Khamenei’s enterprise extends beyond sanctions, says report

According to a Reuters investigation, Khamenei has influence in every major Iranian sector, including real estate, finances and charity.

By HENRY ROME
November 15, 2013 00:24
3 minute read.
Iranian Supreme Leader Ali Khamenei at NAM Summit.

Iranian Supreme Leader Ali Khamenei at NAM 390. (photo credit: REUTERS)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

Iran’s supreme leader, Ayatollah Ali Khamenei, directs a massive financial enterprise valued at $95 billion that extends beyond the reach of Western economic sanctions, Reuters reported this week.

Khamenei’s organization – called “Headquarters for Executing the Order of the Imam” and abbreviated as “Setad,” the Persian word for headquarters – amassed tremendous wealth since its founding in 1989.

Be the first to know - Join our Facebook page.


According to the Reuters investigation, Setad has influence in every major Iranian sector, including real estate, finances and charity.

Khamenei’s paramount control of the Iranian military and political system is well documented.

But the revelations about Setad are significant because they illustrate that the supreme leader has developed an expansive, albeit opaque, personal role across Iran’s economy, according to analysts.

Reuters said it had no evidence that Khamenei used Setad’s resources to enrich himself.

Still, it reported that Setad’s power and influence served to solidify Khamenei’s own standing.



Setad has not been immune to the sanctions imposed by Western powers. The United States and the European Union have levied sanctions against individuals involved in Setad and against parts of the corporation itself. Also, Setad has holdings in sectors, such as energy, that are directly impacted by sanctions.

At the same time, Setad is able to bypass sanctions, Reuters reported, by possessing large – but not majority – shares in companies. This opacity makes Setad difficult to target.

Indeed, in June the US Treasury Department – which executes the US economic sanctions – called Setad a “shadowy network of off-the-books front companies,” and noted that it partly accumulates money by seizing private property.

“In addition to generating revenue for the Iranian leadership, [Setad] has been tasked with assisting the Iranian government’s circumvention of US and international sanctions,” the agency said.

Setad was formed by Iran’s first supreme leader, Ayatollah Ruhollah Khomeini, in order to manage properties abandoned after the revolution and facilitate donations to “the families of the martyrs, veterans, the missing, prisoners of war and the downtrodden.”

Since then, its role has expanded dramatically.

One example of Setad’s influence in a less prominent sector is in telecommunications. In 2006, Khamenei ordered the privatization of the majority shares of government-run enterprises, including the Telecommunications Company of Iran. The company was the biggest sale by the government, Reuters reported.

Through a consortium and front company, Setad came to acquire a significant, but not majority, share in the newly privatized company. Another major shareholder was the Iranian Revolutionary Guard Corps, which is fiercely loyal to the ayatollah.

The supreme leader’s decision to centralize economic power in a national conglomerate would allow Iran to more effectively compete internationally in the future if sanctions are reduced, according to one analyst.

Laicie Heeley, director of Middle East and defense policy at the Washington-based Center for Arms Control and Nonproliferation, told The Jerusalem Post that Setad’s influence highlights Iran’s international economic ambitions and its desire to mimic the successes of conglomerates in South Korea and Japan.

“Why is Iran not succeeding quite as quickly?” she said.

“Partially because they don’t have these big, prominent corporations.”

The political impact of the news about Setad’s role is less clear, she said.

“If it’s going to have an effect, it’s going to have an effect on Congress” as it debates changing the sanctions regime, Heeley said.

The Iranian government told Reuters that it disputed the report, but did not present specific complaints. A spokesman for the Iranian Embassy in the United Arab Emirates told The Jerusalem Post that “we don’t know why they issued the article” and did not have a further response. The Iranian Ministry of Foreign Affairs did not respond to a request for comment.

Spokesmen for the Foreign Ministry and the US State Department told the Post that they had no comment.

Related Content

Bushehr nuclear Iranian
August 5, 2014
Iran and the bomb: The future of negotiations

By YONAH JEREMY BOB