a reduced price, and transferred other sums of money, in order to settle its debt to the organization. While the particulars of its budget are not a matter of public record, according to the financial magazine, Tejarat-e Farda, Khatam al-Anbiya’s excess revenue over expenses is allocated as follows:

  • Up to 30% – Purchase of machinery, equipment, engineering equipment, tools,
    Spare parts, overhaul, manufacture of building materials and construction of
    required buildings.
  • Up to 20% – remuneration, bonuses, overtime and other necessary costs.
  • Up to 30% – Construction of corporate housing.
  • The remainder goes to the IRGC’s forces.

# Grassroots Support

Another important aspect of the organization’s activity is its social activities. This is mainly carried out by using the organization’s vast resources toward communal projects. In addition to building corporate housing in areas it carries out long-term projects, the organization engages in a wide range of activities targeting poor and underdeveloped areas. The activities range from renovation and maintaining various infrastructures (such as roads, water pipes, sewage), to building schools, hospitals and dispensaries, orphanages, mosques and more. In addition, Khatam al-Anbiya also carries out activities to help the agriculture sector such as building warehouses, water pumping stations, providing agricultural machinery and more. Securing grassroots support for the regime is in fact one of the organization’s stated objectives. Naturally, this allows Khatam al-Anbiya not only to bolster its own and the IRGC’s public image, it also helps it recruit candidates for the Basij and the IRGC. [According to official website of Khatam:]