Corruption in Iran: widespread, institutionalised, and systemic

Corruption in Iran: widespread, institutionalised, and systemic
Comment: The fight against graft seems to be unwinnable due to its structural nature and institutional unwillingness to tackle corruption, writes Majid Mohammadi.
5 min read
13 Oct, 2015
Corruption has been rampant in major sectors of Iran's economy [AFP]

Two days after the Iran nuclear deal was struck, Ali Khamenei, the leader of Islamic republic, warned his followers that the enmity between Iran and the West was not over.

Khamenei has been talking about the importance of preventing "the enemy's" influence in the past four months.

"The root cause of the problems returns to… real enemies, the US and Israel," he said. "[People] have realised that their real stubborn enemy is the world's arrogance and Zionism - and that's why they chant slogans against the US and Zionism."

But Iran's real public enemy number one is not the west. It is corruption. 

     Iran's real public enemy number one is not the west. It is corruption

Corrupted areas

Corruption has been rampant in major economic sectors of the country: 

1)      money laundering and embezzlement in the mostly nationalised banking sector,

2)      grabbing public lands in the construction sector,

3)      distribution of low-interest loans among well-connected officials in the financial sector; Iranian government's banks have a stack of $50 billion unpaid loans. One third of the low-cost loans have gone to a group of just 575 people;

4)      no-bid contracts and the selling off of public and governmental companies in industry and agriculture sectors,

5)      granting import and export licenses to the most powerful individuals and people who are connected to military and security establishments, and

6)      granting non-competitive governmental scholarships to offspring of well-connected people in the education sector.  


Iranian officials usually present four justifications for widespread and structural corruption in Iran

  1. "It is not just us" - When an MP was asked about corruption charges against 170 members of the Majles spending government funds on their election campaigns, he said: "Everybody knows that organisations such as social security, public welfare and public funds allocate some money to be paid to the poor - and MPs are just a medium to do this job."
  2. "We are the Samaritans" - All high-ranking officials have lines of budgets that are spent at their discretion and nobody knows how much is allocated. When asked by the media, Iranian officials claim they are giving these funds to charities and people in need.
  3. "We will pursue it" - In most cases, Iranian officials accused of corruption claim that they will pursue the case. By doing this, they sit in the seat of a prosecutor instead of the accused.
  4. "This was exaggerated" - When media outlets reported that the social security administration paid around one million dollars to 170 MPs to spend in their campaigns, they reacted by saying that "these gifts were lower than that. MPs added some to the gifts and distributed among the needy". It is not clear why social security should use MPs to distribute resources among the poor. If this was not a corruption but charity work, why would the deputy chair of the oversight committee say "the names of the MPs who received these funds will be confidential"?


Corruption works

Corruption has an important function in Iran. It brings loyalty to the regime and more importantly, to the leader. Khamenei has always been a staunch supporter of sweeping corruption cases under the rug. When a $2.5 billion embezzlement case - the largest in the country - was disclosed in 2011, Khamenei asked the media to stop reporting on the case.

A number of MPs were involved in the case. None were indicted.

In another case, 3,000 people received scholarships to pursue their graduate studies abroad - without any credibility - during Ahmadinejad's administration. During Rouhani's administration, some of these scholarships were nullified - but Khamenei interfered and they were reinstated.

Most of the grantees were family members of high-ranking officials and members of Basij.   

Root causes of government corruption

Khamenei has four major policies to run the country and all of them invigorate corruption and abuse of power.

The first is to divide Iranian citizens beween "insiders" (khodi) and "outsiders" (ghair-e khodi). Insiders have all the privileges due to their loyalty to the government, and all the structural and legal discriminations work against the outsiders.

The second policy is banning the free flow of information through censorship, jamming and filtering.

The third is to let the military and security establishment to take a major share of the economy. And the last the leader's office constructing an economic empire that is not under any oversight.

     Fighting against corruption is just a strategy in political competition between factions

Decorative fight against corruption

Fighting against corruption is just a strategy in political competition between factions.

Every faction accuses another over corruption, while most accusations have some grounds in the reality or at least not verifiably rejected, most were not and will never be reviewed by a court, and politicians do not care about these accusations anyway.

To stay in power, they just need Khamenei's trust. Iranian media are not free to do any investigative work on this matter and the government is not transparent.

In 2014, Iran's transparency rank was 136 among 175 nations. 

Hopeless case

Iranian officials have expressed their hopelessness regarding fighting against corruption.

"I have no hope that fighting against corruption works," says Ali Larijani, the speaker of the Majles.

Ahmad Tavakkoli, an Iranian MP, believes that "corruption is now systemic in Iran".

Khamenei, meanwhile, talks about corruption as if he believes nothing could be done: "Some years ago I talked about fighting against economic corruption. I wrote a letter to the heads of three branches of government… What is done? What did you really do?"

According to Article 142 of the constitution, "the assets of the leader, the president, the deputies to the president, and ministers, as well as those of their spouses and offspring, are to be examined before and after their term of office by the head of the judicial power, in order to ensure they have not increased in a fashion contrary to law".

This article has never been enforced.

Majid Mohammadi is an Iranian-born academic and the author of several books in Persian and English on politics, arts and religion in Iran.

Opinions expressed in this article remain those of the author and do not necessarily represent those of al-Araby al-Jadeed, its editorial board or staff.