The massive corruption scandal rocking the Islamic Republic has reached the boiling point. On the one hand, senior regime officials such as Supreme Leader Ayatollah Ali Khamenei have called on the various political factions involved to back down so that the scandal, referred to as the Big Graft in the Iranian media, can be quietly dealt with. On the other hand, the scandal has become a political hot-potato, with each faction trying to shift the blame. This dynamic has been exacerbated by the specter of the upcoming 2012 Majlis (legislative) election, which has made the scandal seem like an ideal vehicle for smearing one’s opponents and gaining votes.
The Big Graft is a scandal in which senior figures in President Mahmoud Ahamdinejad’s administration and high-level banking officials have been accused of aiding a businessman, Ali Mansour Aria, in illegally acquiring a $2.6 billion loan which he used to build a business empire. Mahmoud-Reza Khavari, the head of Bank Melli (a leading state bank) which has been implicated in the scandal, has fled to Canada, further complicating the matter.
The existence of such massive corruption and the inability of the regime to deal with it in an open forum, in which all of the facts can come to light, should not come as a surprise. It goes to the heart of the authoritarian essence of the Islamic Republic, which has the simulacrum of democracy, an independent judiciary and a free-press, but not the reality. This is reflected in the senior regime leadership’s handling of the scandal, which has essentially been to issue a directive telling all of the relevant players to stand down.
Yet the Islamic Republic is not a totalitarian dictatorship. There is some public space for different factions within the regime’s inner sanctum to compete for power, sometimes through carefully managed elections. It is precisely this aspect of Iran’s political system which makes the trajectory of this scandal ultimately unpredictable. At this point all of relevant parties are denying blame while trying to pass the buck.
This is clearly illustrated by Minister of Intelligence and Security Heydar Moslehi’s recent interview with Mehr News. When asked why the intelligence ministry approved Bank Melli’s fugitive ex-CEO Khavari to that post, Moslehi claimed that:
“His approval goes back a long time and I have no recollection of that period because the decision [for approval] was made before I came to the intelligence ministry. But I do not know whether or not he had dual citizenship [at the time he was approved].”
This is particularly awkward because Moslehi’s predecessor in the intelligence ministry, Gholam-Hossein Ejei, is now in charge of the investigation into the Big Graft for the Judiciary.
Mahmoud Bahmani, the head of Iran’s Central Bank, is another case in point. His interview with Mehr News was also filled with denials. When asked about the role of the Central Bank in the scandal, Bahmani responded:
“We are claimants to this issue. Given that the Central Bank must protect the interests of its depositors and is a claimant to this affair, we shall help in this regard so that all documents and evidence are at the disposal of the Judiciary…we have already placed evidence before the Judiciary and, god-willing, all of the details shall soon come to light and anyone who has even given favours or has had the smallest involvement in this affair…must answer for it.”
When asked about Khavari’s vetting, escape to Canada, and possible extradition, Bahrami claimed total ignorance, despite the fact that state banks like Khavari’s Melli Bank are under the supervision of the Central Bank:
“I am not aware of this matter and it is something that is linked to political issues…do not ask me about politics, you have to ask the Judiciary about such subjects…I do not know, someone else has chosen and approved him and I do not even know whether Khavari has gone to Canada or not.”
Perhaps it was Ahmad Khatami, a fixture at Tehran’s Friday prayer sermons, who has best captured the divisiveness of this scandal. He emphasized that some politicians may want to use the scandal to further their ambitions, but called for patience as the senior regime leadership tries to sort out the mess:
“They want to bake their own hot electoral bread from this oven. We want regime officials to have patience…To assign guilt for the corruption on one another is the objective of [our] ill-wishers.”
As Ejei has pointed out, Khavari’s escape to Canada may well be a sign of his guilt. It is also possible that Khavari was chosen as a sacrificial lamb, but decided to make his escape before punishment could be meted out. Experience in other countries has shown that such scandals are sometimes resolved by having a single official or a small group absorb the total blame. A failure to bring a swift and credible end to this affair by the senior regime leadership would further disenchant Iranians from their country’s dysfunctional political system. It could also create political space for regime factions to use this issue as a lethal weapon against one another, intensifying the internal struggles within the Islamic Republic. This could introduce a level uncertainty not only to the upcoming 2012 election, but beyond.