Downfall of Iran’s billionaire sanctions-buster

With a fortune estimated to be worth about Dh 50 billion and a multinational string of businesses, Babak Zanjani was flying high until his arrest in late December.

The imprisoned Iranian billionaire Babak Zanjani says he helped the government evade western sanctions. Trend News Agency
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Is he a hero driven by patriotism or a swindler motivated solely by profit?

Either way, Babak Zanjani, a flamboyant Iranian billionaire who sports a Dh130,000 wristwatch, drives a black Mercedes 500SL and owns a Tehran football club, has suffered a spectacular fall from grace.

One of Iran’s wealthiest businessmen with a fortune worth an estimated US$14 billion (Dh51.38bn), Mr Zanjani helped the Islamic republic evade choking US-led sanctions imposed over its contentious nuclear programme.

But, on December 30, state-run media outlets reported that he was hauled off to Tehran’s notorious Evin prison on corruption charges that he vehemently denies.

The high-profile case, which came after the launch of a parliamentary corruption investigation in September, has riveted ordinary Iranians, giving them a rare insight into the secretive and lavish world of Iran’s tycoons who have prospered, at least in part, by helping the country evade sanctions.

Last week, Iran’s oil minister, Bijan Zanganeh, said Mr Zanjani still owed “more than 2 billion euros” for oil exports he made on behalf of the previous government.

The documents that Mr Zanjani presented to show he had settled the debt were not accepted by Iran’s central bank, Mr Zanganeh said.

The bank’s governor, Valiollah Seif, also denied Mr Zanjani’s claim that he had made payment.

Mr Zanjani’s arrest came a day after Iran’s moderate new president, Hassan Rouhani, ordered his government to fight “financial corruption”, particularly among “privileged figures” who had taken advantage of economic sanctions to enrich themselves, though he made no specific mention of Mr Zanjani.

The businessman’s plight is seen as blowback against the discredited administration of Mr Rouhani’s hardline predecessor, Mahmoud Ahmadinejad, during whose tenure the tycoon made most of his fortune.

Iranian conservatives and hardliners once — but no longer — allies of Mr Ahmadinejad, are swiftly dissociating themselves from Mr Zanjani, a youthful-looking 39-year-old bachelor.

Hardliners are linking the tycoon to the administrations of the former president Mohammad Khatami and his predecessor, Akbar Hashemi Rafsanjani. Supporters of the moderate former presidents have said this is an attempt to discredit the two men.

“Effectively, for political factions across the ideological spectrum, Zanjani has become a symbol of what’s wrong with the economic system,” said Farideh Farhi, an Iran expert at the University of Hawaii. “What’s missing at this point is a discussion on whether Zanjani was an independent businessman or a prop for behind-the-scenes economic players, including various state organisations.”

Scott Lucas, an Iran specialist at Birmingham University in England, suspects that Mr Zanjani will become the “fall guy” for corruption scandals involving powerful figures and institutions during the Ahmadinejad era. “More senior figures are likely to escape unscathed, provided Mr Zanjani pays the price,” Mr Lucas said.

Following the launch of the corruption investigation in September, Mr Zanjani told Iran’s Aseman weekly that, beginning in 2010, he used a web of more than 60 companies in Dubai, Turkey and Malaysia to sell millions of barrels of oil on behalf of the government. This, he said, generated $17.5bn of desperately needed revenue for Iran’s oil ministry, the Revolutionary Guards and the central bank.

Portraying himself as a national hero, he told the magazine that he was proud of his work and described himself an “economic basij”, a reference to Iran’s hardline paramilitary organisation and defender of the Islamic revolution.

“The central bank was running out of money,” he said. “They asked me to bring their oil money into Iran so the system could use it. So that is what I did.”

He insisted he never took more than 0.007 per cent commission on all transactions.

Instead, he blamed international sanctions for any delays in forwarding the proceeds to Iran’s central bank, but insisted he had money safely stashed away to pay when he could.

Until now, Mr Zanjani’s enemies were mainly abroad. In April last year, the US Treasury Department imposed financial restrictions on Mr Zanjani and froze his US assets, accusing him of trying to evade sanctions.

Earlier, the European Union described him as “a key facilitator for Iranian oil deals and transferring oil-related money”.

Unbowed, he told Aseman: “This is what I do – anti-sanctions operations. I am a businessman who has done his job well.”

While blasting the sanctions as unfair, Mr Zanjani also robustly denied any wrongdoing. He has shrugged off his various blacklistings abroad, scoffing that, ironically, the publicity gained from the western accusations was good for his businesses.

Last month, however, he was forced to deny any role in a major corruption scandal currently roiling neighbouring Turkey that in part stemmed from the sale of Turkish gold to pay for oil and gas imports from Iran.

Mr Zanjani says he has prospered because of “God’s help” and good luck. According to various accounts, he started out in life selling sheepskins or cosmetics and went on to earn a degree in crisis management from a Turkish university.

Today, he is the chairman of the Sorinet Group, which includes some 65 companies that operate in Iran, Turkey, the UAE, Malaysia and Tajikstan, and involve a range of industries such as cosmetics, food, oil and aviation.

He said his big break came in 1999 when he became the driver for Mohsen Nourbakhsh, the former head of Iran’s central bank. Mr Zanjani showed a talent for money-changing and told Aseman that he was soon earning a staggering $17,000 a day from his cut on all foreign currency deals. However, both the Nourbakhsh family and Iran’s central bank deny that anyone with his name was on the bank’s staff.

Photographs on Mr Zanjani’s Facebook page depict his gentler side, showing him playing the violin, eating out with friends and riding a motorbike.

That active and gregarious lifestyle will be severely constrained if he is convicted and condemned to stay in Evin prison.

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