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Iran: Oil Ministry Is The Focus Of Anticorruption Bid

An oil refinery at Lavan Isl (file photo) Iranian conservatives often denounce corruption and cronyism in the state, and newly inaugurated President Mahmud Ahmadinezhad believes he won many votes in June --> because of his pledge to fight corruption. But this vice is difficult to pinpoint in Iran's extensive and secretive governing system, and corruption allegations are often vague. The oil sector, which handles the bulk of Iran's revenues, has faced it's share corruption charges, notably those made by Guardian Council Secretary Ayatollah Ahmad Jannati, --> who threatened in 2001 to reveal the alleged beneficiaries of suspect fortunes.

Recently, a conservative-dominated parliament has said it will investigate the affairs of the Oil Ministry, which is run by Oil Minister Bijan Namdar-Zanganeh, although already there is talk that such investigations are motivated by politics.

In February 2005, parliament approved a motion to conduct an inquiry into the ministry and its business, and on 20 June Mohammad Said Ansari, the chairman of the parliamentary committee investing Oil Ministry affairs invited individuals and bodies to submit relevant information, including complaints, to the committee. Parliamentary Energy Committee Chairman Kamal Daneshyar said on 16 July that a legislative committee was preparing a report on breaches of "technical principles" in deals signed by the ministry, "Kayhan" reported on 17 July. The present stage of investigations is not clear: "Aftab-i Yazd" reported on 24 July that this parliament had yet to read out in the chamber a single completed report of any of its planned inquiries into various government agencies.

The issue, say proponents of scrutiny, is the lack of transparency in business involving billions of dollars of oil revenues. A Finance Ministry report cited by the daily "Siyasat-i Ruz" on 28 June estimates that oil companies manage some $54 billion of public money. The daily was presumably referring to the four main, ministry-affiliated companies: the National Iranian Oil Company, the National Iranian Gas Company, the National Petrochemical Company, and the National Iranian Oil Refining and Distribution Company. In addition, there are a number of smaller companies affiliated with these four majors, and all of their assets and revenues are considered publicly owned.
A recent editorial in "Kayhan" declared that conservatives do not control Iran and that real power belongs to a discrete class of affairistes who pocket millions through state corruption.

These companies are supposed to deposit their profits into the treasury, but, the daily adds, "they have a free hand" and it is not clear -- at least to parliament -- how they actually dispose of their revenues and profits. Another problem, it added, is that parliament has not seen their articles of association to determine if their activities match their legal purpose.

Parliament wishes to know, among other issues, how oil contracts are given out, and what monies oil companies spend and earn? How are equivalent rates set in oil-swap deals? What obligations do these companies, and effectively the state, face pursuant to their contracts?

More specifically, parliamentarians claim certain recent contracts have broken Iranian laws. The head of the parliamentary research center, legislator Ahmad Tavakoli, said it had observed legal violations in the tenders process for the development of two petrochemical plants, "Kayhan" reported on 17 July. He has asked the state inspectorate and auditing body to check the contracts for violations of two laws, respectively on regulating tenders, and on the efficient use of domestic technical and engineering capabilities. One contract, the parliamentary research center found, was taken from an Iranian consortium and given to a foreign contractor, although it is not clear why. The other had its terms changed, but not all companies were invited to bid for what was effectively a new contract, "Kayhan" reported.

Oil Minister Namdar-Zanganeh said in Tehran on 16 July that the center was not legally competent to declare those tenders illegal, ISNA reported. Legislator Mohammad Said Ansari said on 17 July that this disagreement was clearly "political," since the law gives parliament the right to supervise all public affairs, Mehr reported that day. Mohsen Yahyavi, a member of the parliamentary Energy Committee, said on 19 July that the research center's public criticisms were "inciting opinion," and the National Petrochemical Industries Company, which handled the tenders, could take legal action, "Aftab-i Yazd" reported on 20 July.

Parliamentarian Hassan Moradi said on 29 July that unspecified oil contracts were against "national interests" and the Oil Ministry and affiliated companies were signing them without "expert" advice, Fars reported the same day. He suggested "teams of experts" examine all aspects of contracts, and the government tighten rules to prevent influence peddling by interested parties in the tenders and bidding processes.

In addition to the legal issues, the concern shown by conservative parliamentarians could be motivated by economic or even nationalist concerns. Energy Committee Chairman Daneshyar said on 4 July that the oil sector should be downsized and made more profitable, and "parallel systems" merged to "reduce costs." Tavakoli told ISNA on 17 July that he hoped the new government will prioritize working with Iranians: this is an echo of parliament's concerns with two earlier transport and communications contracts with Turkish firms, which showed the anti-free market and protectionist tendencies of some conservatives.

Or it may be politically motivated, as echoed by a 9 July editorial in "Kayhan," which denounces a "triangle" of diplomats and oil and banking officials who allegedly wield excessive influence over state policies to the detriment of national interests. The article urges the new government to tackle this "monster." Its aggrieved tone suggests that, contrary to the impression of many in Iran and outside, it is not the conservatives who wield power, but a discrete class of affairistes -- people with a finger in every pie -- who pocket millions, though the paper makes no specific allegations against the "famous and infamous" people it cites.

Some in Iran might identify them as centrist forces and business-oriented pragmatists associated with former President Ali-Akbar Hashemi-Rafsanjani. He has not been named in recent disputes, but he complained he was the target of a systematic campaign of calumny in the June presidential elections. He may perhaps be an indirect target in the reported arrest of senior executives of Oriental Oil of Kish for alleged financial malfeasance, as reported by Fars on 27 July. The company is reportedly closely linked to or owned by Rafsanjani family members. In Tehran on 10 August, state corruption investigator Hamid Reza Movahhed said four people from Oriental Oil have been charged with taking bribes in the course of their business with an unspecified oil company, "Etemaad" reported the next day. The suspects, Movahhed said, include company directors and shareholders, though he did not name them. "Etemaad" reported that the alleged bribes amounted to $700,000-$750,000.

A 20 July editorial in "Jomhuri-yi Islami," another right-wing paper, denounces the "smear campaign" against government bodies including the Oil Ministry, and suspects the "true aims" of the publicized anticorruption drive of "one faction." This faction might be the radical conservatives associated with the Developers (Abadgaran) grouping in parliament, who have echoed the new president's pledge to stamp out corruption. It urges caution and strict legality on the new government in its stated desire to fight a "power mafia" in the ministry. The impression of political motivations may be boosted by the absence of such initiatives against other vast but opaque money-making bodies like the Foundation for the Oppressed, an ostensible charity associated with Supreme Leader Ali Khamenei.

Namdar-Zanganeh defended his ministry's record on 1 August, but admitted that "in a place where $300 billion are handled, the devil will also be present to confuse people," "Etemad" reported the next day. He said nobody in the ministry had pocketed "a single dollar" of the $190 billion the ministry had earned in eight years from the sale of oil and oil products, and the money "has been entirely returned to the country." He said he issued a directive three years ago to make the tender process "very clear," without giving details. The state auditing body, he said, "oversees our small and large contracts in an orderly and continuous way," he said, and oil industry activities "are relatively clean."

But Namdar-Zanganeh accused an unspecified "set of dealers" who "seem respectable but are not honest," saying they have come to him in the past asking for concessions or permits. When he refused, he said, "they went the next day and said swap deals were very confused and ambiguous," the daily reported.

Asked to name violators, Namdar-Zanganeh said: "If I name a person or body...I stand accused, because I do not have an information system to find out who is a suspect." Many of those who denounce thievery in the ministry, he said, "are themselves thieves."

Former President Hojatoleslam Mohammad Khatami said in Tehran on 20 July that the "regulatory problems and practices" that allow corruption must be tackled before individuals are accused and reputations ruined, according to "Aftab-i Yazd" the next day. Zanganeh deplored on 1 August that calumny is "not considered an offence" in Iran. Of course, one powerful antidote to calumny and corruption is open and accountable government. But the government and parliament that have vowed to fight corruption have shown little inclination for openness or accountability to civil and public institutions such as the media.

See also:

"Corruption Becomes An Issue In Iran's Presidential Campaign"

For RFE/RL's complete coverage of the controversy surrounding Iran's nuclear program, see "Iran's Nuclear Program."