One of the central figures in Iran\u2019s kleptocracy now heads its government<\/p>\n\n\n\n
In 1993, the Rafsanjani administration made bold reforms to resuscitate an Iranian economy devastated by a decade of war and neglect. Taking advice from Western embassies, government-appointed technocrats laid out a far-reaching privatization scheme under which moribund industries would be returned to their prerevolutionary owners. Even in those early days, shadowy parastatal structures stonewalled the government\u2019s efforts.\u00a0<\/p>\n\n\n\n
When the government appointees met to examine the scope of the task before them, one of them drew an intricate spider chart on the board. It depicted the \u201cvertical and horizontal monopolies\u201d controlled by major bonyads. Established after the Revolution to manage confiscated enterprises in accordance with Islamic principles, these paragovernmental foundations had grown into unaccountable conglomerates that resembled, as one observer put it, \u201cFrankenstein monsters\u201d in how they cobbled together revenue from multiple strategic economic sectors.<\/span>1<\/sup><\/a><\/span>\n\n\n\n At the center of one of these spiders was Astan Quds Razavi<\/a> (AQR), an organization that oversees an eponymous shrine in the city of Mashhad. This entity, which behaves like a bonyad though it\u2019s structured differently, is closely associated with Iran\u2019s new hardline president, Ebrahim Raisi. The president is also a former trustee of Setad Ejrai Farman Imam (EIKO), the secretive bonyad dubbed \u201cthe supreme leader\u2019s slush fund\u201d by the Trump administration.\u00a0<\/p>\n\n\n\n Part of Raisi\u2019s political success can be ascribed to the fact that he knows how to access this slush fund and others like it. Though his election was hardly the result of a democratic process, Raisi\u2019s populist campaign centered on fighting economic corruption\u2014a brazen political position given his involvement in bonyads, which form the very heart of Iran\u2019s kleptocratic system. This system, rooted in the foundations of the Islamic Republic and amplified by Rafsanjani\u2019s privatization processes, is a form of institutionalized corruption designed to divert public funds into the bank accounts of elite businesses and individuals. An intensive examination of the bonyads and their assets reveals an intricate mechanism that benefits a chosen circle of individuals, making it difficult to determine where bonyads end and the government begins.<\/span>2<\/sup><\/a><\/span>\n\n\n\n Untaxed and unaccountable to the government, bonyads are allocated trillions of dollars in state benefits. The only institution with any oversight over their opaque finances is the Office of the Supreme Leader (Beyt-e Rahbari).\u00a0As the bonyads under its purview expanded their portfolios, the office staff has grown to thousands of employees under the leadership\u00a0of Ayatollah Khamenei\u2019s son Mojtaba, who acts as its chief of staff.<\/span>3<\/sup><\/a><\/span> Whoever oversees the bonyads wields power over Iran\u2019s economy, a dynamic unlikely to change under Raisi\u2019s administration.\u00a0<\/p>\n\n\n\n The largest bonyads are managed by leading clerics, politicians, and generals, while members of the Islamic Revolutionary Guard Corps (IRGC) sit on the boards of important bonyad-run companies in nearly all economic sectors. Selecting people close to him to run the bonyads\u2014and, in Raisi\u2019s case, also the presidency\u2014is Khamenei\u2019s way of ensuring that Iran\u2019s wealth remains in its current hands.<\/p>\n\n\n\n In the 2021 election, rooting out corruption was one of Raisi\u2019s major political slogans. This mantra was designed to resonate with a population enraged by inflation, income inequality, and the plundering of the commons by unaccountable public officials. From the regime\u2019s perspective, Raisi\u2019s reputation as an aggressive prosecutor and former AQR custodian gave him the authority to crack down on perpetrators of \u201ccorruption on earth,\u201d a crime punishable by death in Iran. In another interpretation, Raisi\u2019s institutional proximity to the supreme leader made it possible for him to use the money and power of AQR for his personal benefit, all while remaining at a safe distance from the corrupt practices of its subsidiaries.\u00a0<\/p>\n\n\n\n Raisi ran unsuccessfully for president in the 2017 election, when he came in second behind incumbent Hassan Rouhani. In the weeks preceding the vote, several media outlets alleged that Raisi diverted funds and political resources from AQR to fund his campaign.<\/span>4<\/sup><\/a><\/span> Others pointed out Raisi\u2019s use of AQR-owned newspaper Quds<\/em> as his campaign mouthpiece.<\/span>5<\/sup><\/a><\/span> A recent review of campaign finance legislation and practices in Iran reveal that such misuses of public funds are standard among the country\u2019s political elite. In the Iranian legal system, no law provides for the transparency of presidential election campaign funding<\/a>.<\/span>6<\/sup><\/a><\/span>\n\n\n\n With vast holdings in the real estate, agriculture, and construction sectors, AQR is an ideal source of clandestine income for political campaigners close to the supreme leader. The exact size of its multi-billion-dollar empire is shrouded in opacity, as is the case with all the major bonyads. In the most recent government budget from this year, the Iranian state acknowledges a debt of approximately $230 million to AQR. That\u2019s roughly equivalent to the starting share capital of Iran\u2019s largest bank.