September 06, 2019
Iran’s car industry seems to be mired in corruption with six executives of the country’s second largest carmaker in jail, immense debts piling up that the firms cannot repay and large sums said to have been expended questionably on minor design changes.
“Widespread financial corruption has turned automakers in Iran into a powerful mafia,” Majlis Deputy Bahram Parsaei from Shiraz said August 17.
Speaking to the Iran Students News Agency (ISNA) Parsaei, a Reformist lawmaker, maintained that $250 million was spent for designing a new trunk for the French Peugeot 206 model.
“Peugeot 206 is manufactured in France, but they have only added a [new] trunk to it in Iran, and renamed it Peugeot SD,” Parsaei said.
Meanwhile, according to the lawmaker, the two largest automakers—Iran Khodro and SAIPA—together owe $9 billion to banks and $7.5 billion to their parts manufacturers.
Furthermore, the auto-makers have accumulated up to $9 billion in losses, while they sold $7.5 billion of cars, Parsaei asserted.
The Justice Ministry has banned Javad Soleimani, the CEO of SAIPA, from leaving the country, local news outlets reported last month.
More recent reports say the Judiciary has banned the CEO of Iran Khodro, Hashem Yekke-Zareh, from leaving Iran. But there has been no official confirmation or denial of that report. However, on August 19, it was announced that Yekke-Zareh had been fired for unilaterally increasing the prices of Iran Khodro products.
Earlier, the Judiciary spokesman announced that prosecutors have indicted the top managers of SAIPA. “Based on the indictments, six of SAIPA’s top managers are currently under arrest, while 25 others are charged with corruption,” Parsaei said.
SAIPA, an acronym for the French “Societe Anonyme Iranienne de Production des Automobiles,” was established in 1965 with 75 percent Iranian ownership to assemble Citroens.
The problems aren’t just internal to the industry. “During Mahmud Ahmadi-nejad’s second term in the presidency [2009-2013], the government forced Iran Khodro to run a car production line in another country,” Parsaei said, adding, “$90 million was invested for the venture, but it was wasted away since the host country declared that it would not provide the line with electricity for 10 years. Therefore, such a huge national asset was lost, but nobody was held accountable for it.” Parsaei refrained from naming the host country.
Since the re-imposition of US sanctions, the industry has seen a sharp decline in output. Sanctions have made it impossible to procure raw materials and parts.