Iran Probes $170 Million Fraud In Petrochemical Firm

A $170 million apparent embezzlement case has left one of Iran’s natural gas producers in serious trouble and might reduce production at the onset of winter.

The issue of possible fraud or some sort of corruption is not straightforward as one might expect in a typical Western company. There are Iranian nuances in the case that makes it a bit different.

Mehr Petrochemicals produces the highest-grade polyethylene in the Middle East but it stands at the verge of bankruptcy, according to Eghtesad Online (Economy Online) a recognized website in Iran reporting on economic issue.

The firm belongs to Persian Gulf Holding, a large Iranian quasi-governmental company that claims to be an independent entity, with 15 subsidiaries.

Mehr Petrochemicals, as an Iranian company is supposed to repatriate its foreign currency earnings according to law, as it exports products and receives government dollars at preferential rates when it for importing equipment or chemicals.

The problem is that it has failed to bring back $170 million to the country and apparently the money has simply vanished.

The Iranian Inspector General’s office has issued a report saying that Mehr owes close to $100 million locally and its export revenues are missing.

The danger in the company going bankrupt and shutting down is loss of gas output in the South Pars fields in the Persian Gulf, Iranian media say.

Mehr plays a role in gas production because it needs it for producing petrochemicals.

In the middle of the scandal stands a mysterious and unnamed foreign investor, reportedly a firm registered in Italy.

The story goes back seventeen years, when Mehr Petrochemicals was established with a 60-percent foreign stake by a Japanese-Thai consortium, with some management rights over the company.

In 2018, in the wake of renewed economic sanctions by the United States, the foreign investor decided to divest of its stake in the company.

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