Iranian regime accused of stealing billions

Ahmadinejads Administra

By BENJAMIN JOFFE-WALT / THE MEDIA LINE NEWS AGENCY
October 27, 2009 17:17
4 minute read.

 
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Iranian President Mahmoud Ahmadinejad's administration has been accused of extensive financial fraud after a dispute between government agencies revealed a $35 billion discrepancy in revenues from the country's oil sales. A report by Iran's State Audit organization found a series of inconsistencies in the amount of revenue recorded by different organs of Ahmadinejad's government. The discrepancies, totaling around $66 billion, are equivalent to Iran's average oil revenues over an entire year. Ahmadinejad's regime has been accused of misappropriating oil revenues for years. While the gist of the State Audit organization's findings were made public months ago, the extent of the inconsistencies it uncovered were first revealed Monday by Farda, a conservative local media outlet associated with Teheran's mayor Mohammad Bagher Ghalibaf, frequently cited as a potential future contender for president. "The amount was really surprising," Hossein Bastani, the co-founder of Rooz, an Iranian dissident journal, told The Media Line. "In the past the Iranian parliament questioned what had happened to $1 billion in the 2006 budget. Until this week, that was the largest amount of money to have disappeared. Now we are talking about $66 billion!" "We do not think that this money is stolen, not at all," Bastani clarified. "What is important is that the government is using such huge amounts of money in a non-transparent way. Whether it is to assure the re-election of Ahmadinejad or other secret military or intelligence projects doesn't really matter. Every dollar made from oil exports should be sent to the Central Bank." The largest of the discrepancies centers around $35 billion worth of imported goods. While Iran's Central Bank reported almost $220 billion worth of goods to have been purchased for import into the country between 2005 and 2008, the country's customs administration reports only $185 billion worth of goods to have actually arrived in the country. The report also found significant inconsistencies between the revenue the government reported as earned through exports of oil and other goods and the amount of money actually deposited in the country's central bank. While Iran's oil ministry recorded $255 billion in revenue generated from the country's oil sales over the past four years, Iran's Central Bank reported receiving a much larger sum of money, $280 billion, during the aforementioned period. A further $2.6 billion discrepancy in revenues from non-oil exports was reported and the Central Bank found a $3 billion discrepancy between the amount of money recorded as being in the country's foreign exchange reserves and the amount of money actually there. Oil constitutes Iran's largest source of revenue, making up 80% of the country's foreign exchange revenues. Heavily dependent on oil, Iran's economy has been badly damaged by the recent fall in oil prices. Ahmadinejad's regime has been accused of misappropriating oil revenues for years, but some Iranian analysts said the recent issue had been overblown by local media, attributing the dispute to an internal government spat over accounting practices. "The two organizations at loggerheads over this are the Ministry of Oil and the State Audit organization," Dr Seyyed Mohammad Marandi, a lecturer at the University of Tehran, told The Media Line. "Neither side is accusing the other of fraud and while there are some newspapers who have talked about missing money, that's not what the agencies themselves have said... They just have different ways of carrying out their auditing and I think they are trying to resolve their differences." Dr Marandi said it was unlikely Iranian officials would be able to steal billions. "You can't manipulate statistics without it being discovered and auditing is not something a major government agency would fool around with," he said. "If you try to make a buck by getting out of a taxi and asking the driver to write you a receipt for $20 when you only paid $15, in any country that form of fraud or theft would be the most easy to discover. So usually if there's corruption, it's would be found at the middleman level in kickbacks or bribes for oil tenders." Other analysts argued that while the accounting inconsistencies may not point to corruption, they were likely the result of funds appropriated for illicit government initiatives. "Economic mismanagement is a huge issue and one of the most unreported causes of discontent in the country," Dr Emanuele Ottolenghi, an Iran expert and the executive director of the Transatlantic Institute, told The Media Line. "There is liberal use of state revenue to fund activities that are not necessarily audited, such as nuclear procurement, terrorism and funding insurgencies abroad. These things don't appear in the state budget in a transparent fashion." "There is growing resentment among workers over state money being used to fund the Palestinians or similar causes rather than for infrastructure that would help the Iranian population," Dr Ottolenghi said. "So the fact that there is profound economic mismanagement, corruption and vast disparities in accounting is neither new nor surprising. What's significant is that somebody in the political system is using it as a tool to criticize the government."

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