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HomeIran News NowIran Economy NewsRecord $3.7B Embezzlement Scandal Shakes Iran’s Tea Industry, Revealing Deep Corruption and...

Record $3.7B Embezzlement Scandal Shakes Iran’s Tea Industry, Revealing Deep Corruption and Production Consequences

iran dollar banknote tea leaves

While poverty continues to tighten its grip on a substantial portion of the Iranian population every day, recent revelations from state-controlled media shed light on an egregious economic corruption case that sets a new record for embezzlements and overt thefts within the history of the clerical dictatorship.

The focal point of this economic corruption is the “tea” sector. According to the statements of Zabihollah Khodaeian, the head of the regime’s inspectorate, a “commercial group from 2019 to mid-2022 has received approximately $3.37 billion for the import of tea and advanced printing and packaging machinery. However, so far, for $1.4 billion of the received currency, it has not fulfilled its commitment and has not imported any goods into the country. Moreover, this company has sold the received government currencies at a higher rate in the open market, and this figure is expected to increase to nearly $2 billion.”

In the Iranian economic context, the official exchange rate, known as the “Nimaee-dollar,” values one dollar at about 37,000 tomans, a rate accessible exclusively to traders affiliated with the regime. This stands in stark contrast to the market exchange rate, hovering around 50,000 tomans. Consequently, each dollar contributes approximately 13,000 tomans to the coffers of the regime’s embezzlers. When multiplied by the billions of dollars received in foreign exchange, this translates into astronomical figures.

The commercial entity at the center of these allegations is identified as the Debsh Agriculture and Industrial Group, managed by an individual named Akbar Rahimi. This large-scale financial malpractice commenced during the presidency of Hassan Rouhani in 2018 and has persisted until the present year. Rahimi is part of a group known colloquially in Iran as the “smuggling brothers,” who was implicated in another significant case related to irregularities in the import of paper at the Ministry of Culture and Islamic Guidance.

The term “smuggling brothers” refers to organized groups exploiting state connections, particularly with the Revolutionary Guards, to conduct extensive trafficking to bypass international sanctions. This term was first used by former President Mahmoud Ahmadinejad in July 2011 and faced severe criticism from Revolutionary Guards commanders.

In addition to Akbar Rahimi, several other individuals have been named, including a deputy to Javad Sadatinejad, the resigned Minister of Agriculture, an individual identified as “A” in one of the ministry’s departments, a deputy minister named “K,” and a director-general named “A.” The company’s customs clearance followed the “green channel” process, wherein the necessary checkboxes were marked within the system, resulting in the smooth clearance and entry of goods into the country. However, the importation of tea, being a regulated product, necessitates quality confirmation by other authorities. According to regulations, such imports should have undergone scrutiny through either the “yellow” or “red” channels.

Several banks, institutions, and ministries, such as the Ministry of Industry, the Ministry of Agriculture, the Customs Administration, the Central Bank, the Trade Development Organization, and the regime’s Food and Drug Organization, have been implicated in this widespread corruption scheme. The mentioned deceptive company purportedly “placed an order for Grade 1 Darjeeling tea at $14 per kilogram. However, in practice, it imported tea from Kenya and secondary export tea from Iran at a mere $2 per kilogram, with the Food and Drug Organization confirming the quality of the imported teas.”

Recent instances of financial misconduct include the misappropriation, coupled with forgery, in the disbursement of 244 marriage loans in Qom, the mismanagement of 20 trillion tomans from Tehran Municipality’s budget, and the allocation of a $3.37 billion subsidy in foreign exchange to a tea importer. These cases exemplify the rampant financial corruption within the Iranian regime that has come to light in recent days. While the response from Iranian society has been relatively subdued in the current circumstances, these revelations have ignited intense discussions among state-affiliated figures and analysts.

In a note in the state-run Etemad newspaper, Abbas Abdi, former intelligence interrogator and currently a “political activist,” wrote that engaging in corruption at this level undoubtedly involved the knowledge of high-ranking officials of the ruling establishment.

On Tuesday, December 5, Masoud Stayeshi, the spokesman for the Judiciary, attributed the $3.7 billion corruption to a “private, non-governmental company” but admitted, “Various collaborations have been made with this company, and a significant amount of foreign exchange and national resources have been allocated to this issue.”

Heshmatollah Falahatpisheh, a former member of the regime’s parliament, contributed an article to the state-run Etemad newspaper on December 5, addressing the revelation of “one of the largest embezzlements, primarily occurring during the thirteenth government.” In his piece, Falahatpisheh pointed out that the “parliament has maintained a conspicuous silence” on this matter.

Reacting to the recent revelations of embezzlements, Maryam Shokrani, an economic journalist at the state-run Shargh newspaper, stated, “Only two cases of corruption have cost the country about 200 trillion tomans. She pointed out that the amount of tea imports last year was “about 110,000 tons,” which is “twice the country’s needs.” She said that this reckless import, for which the importer has also received cheap dollars, has resulted in “calculating the price of tea six times the consumer price in the world, and on the other hand, with hoarding, they have made tea expensive,” and that domestic “tea cultivators have suffered huge losses.”

On December 3, Mohammad Sadegh Hassani, the executive director of the Union of Northern Tea Factories, said that the embezzlement in the tea import case had “upset the market balance, confronted the industry with a crisis, and led to the accumulation of a large volume of tea in warehouses.