Iran: Ahmadinejad Administration in Tensions With Revolutionary Guards — 600 Million Dollars in Embezzlement

05/29/11


Ertebatat Zirsakht telecommunications company – a government entity operating under the Ministry of Telecommunications – issued a warning to Iran’s main telecommunications agency, TCI that unless it paid up its debt, the country’s telecommunications with the outside world and even between the country’s provinces, would be cut off “in the near future.”

Ertebatat is the company that handles international Internet communications, inter-provincial and international telephone communications for Iran’s Telecommunication Company (also known as TCI or the Sherkate Mokhaberate Iran), the government agency that regulates all telecommunications.

Ertebatat split from TCI in 2008 and has been operating as an independent government agency since then. It has about 25 million land telephone subscribers, 41 million cell phone (mobile) subscribers and about a million data subscribers who receive services from TCI. According to the manager of TCI, Ertebatat made a net profit of 2.5 million Dollars.

Prior to that, TCI was a fully government entity. It was bought by a consortium of three companies owned by the Revolutionary Guards, the IRGC, and the Setade Ejraie Farmane Imam (translated as the Operational Group for the Imam’s Decree) in September of 2009. The consortium, called the Tose-e Etemad Mobin, bought the shares of TCI and is made up of three companies: Tose Etemad investment company and the Shahriyar Mahestan investment company – both of which belong to the Bonyad Taavone company (a cooperative foundation) belonging to the IRGC – and Gostareshe Electronik Mobin Iran company which belongs to the Setade Ejraie Farman Imam group.

The 600 Million Dollar Debt

State-run IRNA news agency, which published the news of Ertebatat’s debt to TCI, adds that after Ertebatat broke away from TCI, the latter never signed any contracts with Ertebatat, while it still owes it about 700 million Dollars. In response to the claims and threats of Ertebatat, the managing director of TCI, Dawood Zarian announced that his company had no outstanding debt to Ertebatat adding that it had paid up its dues. He also said that Ertebatat pursued “anti privatization” actions.

Zarian has said that because his company has had good profits for its shareholders, “some were trying to create flux in the value of the company’s shares by making such debt announcements.”

An uproar and controversy erupted in 2009 when the TCI handed over 8 billion Dollars of its shares to the Tose Etemad Consortium that year. Just hours prior to the transaction, a competitor to Consortium, namely Pishgaman Kavir Yazd, was announced disqualified to bid as a way to ensuring that the IRGC owned Consortium would win the bid for the company. This event has been labeled as the “largest stock exchange transaction in Iran’s stock exchange.” Even the Majlis which conducted an investigation into the allegations of fraud a year later announced that the transfer of TCI shares as part of the privatization policy of the government was “superficial” (i.e. lacking essence and authenticity) adding that “the transaction took place completely in an uncompetitive manner with the purpose of passing shares to a government entity.”

The IRGC and Business

Tensions between Ahmadinejad’s administration and the IRGC Revolutionary Guards, involving such large sums of money, come despite the fact that Ahmadinejad’s administration has engaged in the largest business transactions since 2005 in which it has handed over the country’s largest projects in all economy and business sectors ranging from road building, industrial projects, gas and oil development projects, etc to the IRGC bypassing even existing regulations for such transfers that are designed to ensure fair competition among bidders. IRGC consortiums and firms that have received the bulk of government privatization shares include the Khatam ol- Anbia engineering firm and the Taavon (Cooperative) Foundation.

In addition, the IRGC has received full support in entering the financial and economic sectors of Iran’s economy which includes its banking and stock exchange activities. While there are no official estimates of the value of such transactions that have gone to the IRGC, numbers that are often mentioned by those in the business world are around billions of Dollars. What is known and clear is the heavy take over and involvement of the IRGC in the country economic life. One example of such intrusion are the activities of Mehr Eghtesad Iran Investment Company which till now has investments in a range of companies and fields such as telecommunications, Mobarake Steel Mill, Iralco, Tabriz Tracktor Manufacturing, Sadra, Technotaj, Tose Sanati Investment Company, and Jaberin Hayan Pharmaceutical Company.

According to Tehran Emruz newspaper, Bonyad Taavon Sepah (an IRGC cooperative company) currently owns 45 percents of Bahman Group, 4 percent of Saipa automobile manufacturing, and 25 percent of Kermanshah Petrochemical Plant. This entity is also aggressively active in Iran’s stock market and has purchased large shares in companies such as Bama. Among better known companies that are fully owned by the IRGC’s Bonyad Taavon are Kesht va Sanaat Shadab Khorasan company, Khadamat Havai Pars aviation company and Maede food industries.

In addition to such aggressive and uncompetitive market interventions and take-overs, the IRGC in August of 2006 militarily took over an oil production rig, Orizant, in the Persian Gulf operated by the Romanian “Grup Servicci Petroliere” company and a year later took over Kish Oriental company.

It is widely accepted that IRGC’s Khatam ol-Anbia is the largest economic and industrial cartel in Iran which owns and controls the largest oil and other economic projects in the country.

These tensions between the IRGC and Ahmadinejad’s administration come at a time when Ahmadinejad’s relations with the supreme leader have also been shaken particularly since last month when ayatollah Khamenei blocked Ahmadinejad’s dismissal of the intelligence minister. The IRGC and its commanders are directly appointed by the supreme leader and in recent weeks some commanders have publicly spoken against senior administration officials, particularly Esfandiar Rahim Mashai, the head of the president’s office, Hamid Baghai who is Mashai’s deputy, and Mohammad-Reza Rahim, the first vice-president.

 

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