<\/span>7<\/sup><\/a><\/span>\n\n\n\n Unlike other bonyads, which were founded as a consequence of the 1979 Revolution, AQR\u2019s institutional history dates back to the Qajar period, when it functioned as a waqf <\/em>managing religious donations to the Mashhad shrine.<\/span>8<\/sup><\/a><\/span> After the Revolution, AQR competed with other bonyads to swallow up controlling shares of lucrative industrial firms. Though it behaved like a bonyad in the sense that it was a predatory parastatal conglomerate overseen by Beyt-e Rahbari, it had a different legal structure.<\/span>9<\/sup><\/a><\/span> Today, AQR owns one in ten acres of land in Khorasan Razavi Province. It is the largest non-state landowner in Iran, and is by some accounts, the largest owner of land endowments in the world.<\/span>10<\/sup><\/a><\/span> <\/p>\n\n\n\n Raisi headed AQR from 2016 until 2019, when he was appointed chief of Iran\u2019s judiciary. That is a relatively short stint compared to his predecessor, Ayatollah Abbas Vaez Tabbasi, under whose 35-year patronage the organization grew from a small charitable foundation into a predatory conglomerate. Raisi is the son-in-law of cleric Ahmad Alamolhoda, a Mashhad Friday prayer leader and Assembly of Experts representative closely linked to AQR. While Alamolhoda did not openly endorse his son-in-law for president from the Friday prayer podium, he made use of Raisi\u2019s campaign talking points during his sermon and added that anyone who invites the people to boycott the election is an apostate.<\/span>11<\/sup><\/a><\/span>\n\n\n\n During Raisi\u2019s tenure, AQR was involved in at least two corruption scandals\u2014the first involved environmental degradation. Caspian Forest Development Company, an AQR subsidiary, came under public scrutiny in 2017 for illegal logging in the Caspian Sea region.<\/span>12<\/sup><\/a><\/span> Under media and public pressure, Raisi issued a statement that the company had been privatized, denying AQR\u2019s responsibility for the illegal activities.<\/span>13<\/sup><\/a><\/span> Raisi\u2019s statement contradicts publicly accessible beneficial ownership data, which shows that Caspian Forest Development Company\u2019s board members have not changed since 2013.<\/p>\n\n\n\n In the second case, AQR features in a network of pharmaceutical companies and government regulators charged with financial corruption, misuse of public funds and importation of expired pharmaceuticals.<\/span>14<\/sup><\/a><\/span> In 2019, high-ranking officials at Iran\u2019s Food and Drug Administration were accused of negligently licensing a hypertension-treating drug deemed carcinogenic by international watchdogs. The FDA\u2019s director, Mohammad Reza Shanesaz, is linked to several bonyad-associated drug companies\u2014a clear conflict of interest. He is on the board of the Astan Quds Razavi\u2013owned Samen Pharmaceutical company.<\/span>15<\/sup><\/a><\/span>\n\n\n\n Although Raisi was no longer at the helm of AQR in the run-up to this June\u2019s election, his campaign made use of the vast resources of EIKO and Mostazafan Foundation (BM), two bonyads that had since 1979 seized a large proportion of Iran\u2019s businesses and real estate. His campaign manager, Ali Nikzad, was a long-time EIKO executive.<\/span>16<\/sup><\/a><\/span> Nikzad appointed Safar-Ali Baratlou, head of Mostazafan Foundation\u2019s Herasat Office, as Raisi\u2019s campaign manager in Tehran Province.<\/span>17<\/sup><\/a><\/span>\n\n\n\n Raisi had announced he would forgo the comfort of a campaign headquarters. Calling himself a \u201cservant of the nation,\u201d he appealed to the people, claiming that every home could be a campaign headquarters for Raisi.<\/span>18<\/sup><\/a><\/span> Shortly after Baratlou\u2019s recruitment, empty homes previously seized by EIKO and BM were festooned with Raisi banners\u2014these were the \u201cheadquarters\u201d Raisi was using for his campaign.<\/span>19<\/sup><\/a><\/span>\n\n\n\n Raisi\u2019s proximity to Khamenei and the bonyads all but invalidate his preelection promises of cracking down on economic corruption. Iran\u2019s new president has been an influential player in that network throughout his career, manipulating the parastatal institutions he oversaw for his own political gain, all while maintaining the public persona of an anti-corruption crusader. One illustration of his role in Iran\u2019s kleptocracy dates back to the Rafsanjani era, when various state institutions and paragovernmental conglomerates morphed into instruments of money laundering and embezzlement in the newly privatized public sector.<\/span>20<\/sup><\/a><\/span>\n\n\n\n At this early stage in his career, Raisi was head of the General Inspection Office, an anti-corruption body linked to the judicial branch. In a 1997 entry in his memoir, Rafsanjani recalls summoning Raisi to discuss his findings on potential graft in the plethora of local governments, executive bodies, and military institutions the GIO oversaw. Raisi responded that \u201cwindfall wealth\u201d was a terrible thing, but that he had not found a single instance of it in his organization.\u00a0<\/p>\n\n\n\nRaisi and Astan Quds Razavi<\/a><\/h2>\n\n\n\n
No country for reform<\/h2>\n\n\n\n