A three-part article from Reuters, disabusing us of the notion that to hold a Highly Clerical (not to say Priestly) position is automatically to render one uninterested in the contents of the piggy bank. Well, perhaps in this case that’s not the best term for it. Perhaps I should say, the value of the portfolio. Of course, as Reuters reports below,
Meanwhile, Rand Paul believes that we should reason peacefully with Iran, whereas Ted Cruz advises stronger sanctions.
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Assets of the Ayatollah
Khamenei controls massive financial empire built on property seizures
By Steve Stecklow, Babak Dehghanpisheh and Yeganeh Torbati
Filed November 11, 2013
Part 1: A Reuters investigation details a key to the supreme leader’s power: a little-known organization created to help the poor that morphed into a business juggernaut worth tens of billions of dollars.
The 82-year-old Iranian woman keeps the documents that upended her life in an old suitcase near her bed. She removes them carefully and peers at the tiny Persian script.
There’s the court order authorizing the takeover of her children’s three Tehran apartments in a multi-story building the family had owned for years. There’s the letter announcing the sale of one of the units. And there’s the notice demanding she pay rent on her own apartment on the top floor.
Pari Vahdat-e-Hagh ultimately lost her property. It was taken by an organization that is controlled by the most powerful man in Iran: Supreme Leader Ayatollah Ali Khamenei. She now lives alone in a cramped, three-room apartment in Europe, thousands of miles from Tehran.
The Persian name of the organization that hounded her for years is “Setad Ejraiye Farmane Hazrate Emam” – Headquarters for Executing the Order of the Imam. The name refers to an edict signed by the Islamic Republic’s first leader, Ayatollah Ruhollah Khomeini, shortly before his death in 1989. His order spawned a new entity to manage and sell properties abandoned in the chaotic years after the 1979 Islamic Revolution.
Setad has become one of the most powerful organizations in Iran, though many Iranians, and the wider world, know very little about it. In the past six years, it has morphed into a business juggernaut that now holds stakes in nearly every sector of Iranian industry, including finance, oil, telecommunications, the production of birth-control pills and even ostrich farming.
The organization’s total worth is difficult to pinpoint because of the secrecy of its accounts. But Setad’s holdings of real estate, corporate stakes and other assets total about $95 billion, Reuters has calculated. That estimate is based on an analysis of statements by Setad officials, data from the Tehran Stock Exchange and company websites, and information from the U.S. Treasury Department.
Just one person controls that economic empire – Khamenei. As Iran’s top cleric, he has the final say on all governmental matters.
Part 2: An organization controlled by Iran’s supreme leader generates billions of dollars a year, helping to solidify his control over a country hobbled by sanctions.
Seven years ago, the United Nations and Western powers began subjecting Tehran to steadily harsher economic sanctions. Around the same time, an organization controlled by Supreme Leader Ayatollah Ali Khamenei started to study how some developing economies managed to grow fast.
Setad, as the organization is known, had amassed billions of dollars in property seized from Iranian citizens. What Iran lacked and needed, Setad decided, was conglomerates on a par with those of South Korea, Japan, Brazil and the United States.
According to an account this year by a senior official in the unit that oversees Setad’s financial investments, Ali Ashraf Afkhami, the organization also picked the perfect candidate to create an Iranian national champion: Setad itself.
The ayatollah’s organization would go on to acquire stakes in a major bank by 2007 and in Iran’s largest telecommunications company in 2009. Among dozens of other investments, it took over a giant holding company in 2010.
An organizational chart labeled “SETAD at a Glance,” prepared in 2010 by one of Setad’s companies and seen by Reuters, illustrates how big it had grown. The document shows holdings in major banks, a brokerage, an insurance company, power plants, energy and construction firms, a refinery, a cement company and soft drinks manufacturing.
Today, Setad’s vast operations provide an independent source of revenue and patronage for Supreme Leader Khamenei, even as the West squeezes the Iranian economy harder with sanctions in an attempt to end the nuclear-development program he controls.
