Iran Court Tries 13 in $7 Billion Petrochemical Fraud Case

The trial has started in an Iranian court for 13 petrochemical industry executives charged with embezzling EUR 6.6 billion USD 7.4 billion) in one of the nation’s biggest corruption cases, the state-run Islamic Republic News Agency reported. 

The defendants, most either chief executives or board members of Iranian petrochemical producers and exporters, are accused of “causing a great economic disturbance” by establishing shell companies overseas to circumvent sanctions imposed while Mahmoud Ahmadinejad was president, judge Assadollah Masoudi Magham said, according to IRNA.

Reading from a 700-page indictment, another judicial official added that billions of euros worth of sales from petrochemical exports were funneled to the companies as purchases, the Mehr news agency reported on Thursday.

The case, described by IRNA as “record-breaking” for its monetary value, is the latest in a series of trials and investigations started after the government of President Hassan Rouhani and the hardline judiciary vowed to root-out corruption in response to rising public anger over levels of cronyism and economic nepotism within industry and government.

The return in August of U.S. sanctions, the most punitive ever imposed on the Islamic Republic by Washington, has brought fresh urgency to the efforts as people are being forced to cope with steep increases in prices and a collapse in the rial, which have cut the value of their paychecks and spending power.

Photo Credit: IRNA

Iran Presents Budget to Counter 'Cruel' US Sanctions

President Hassan Rouhani on Tuesday unveiled Iran's first annual budget since the return of US sanctions, saying it had been adjusted to take account of Washington's "cruel" measures.

The president announced a 20 percent increase in public sector wages in a sign of the economic challenges the Islamic republic has faced since the United States pulled out of the 2015 nuclear deal earlier this year. 

The speech gave only a few general points of the budget—which will now be scrutinized and voted on by parliament—but acknowledged the pressure Iran was under. 

"Last year we faced some problems," Rouhani told parliament in a televised speech, referring to the widespread protests that hit the country almost exactly a year ago, sparked by anger over economic and political conditions. 

"Those events caused the Americans to change their position regarding the Islamic republic and the nuclear deal," he said. 

"The real objective of the US in all of this conspiracy and sanction and pressure... is to bring the powerful Islamic republic of Iran to its knees," he said, vowing that the US "will definitely be defeated."

The renewed US sanctions include an embargo on Iran's crucial oil sector. 

The new budget did not say how many barrels of oil Iran hopes to sell in the next financial year, which starts in late March, but analysts believe it will be considerably less than the approximately 2.5 million it sold per day prior to Trump's withdrawal. 

The US granted waivers to eight key buyers of Iranian oil—including China, India and Turkey—though this has been a double-edged sword for Iran since it also helped push down the global price. 

Forex 'Practically Zero'

Rouhani came to power in 2013 representing the more moderate side of Iran's ruling elite, hoping a compromise on the country's nuclear program would reduce tensions with the West and allow foreign investment to boost the stunted private sector. 

The return of sanctions has ended that hope, and forced Rouhani more towards the self-sufficient "resistance economy" preferred by supreme leader Ayatollah Ali Khamenei. 

Concern over the economy pushed many Iranians to secure their savings in dollars and gold, triggering a run on the Iranian rial, which has lost around half its value since Trump announced the pullout.

"At one point early this year our foreign exchange cash reserve was practically zero, forcing the government to take hard decisions to save the country," Rouhani told parliament.

The government has pressured exporters to return their dollars to Iran, and Rouhani said they would lose tax incentives if they failed to repatriate their cash.

The central bank has used the returning dollars to shore up the collapsing rial, which has recovered to around 110,000 per dollar on unofficial exchanges. 

The rial's fall drove up prices across the board, with food and drink costs up 60 percent in the year to November according to the central bank. 

The judiciary launched a fierce crackdown on currency speculators, dubbed "economic disruptors" that has seen dozens of traders put on trial and at least three businessmen executed. 

The so-called "sultan of coins", Vahid Mazloomin, was hanged in October after being found guilty of amassing two tonnes of gold coins.

But sanctions and fraud are only part of the story in an economy with many long-standing problems. 

Its banking sector is riddled with bad loans, while many key industries from oil and gas to construction are dominated by semi-state groups with opaque links to the government and military.

The budget was delayed several times in recent weeks, with reports that Khamenei had demanded unspecified changes to the final document. 

Photo Credit: IRNA

Iranians Flock to Empty Exchangers After Currency Fix

Confused and frustrated Iranians flocked to exchange offices on Tuesday after the government fixed a new rate for the dollar, only to find there were none to buy.

On Ferdowsi Street in central Tehran, home to dozens of banks and currency exchanges, many had hoped to find much cheaper dollars than the day before.

Overnight, the government had announced it was fixing the rate at 42,000 rials per dollar in a bid to arrest a slide in the currency, which has lost more than a third of its value against the greenback in six months.

But all along Ferdowsi Street, exchangers were turning hundreds of people away or had signs up saying: "We have no dollars to sell", while rate boards showed blank spaces for US and European currencies.

"Last night on TV I heard it's 42,000 so I came here to buy some for my son who is overseas. I've checked every exchanger but I couldn't find any dollars," said Tahmoores Faravahar, a 71-year-old retired oil sector worker.

A day earlier, some reported dollars selling at a record-high rate of 60,000 rials—pushed up by fears over tensions with the United States and a difficult political and economic situation at home.

"The truth is that the people can't trust the word of the government that their money will be safe," said a trader who sold currency on the street and asked to remain anonymous.

"People don't have hope in the political and economic situation in this country. People are confused and just want to keep their money safe by turning it into dollars."

One exchange office said it was never clear when the central bank would deliver dollars for them to sell.

"I don't know why they haven't come yet today," he said in the early afternoon. "But the new rate is good. The price was not normal these last few days."

'Everything is down'

Another street trader said the recent currency speculation was driven by the fact that people had few other options to make cash.

"If you look at the market, everything is down except the dollar. Real estate is down, the retail sector is down. People need income so it's a good idea to buy and sell dollars and make some money," he said.

"Last night, the government lowered the price and some people had a heart attack, but it won't stay like this."

He said exchangers would find ways to fiddle the system to get round the new fixed rate, even though Vice President Eshagh Jahangiri warned this would be considered smuggling.

"Just like the smuggling of drugs, no one has the right to buy or sell it... If any other exchange rate is formed in the market, the judiciary and security forces will deal with it," Jahangiri warned on state television.

Some said this had only created fear and confusion. "I want to sell some dollars but no one wants to buy them because the market is not safe," said a man in his forties, who did not give his name.

"The exchanges are worried about the situation because the government says it is smuggling if they sell above the new rate, so no one wants to sell," he said.

Meanwhile, for the many journalists covering the scene at Ferdowsi Street on Tuesday, there was another, unexplained phenomenon. "There are so many police here, but no one has asked us anything," said one local reporter.

Other media, including AFP reporters, said it was the first time they had been left to work without even being asked for their papers or being told to move on.

Journalists have felt less pressure since President Hassan Rouhani came to power in 2013, but police routinely hassle reporters and stop them filming in public. "It's like a dream," said one journalist as police walked past his video camera without batting an eye.

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