the country for Canada, where it turns out he owns a $3 million house in Toronto.
Iranian officials have urged Mahmud-Reza Khavari to return to Tehran, but he has ignored them and gone to ground in Canada.
The immense scandal has engulfed the country and is the major topic of conversation, not to mention conspiracy theories. A number of Majlis deputies are busy naming the guilty without waiting for the investigation to be completed, yet alone for a trial to be held.
It is sometimes difficult to tell where the pursuit of the fraudsters ends and the pursuit of political ends begins.
Supreme Leader Ali Khamenehi had his fill of the running accusations this week and firmly but politely told the political elite Monday to shut up. “Some people are using this to bash the authorities,” Khamenehi complained. He singled out the media, although they have mainly been quoting Majlis deputies. “The media must not persist in creating controversy and fomenting an uproar,” he said.
But he also turned on the Ahmadi-nejad Administration, complaining that it failed to carry out his orders to focus on corruption. “I gave strong advice to the country’s officials in recent years about combating economic corruption. They welcomed my advice—but, if correctly implemented, the recent economic corruption would not have occurred.”
The main focus of recent days has been on Khavari, the managing director of Bank Melli, who submitted his resignation last Tuesday and then disappeared. The bank said he had gone abroad on official business, though no one explained how one was to conduct official business after resigning. It was announced he would return from Canada two days later on Thursday, though why one would fly to Canada on Tuesday and return on Thursday was left in the air. In the end, he did not return Thursday—or afterward.
The Globe and Mail, Canada’s largest daily based in Toronto, checked property records and found a Toronto home registered in Khavari’s name in the affluent Bridle Path neighborhood of Toronto. Public records showed the house was bought July 30, 2007, for C$2,925,000, a sum that was then worth more than $3 million in American currency.
The Globe and Mail sent a reporter to the house Friday, The reporter was greeted by a woman who refused to answer any questions.
Some news reports in Iran have said Khavari holds Canadian citizenship. But the Canadian government has declined to say anything about his legal status. Canada and Iran do not have an extradition treaty, so Iran has no legal route to get its hands on Khavari in Canada.
Khavari was both the managing director and the chairman of the Board of Bank Melli, which is Iran’s largest bank. It is state-owned. In his letter of resignation, news agencies said, Khavari insisted the bank was not directly involved in the scandal but said he was resigning anyway “to respect public opinion.”
The managing director of another bank—Mohammad Jahromi of Bank Saderat, a partly privatized institution—was forced to resign last week. He remains in Tehran, where he complained that he was being used as a scapegoat when he had actually been trying to fight the fraud.
“Despite my follow-ups and contacting the Intelligence Ministry and the Judiciary seeking the arrest of the main culprits, the main backers of this corruption have publicly blamed Bank Saderat and its managing director,” he said.
The managing director of a third bank, Bank Saman, has also been dismissed.
On Tuesday, Prosecutor General Gholam-Hossain Mohseni-Ejai said the number of suspects being pursued has risen to 35. Last week, other officials said 22 people had thus far been arrested in the scandal, with some of them freed after interrogation.
Jahromi is not among those arrested. Jahromi was the labor minister in Ahmadi-nejad’s first cabinet named in 2005.
News reports say eight Iranian banks are involved in the scandal, though it isn’t made clear how many were victims of the fraud and whether any profited. The main accusation against some of the banks is that they exceeded their lending authority in providing the letters of credit behind the scandal or failed to check the bona fides of applicants for letters of credit.
The scandal is understood to involve the issuance of letters of credit that were used to buy industries being privatized by the state and also used to back loans from other banks. The man at the center has been named in the media as Amir Mansur Aria, who is a major industrialist with many interests and who recently purchased a large steel mill when it was privatized. He is understood to be one of those detained.
Many in the political world are trying to link the fraud to Esfandiar Rahim-Mashai, Ahmadi-nejad’s chief of staff and the official Ahmadi-nejad’s critics most love to hate. The critics say Mashai signed the papers turning over the steel plant to Aria. The government said he signed the papers pro forma after being told the sale had been arranged.
Attention has also focused on Hamid Pur-Mohammadi, who is the deputy governor of the Central Bank in charge of overseeing the banking system. News reports say he stands accused of ineffective management, not criminal activity. He has reportedly been asked to resign, but so far has refused to do so.
The investigative committee assigned to the case issued a brief statement last Wednesday explaining why the senior managements at the Melli, Saderat and Saman banks were replaced. It said Melli and Saman had issued the highest volumes of discounted letters of credit, in each case exceeding the legal limit. It said Bank Saderat had failed to carry out the required credit checks and other documentation before issuing the letters of credit in contention.
Last week, a Majlis deputy asserted that the scandal was much smaller than originally described and nowhere near $2.6 billion. But no one else has supported that contention. Intelligence Minister Heydar Moslehi said only 1 percent of fraudulent sum was wired abroad. He did not, however, say if the government has its hands on the other 99 percent.