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.
Originally, the PCC corruption case had 129 defendants, both real people and legal entities. As the proceedings moved forward, however, 108 of them were ignored by the prosecution and only 21 were tried, 15 of whom were convicted. Moreover, none of the convicts were in custody when the verdict was issued.
The powerful Khamoushi brothers, two businessmen close to the Supreme Leader, were among those who not only escaped prosecution but benefited from an official drive to conceal their identities from the public. Why was no effort spared in protecting these two, where others were named and shamed?
The story begins in 2009, when the majority of the company’s shares were handed over to the (nominally) private Iran Investments Co. as part of the controversial privatization drive under Mahmoud Ahmadinejad. That company then sold the PPC to one Ali Naghi Khamoushi for 110 billion tomans, or a little over $26 million: according to the critics of deal, this represented one-tenth of its true value.
At the time of the handover Ali Naghi Khamoushi paid just 20 percent of the amount upfront and in cash, while the rest was to be paid in installments. Reza Hamzelou, a trusted aide of Khamoushi’s (and the principal defendant in the corruption case), was then made the CEO of the PCC, and Abolhassan Khamoushi, Ali Naghi’s brother, became chairman of the board. Both remained in post throughout the time the funds were being embezzled.
Who Are the Khamoushi Brothers?
The Khamoushi Group comprises a constellation of mostly oil and gas-related firms run by two brothers out of the six born to the Khamoushi family. The most famous by far is Ali Naghi Khamoushi, an 83-year-old business magnate and politician known as Iran’s “Godfather of Petrochemicals”. For 27 years, from 1984 to 2007, he was president of the Iran Chamber of Commerce, often referred to as “the pseudo-parliament of Iran’s private sector”. He was also the first ever head of Mostazafan Foundation, the second-largest commercial enterprise in Iran after the state-owned National Iranian Oil Company.
Ali Naghi Khamoushi is also a founder and a senior member of the Islamic Coalition Party and runs three large textile companies owned by two religious centers. He was an MP from 1992 to 1996 and before that a deputy minister of commerce. For a while he was also head of the British-Iranian Chamber of Commerce.
In sum, Ali Naghi Khamoushi is one of the most powerful lobbying voices in Iranian business alive today. In one trial session, defendant Mohsen Ahmadian, who ended up sentenced to 20 years in prison, claimed Khamoushi’s offences were being “ignored” because of the support he enjoys from pro-regime institutions.
Not all the Khamoushi brothers trod the same path. Two of Ali Naghi’s five siblings, Mohsen and Morteza, were members of the People’s Mojahedin Organization (MEK) and were killed before the 1979 revolution. But Abolhassan was an acting minister of energy in the 1980s, and in December 2001 was made head of the Petroleum Engineering and Development Company, an affiliate of the state-owned National Iranian Oil Company.
Mohammad Ali Khamoushi is not a well-known figure. Taghi, the eldest, was also a co-founder of the Islamic Coalition Party, then the Islamic Republican Party. He served as MP for Tehran in the first parliament of the Islamic Republic, and is the father of Seyed Mehdi Khamoushi, a former president and current board member of the Islamic Development Organization.
The Khamoushi brothers are also all uncles-in-law of Meysam Khamenei, son of Supreme Leader Ayatollah Khamenei. Their sister Ezat, whose daughter married the Supreme Leader's cleric son, died of Covid-19 in March 2020.
Was the Sale of the PCC Legitimate?
The PCC case was riven by conflicts of interest from the off. The Khamoushi brothers’ Iran Investments Company is the owner of a wide range of major petrochemical firms across Iran that invariably had to do business with PCC.
One of them was the IRSA Power Plant Development Company, where Ali Naghi Khamoushi and Abbas Samimi, another key convict in the PCC case who has since escaped from Iran, were partners for years. Mehdi Sharifi Niknafs, another escaped PCC convict, was also a member of this company’s board. Khamoushi and Samimi were also partners in the Gachsaran Petrochemical Company.
Page 886 of the verdict cites legal problems in the contracts signed between PCC and Iran Investments Company. “Mr. Mehdi Sharifi Niknfas, PCC’s deputy in charge of financial affairs,” it states, “sent a contract to Abolhassan Khamoushi, CEO of Iran Investments Petrochemical Company, for the sale and transfer of the shares.
“Contrary to Article 129 of the Commerce Law, members of the board of directors were denied the right to vote on this deal. This is in violation of the law since Messrs. Khamoushi and Abbas Samimi were at the time, respectively, the above-mentioned company’s chairman and CEO, and also the PCC’s chairman and a board member.
“It was the Justice Ministry’s experts who should have evaluated the price to safeguard all interests, and the government’s share.” Instead, the analysis had been assigned to a private financial consulting company, which the judge said was “legally problematic”.
After the PCC case became public knowledge in 2019, Alireza Zakani, a conservative ex-MP and current Mayor of Tehran, would pen an open letter to then-Chief Justice Ebrahim Raisi, roundly castigating the sale of the PCC to the Khamoushi Group and expressing his amazement that Ali Naghi Khamoushi was not among the defendants.
Of course, the judiciary paid no attention to this letter. In his verdict, even Judge Masoudi-Magham expresses surprises that the allegations against Khamoushi brothers were never investigated.
Such was the furore surrounding the case that even before Zakani’s intervention, in March 2019, Ali Naghi Khamoushi had publicly defended the manner of PCC’s privatization, saying that Iran Investment Co. had won 55 percent of the company’s shares fair and square in an auction held by the Privatization Organization.
In the same statement, Khamoushi also categorically denied any corruption at the PCC and said the only “controversy” was how currency gained from the sale of petrochemical products abroad had been transferred back to Iran. Far from it, as the judge’s verdict now makes plain.
Fingers in the Till
“On the pretext of bypassing economic sanctions,” Judge Masoudi-Magham sums up of all of the accused on Page 9, “the defendants bypassed the Iranian nation, appropriating billions that belonged to the people and, by investing it [elsewhere], increased the value of their fortune to legendary levels.”
The judge goes on to decry the cover-up of aspects of the case, in which PCC officials knowingly gave bribes and entreaties to the responsible authorities to stop them investigating. “In order to hide accurate information from the judiciary while it was investigating this vast €6.656bn corruption case,” the judge writes on Page 10, “a number of major shareholders of PCC resorted to dismissing and replacing the informed, expert personnel.
“Through Mr. Ali Naghi Khamoushi, Mr. Mehdi Sharifi Niknafs hired Ezzatollah Abdollah Khani, a retired employee of the Intelligence Ministry, under the false identity of Engineer Alireza Pour-Ahmad by faking a title belonging to the Office of the Supreme Leader. Then... he dismissed and replaced 65 expert employees and paid astronomical bonuses [to keep them silent].”
On page 131 of the verdict, the judge points to the destructive role of the PCC’s majority shareholder and the Khamoushi brothers’ concern, Iran Investments Company: “Unfortunately, after Iran Investments Co. purchased the controlling PCC shares, the direction of PCC totally changed, and focused instead on making profits for individuals such as Abbas Samimi, [Reza] Hamzelou, Alireza Rahmani, Mostafa Tehrani-Safa [convicted members of PCC’s boards] and Ali Naghi Khamoushi.”
Page 330 of the first half of the verdict refers to two telling requests made by Abolhassan Khamoushi, Ali Naghi’s brother, of PCC Shanghai. It quotes the testimony of Seyed Alireza Hosseini, the CEO of PCC in Shanghai, as follows: “I was asked to deposit, as soon as possible, a sum equal to two million dirhams into an account that Mr. Khamoushi would specify. Because of the hour, no action was taken until the next morning.
“Then Mr. Khamoushi asked that a sum equal to €2 billion be deposited in his account in Hong Kong. He was immediately told that this sum was the equivalent of around six months of PCC Shanghai’s cashflow and the transfer of such a sum would be impossible.”
Elsewhere, Page 801 describes another corrupt transaction, this time involving Ali Naghi Khamoushi: “$60 million was to be paid by the defendant, Mr. Alireza Alaei Rahmani [a now-convicted member of the PCC board] and the effective owner of Alpine Company, to the account of Persian Gulf Petrochemical Industries.
“In addition, around $60 million at least, and $90 million if possible, was to be paid by the defendant Mr. Mehdi Shafiei and PCC to Alpine Co. In Alpine Co, the defendant Alireza Alaei and, unofficially, the defendant Mehdi Sharifi Niknafs, who are among the company’s shareholders, played two roles: one as the buyer, the other as the seller. The defendant Mr. Ali Naghi Khamoushi was also a beneficiary of this deal.”