“He has a huge sum at his disposal that he can spend,” says Mohsen Sazegara, a co-founder of the powerful Islamic Revolutionary Guard Corps military force, who is now living in exile in the United States. “When you have this much money, that’s power itself.”
Even as Setad was gaining ever-greater control over the Iranian economy in recent years, the Western powers knew of the organization and its connection to the supreme leader – the one man with the power to halt Tehran’s uranium-enrichment program. But they moved cautiously. ….
Part 3: On the supreme leader’s watch, Iran conducted a systematic campaign to legalize and safeguard the seizure of assets on which Setad’s wealth was built.
Two months before his death in 1989, Iranian leader Ayatollah Ruhollah Khomeini tried to solve a problem unleashed by the revolution he led a decade earlier.
Land and other assets were being seized en masse from purported enemies of the young theocratic state. Khomeini issued a two-paragraph order asking two trusted aides to ensure that much of the proceeds from the sale of the properties would go to charity.
The result was a new organization – known as Setad, or “The Headquarters” – that reported to Iran’s supreme leader. As one of the aides later recounted, Setad was intended to oversee the confiscations and then wind down after two years.
Twenty-four years later, Setad is an economic giant. Khomeini’s successor as supreme leader, Ayatollah Ali Khamenei, has used it to amass assets worth tens of billions of dollars, rivaling the holdings of the late shah. Setad’s portfolio includes banks, farms, cement companies, a licensed contraceptives maker, apartments seized from Iranians living abroad and much more.
Reuters found no evidence that Khamenei puts these assets to personal use. Instead, Setad’s holdings underpin his power over Iran.
To make Setad’s asset acquisitions possible, governments under Khamenei’s watch systematically legitimized the practice of confiscation and gave the organization control over much of the seized wealth, a Reuters investigation has found. The supreme leader, judges and parliament over the years have issued a series of bureaucratic edicts, constitutional interpretations and judicial decisions bolstering Setad. The most recent of these declarations came in June, just after the election of Iran’s new president, Hassan Rouhani.
The thinking behind this painstaking legal effort is unclear. The Iranian president’s office and the foreign ministry didn’t respond to requests for comment. Iran’s embassy in the United Arab Emirates issued a statement calling Reuters’ findings “scattered and disparate” and said “none has any basis.” It didn’t elaborate.
Setad’s director general of public relations, Hamid Vaezi, said in an email that the Reuters series is “far from realities and is not correct” but didn’t go into specifics. He said Setad plans to challenge sanctions imposed on it earlier this year by the U.S. Treasury Department.
But the legal machinations served several purposes. The decrees enabled Setad to beat back rival institutions seeking to take property in the name of the supreme leader. A ruling on the constitutionality of privatizations smoothed Setad’s expansion beyond real estate and into owning and investing in companies.
The attention to legal procedure also allows Setad and Khamenei to justify a practice that Khomeini had cited as a reason for overthrowing the shah in 1979: property confiscations. Mohammad Reza Pahlavi, the former king, inherited his fortune from his father, who enriched himself in the first half of the 20th century by expropriating vast amounts of land from his subjects. In October 2010, Khamenei invoked that memory in a speech.
How the supreme leader rules Iran
Who runs Iran?
The country is a combination of theocracy and democracy. The head of state and leading cleric is the supreme leader, currently Ayatollah Ali Khamenei, who exerts widespread political influence and controls key military, judicial, foreign-policy and commercial institutions, such as Setad, the focus of this series, which Reuters estimates to be worth about $95 billion.
How is the supreme leader chosen?
The position was created after the fall of the Shah of Iran in 1979 and is appointed for life by the Assembly of Experts, a body of theologians elected from lists of candidates vetted by the powerful Guardian Council. The first holder of the post was Ayatollah Ruhollah Khomeini, a theologian who led the 1979 revolution. He died in 1989 and was succeeded that year by Khamenei.
What about the Revolutionary Guards?
The 125,000-strong Revolutionary Guards, a military force which has accumulated great economic and political power, report directly to Khamenei. Their commanders, such as Major General Qassem Suleimani, head of the elite Quds force, exert powerful influence, but many owe their careers to Khamenei.
What is Khamenei’s background?
Born in 1939, Khamenei became a cleric and was one of Khomeini’s supporters in his struggle against the shah. He was arrested and imprisoned during the shah’s rule, and after the revolution became one of Khomeini’s inner circle. He served as Iran’s president from 1981 to 1989.
Where does democracy come into it?
As well as the supreme leader, Iran also has a president and the Islamic Consultative Assembly, or Majles, a parliament consisting of 290 seats. Members are elected to serve four-year terms. In June, Hassan Rouhani, a relatively moderate cleric, was elected president with 50.7 percent of the vote.
Why has the West imposed sanctions on Iran?
Some sanctions began after the 1979 revolution that toppled the shah. More recently, sanctions have been used to put pressure on Iran to stop its nuclear development program, which Iran says is for peaceful purposes, but the West believes is aimed at producing weapons. In 2006, the United Nations passed a resolution demanding that Iran stop its program of uranium enrichment.
Who calls the shots on the nuclear program?
The president and top Revolutionary Guard commanders are important, but ultimately the supreme leader makes the decisions.
Iran shakes up foundation controlled by Ayatollah’s business empire
By Steve Stecklow | Reuters – Thu, Nov 28, 2013
[Complete story. --J.]
LONDON (Reuters) – A multi-billion dollar organization controlled by Iran’s supreme leader shook up the management of its charity division, appointing as its new chief a man involved in the confiscation of thousands of properties from Iranian citizens.
Aref Norozi was named director general of the Barakat Foundation, Iran’s state news agency reported on Wednesday. The foundation is a unit of a massive business empire controlled by Ayatollah Ali Khamenei that is known as Setad Ejraiye Farmane Hazrate Emam.
The report by the Islamic Republic News Agency stated that Setad’s president, Mohammad Mokhber, had ordered the appointment of Norozi, who once headed Setad’s real-estate division and served on the boards of several Setad-linked companies.
As a result of Norozi’s professional experience, the report said, “It is expected that the Barakat Foundation’s activities will be more extensive than before.”
Reuters this month published a three-part series entitled Assets of the Ayatollah (http://www.reuters.com/investigates/iran/) detailing how Setad has become one of the most powerful institutions in Iran through the systematic seizure and sale of thousands of properties belonging to ordinary Iranians.
The series reported Norozi had stated at a press conference in 2008 that Setad’s properties were then worth about $52 billion.
Setad’s total worth is difficult to pinpoint because of the secrecy of its accounts. But its holdings of real estate, corporate stakes in a variety of industries and other assets total about $95 billion, Reuters has calculated. Through Setad, Khamenei has at his disposal financial resources whose value rivals the holdings of the shah, the late Western-backed monarch who was overthrown in 1979.
Setad also controls the Barakat Foundation, a charity focused on economic development projects in rural areas and that has stakes in the country’s pharmaceutical industry.
A Setad official said in April that through Barakat, Setad had spent more than $1.6 billion in the past five years on development projects. But Setad’s claims about its charity spending are impossible to verify because its accounts are not publicly available.
IRNA last week denounced the Reuters series as “disinformation” intended to undermine public trust in the Islamic Republic’s institutions. A Reuters spokesperson said the news agency stood by the accuracy and fairness of its stories.
IRNA said that in the past five years Barakat has been involved in numerous economic development projects, including building schools, roads, housing units and mosques, as well as providing water and electricity.
According to IRNA, Barakat was created following an order Khamenei gave to the head of Setad. “Solving the problems of the deprived has been on my mind,” IRNA quoted Iran’s supreme leader as saying. “For example, solve the problems of 1,000 villages. It would be good to develop 1,000 places or to build 1,000 schools. Prepare this organisation for this task.”
A spokesman for Setad did not respond to a request for comment about Norozi’s appointment.
(This version of the story fixes a typo in Norozi’s name in the second paragraph.)
(Additional reporting by Babak Dehghanpisheh; Edited by Michael Williams and Simon Robinson)