September 26, 2018 | Policy Brief

Reports of Corruption Reinforce Case for Iran Sanctions

“The Iranian people are rightly outraged,” President Trump toldthe UN General Assembly yesterday, “that their leaders have embezzled billions of dollars from Iran’s treasury, seized valuable portions of the economy, and looted the people’s religious endowments, all to line their own pockets and send their proxies to wage war.” A recent effort by the Islamic Revolutionary Guard Corps (IRGC), the regime’s praetorians, to embezzle vast sums of money from the City Council of Tehran highlights precisely this phenomenon. At the same time, it indicates the importance of continued U.S. efforts to isolate Iran’s financial empire.

In July, a spokesperson for the City Council of Tehran announced that the IRGC Cooperative Foundation, which manages the IRGC’s investments, had illicitly appropriated more than $1 billion from the city. The following month, a former member of the City Council accused Bagher Ghalibaf, who served as mayor of Tehran from 2005 to 2017, of deliberately providing multiple contracts to the IRGC, thereby facilitating the corruption. Ghalibaf also previously served as an IRGC commander and the chief of Iran’s state police.

While the IRGC Cooperative Foundation has denied the allegations, the dispute has added to already severe strains on Iran’s economy. In September, the head of the City Council told Iranian state media that the council’s dispute with the IRGC had led to a halt of IRGC-led business transactions in Tehran. This had significant repercussions, since the IRGC is Tehran’s sole mega-contractor.

The dispute in Tehran is emblematic of a longstanding campaign by the IRGC to enrich its leaders even as the Iranian people suffer from mass unemployment and diminishing wages. In 2017, Tehran arrested several IRGC commanders affiliated with the IRGC Cooperative Foundation for corruption, including Masoud Mehrdadi, who is widely known as the IRGC’s financial mastermind. Mehrdadi served on the boards of the IRGC Cooperative Foundation and of Yas Holding, a business development and investment company in Iran controlled by the foundation.

Another prominent member of the Yas Holding board is IRGC operative “Mohsen Sajjadi Nia,” allegedly an alias for Mahmoud Seif. In November 2017, the Trump administration sanctioned Seif and Tejarat Almas Mobin, a holding company he controls, for supporting a currency-counterfeiting scheme aimed at supporting the Quds Force, the IRGC’s foreign operations arm. Yas Holding has been a major shareholder of Tejarat Almas Mobin.

These events illustrate how the IRGC’s business dealings constitute a front for its larger efforts to fund its terrorist activities and enrich its commanders. As the Trump administration moves to reimpose economic sanctions on Iran in the coming months, it should work to isolate this key node of the clerical regime’s financial empire.


Iran Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance