The verdict in a massive corruption case involving the Iran Petrochemical Commercial Company (PCC) was announced on September 5, 2021. But nearly three years after proceedings first got under way, the details remained shrouded in mystery.
We were told at the time that 15 named defendants had been sentenced to a total of 180 years in prison, linked to the embezzlement of around €6.6bn. But curiously for Iran, none of them were in custody at the time the sentences were issued. Most were out on bail, and a handful had even managed to leave the country.
IranWire has now gained access to the 2,000-page judgment, issued by Judge Asadollah Masoudi-Magham in Branch 3 of the Special Corruption Court. The contents shed light on the sheer extent of mafiosi behavior, graft, cronyism and money laundering in Iran’s still-lucrative petrochemical industry – and on how far the 15 convicted men were aided and abetted by dozens of others, many in positions of power.
During the court hearings in August 2020, Judge Masoudi-Magham announced that one of the defendants, defendant Ali Ashrafi Riahi, son-in-law of Mohammad Reza Nematzadeh, a long-time cabinet minister, had escaped Iran by using another person’s passport.
At the time and up until now, nobody knew that Nematzadeh himself was also one of the original 129 accused in the case, 108 of whom were ignored by the prosecution.
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Mohammad Reza Nematzadeh was born in 1945 in Tabriz, the capital of East Azerbaijan province. He was a founder of the Moderation and Development Party, a centrist group that held its first congress in 2002 and backed Hassan Rouhani in the presidential elections of both 2013 and 2017.
In 1969, Nematzadeh graduated in environmental engineering from California Polytechnic State University. For 10 months after the 1979 revolution, from November 1979 to September 1980, he served as Minister of Labor under Abolhassan Banisadr, the first president of the Islamic Republic, who fled Iran after he was impeached. Then from September 1980 to August 1981, he was Minister of Industries and Mines, also under President Banisadr.
From 1989 to 1997, Nematzadeh then served as Minister of Industry under President Akbar Hashemi Rafsanjani. In the first and the second cabinets of the reformist President Mohammad Khatami he was both Deputy Oil Minister for petrochemicals and the CEO of the National Petrochemical Company. He also held other, concurrent roles, such as deputy head of the Defense Industries Organization and the CEO of Tavanir, Iran's state-owned power generation and distribution company.
From 2005 to 2006, under President Mahmoud Ahmadinejad, Nematzadeh was Deputy Oil Minister for Refineries and the CEO of the National Iranian Oil Refining and Distribution Company. And from 2013 to 2017 he served as Minister of Industry, Mine and Trade in the cabinet of President Hassan Rouhani.
To sum up, then, Nematzadeh has been a fixture in the government of the Islamic Republic since the beginning, regardless of who has been serving as president or the general political leaning of the government. He also knows the petrochemical, oil and gas industries inside out.
PCC Scandal: The Cabinet Minister’s Connection
In August 2018, the website Raja News reported that Nematzadeh and members of his family were the majority-owners or shareholders of a combined total of 250 companies, in various sectors. It published the names of all of them. Two of note here, cited on Page 7 of the verdict in the PCC case, were Nemat Commerce Development Co and the Dalahu Kimia Petrochemical Complex.
In January 2017, Ahmad Tavakoli, a member of the Expediency Council, had become the first person in the higher echelons of the Islamic Republic to publicly accuse Nematzadeh and his family of corruption. In a letter to First Vice President Eshagh Jahangiri, he asked for Nematzadeh to be dismissed from this then-post as Minister of Industry.
He also wrote: “Maryam Bakhtiar, Nematzadeh’s wife, and her daughters Shabnam and Zeynab, are active in 10 petrochemical companies as CEO, president, vice-president, board member, or inspector. Through sweetheart deals in this area, they have amassed legendary wealth.”
The dealings of the Nematzadeh women went on to cause a succession of public scandals in their own right. Later on in December 2019, Shabnam Nematzadeh was sentenced to 74 lashes and 20 years in prison in a separate case for “sabotaging the country’s economy” and “drug hoarding”.
But before the PCC case came to light, no accusation had stuck to Mohammad Reza Nematzadeh himself. Pages 147 to 150 of Judge Masoumi-Magham’s verdict, which was suppressed after its delivery last September, sheds light on the particulars of Nematzadeh’s role in the fraud. It relates to about €2.5 million of the funds embezzled by the PCC, which its now-convicted commercial director, Mohsen Ahmadian, then stashed in one of Nematzadeh’s firms.
The judge states: “Part of the ‘percentage’ received by the defendant Mohsen Ahmadian, €2.5 million, has been invested in Dalahu Kimia Industries Company.
“According to investigations, the above-mentioned company was founded in 2006 by Mr. Zangeneh [Bijan Namdar Zanganeh, who also served for some 30 years in various cabinets and was Minister of Oil until last year]. It transferred to Messrs. Torkan and Nematzadeh in 2011. In the beginning, Nemat Commerce Development Co and Lavan Industrial Group each held 1,500 shares, or 50 percent of the total.”
The verdict then describes the involvement of the PCC’s Mohsen Ahmadian with Nematzadeh’s Dalahu Kimia Industries Co at the time of the fraud, based on his own confessions. “About where these ‘commissions’ [received from PCC clients and misappropriated by the PCC] were invested, he says €2.5 million was invested inside the country, in a company named Dalahu.
“After the purchase of the Dalahu shares, through Simin Tejarat-Afra Co, one share was given to Mr. Mehdi Ahmadian, son of Mohsen Ahmadian, and he became a member of its board. On how he paid through his son, the defendant says: ‘My son was in Canada and I told him about it. After converting the dirhams to euros, he paid the money from an account specified by Nematzadeh through the company MASY. All the evidentiary documents exist.
“Mohsen Ahmadian was also a member of Dalahu’s board of directors. The defendant’s other son, Mahmoud, who played a crucial role in soliciting ‘percentages’ from the PCC’s foreign customers, cooperated with the defendant and deposited the amount in an account specified by Mr. Nematzadeh.”
In essence then, a senior PCC manager was laundering the proceeds of a foreign currency scam through one of the PCC’s Iranian client companies, enriching himself and the company’s owner in the process. Page 756 on the verdict further states that on Nematzadeh’s request, Mohsen Ahmadian had bought the 40-percent stake in Dalahu by depositing the €2.5 million in the Dubai-based account of one of Nematzadeh’s other concerns, called Hamburg International.
On Pages 1,587 to 1,503, the judge is plain: “Based on the evidence recorded in this case, and on investigations, the defendant Mohammad Reza Nematzadeh, in cooperation with other defendants, has participated in receiving and transferring ‘percentages’. In the case of the €2.5 million gained from percentages extorted by the defendants, he deposited this amount in a bank account of his own.”
Impossible Justice
The verdict goes on to indicate that Nematzadeh and Ahmadian had a long-standing relationship: “The connections between the defendant Mohammad Reza Nematzadeh and the defendant Mohsen Ahmadian, and his support for him, go back to his tenure as a member of the government. He is also responsible for the illegal deposit of $900,000, which belonged to the government, outside the country into Mr. Ahmadian’s wife’s bank account.”
Meanwhile, Page 7 of the verdict is also very clear on why Mohammad Reza Nematzadeh and others like him never saw the inside of the courtroom – indeed, they were never so much as questioned by the examining magistrate, despite the fact that, according to the judge, they had broken the law and profited from blatant corruption.
“Numerous letters sent by this court to the public prosecutor’s office of Branch 6 of Tehran’s General and Revolutionary Court, and even to judiciary officials, got nowhere,” Judge Masoumi-Magham writes. “No investigation was conducted into the open case. It seems the prosecutor’s office of this branch has no structure in place to investigate that element of a case where the defendants have government or supervisory positions.”
The PCC case was, at least according to those with oversight of it, concerned with the collective swindling of some €6.6bn of funds that were rightly owed to Iranian petrochemical companies. Many of these firms were wholly or partly state-owned, meaning this was effectively money stolen from state coffers, and as such from the Iranian people. But the details were never laid out to the public, and five-sixths of the people and entities involved were let off the hook. It proves once again that grand corruption cases in Iran follow their own rules, which are not enshrined in Iranian criminal law or the constitution. With some irony, and no matter how much is at stake, their outcomes are also determined by corrupt connections between key players. These have now infested every nook and cranny of the ruling system in Iran.
Related coverage:
Iran's Great Petrochemical Corruption Scandal, Part I: The Ones That Got Away
Iran's Great Petrochemical Corruption Scandal, Part II: Buying Off the Intelligence Ministry
Iran's Great Petrochemical Corruption Scandal, Part III: The General (Non-)Inspection Office
Iran's Great Petrochemical Corruption Scandal, Part IV: Sanctions-Dodging and the IRGC
Iran's Great Petrochemical Corruption Scandal, Part V: The Irancell Hustle
Iran's Great Petrochemical Corruption Scandal, Part VI: The Partner Who Fled to Canada
Iran's Great Petrochemical Corruption Scandal, Part VII: The Regime's Favourite Fat Cats
Iran's Great Petrochemical Corruption Scandal, Part VIII: Career Swindler's Takings Stashed in UK and Canada
Who's the Mysterious Survivor of Two Grand Corruption Cases in Iran?
From Luxury Villas to Defrauded Banks: The Mother of All Corruption Cases Gets Under Way in Iran
Government Report Reveals More Corrupt Privatization Practices in Iran
Corrupt to the Core: The Long List of Corrupt Iranian Officials
Sanctions on Iran’s Petrochemical Products: A Heavy Blow to the Economy
How the Corruption Mafia Took $30 Billion out of Iran in One Year
The IRGC Commercial and Financial Institutions: Khatam-al-Anbiya Construction Headquarters
Petrochemical Corruption Scandal Grips the Nation
Corruption is Here — Get Used to It
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