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Iranian Billionaire Blockade Runner Sentenced To Death

Iranian Billionaire Blockade Runner Sentenced To Death

Having facilitated the illicit sale of Iranian oil while under Western sanctions, Iranian billionaire Babak Zanjani now stands accused by his own country of corruption and large-scale embezzlement, for which he and two accomplices have been sentenced to death.

An Islamic court has sentenced the defendants to death for the capital offense of “spreading corruption on earth”, but before their deaths—which can still be appealed—they are ordered to repay one-quarter of the estimated US$2.7 billion they allegedly embezzled from the state-run National Iranian Oil Co. (NIOC).

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“The preliminary court has sentenced these three defendants to be executed, as well as paying restitution to the plaintiff [NIOC],” judiciary spokesman Gholan Hossein Mohseni-Ejeje said in a statement.

According to the Iranian authorities, Zanjani—a billionaire with his own bank in Tajikistan, First Islamic Investment Bank—funneled billions belonging to NIOC out of the country in 2014 through this channel, most prominently in deals with Turkey, Malaysia and the United Arab Emirates. According to Zanjani, who says he’s embezzled nothing, his only intention was to help his country out in a time of need by helping to bypass Western sanctions on Iranian oil.

True or not, the network run by Zanjani is no longer needed now that sanctions have been removed, though he was arrested in December 2013, long before sanctions were lifted.

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That he benefited from the business is no secret—but to what extent he benefitted remains a matter of dispute between Zanjani and the Islamic court. He is said to have told an Iranian reporter that he made $10 billion on these global sanctions-skirting oil deals, but that he lost just as much through related debt.

For the case in question, we’re talking about crimes that apparently took place under the watch of former Iranian president Mahmoud Ahmadinejad, when Zanjani held a certain status as informal dealer for the Oil Ministry. But according to the Oil Ministry, he received oil from the ministry to sell in a manner that would circumvent sanctions, but never paid for that oil, pocketing the proceeds from the sales and thus depriving the state of desperately needed revenues.

For his part, Zanjani holds that while the oil was not in fact paid for, the reason was that sanctions prevented the transfer of funds from taking place.

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But the trial and the sentencing of Zanjani is being viewed by some as a way to gloss over a much deeper corruption. The overriding sentiment is that President Hassan Rouhani is hoping that this sentencing will prove Iran’s new commitment to tackling corruption among its own business elite, but that this sanctions-busting scheme likely goes well beyond Zanjani, who could be a convenient scapegoat that would allow the authorities to wash their hands of the case.

The bottom line, though, is that things have changed, and while Zanjani might have had free reign under Ahmadinejad, under Rouhani, the rules of the game will be different. His boasting under Ahmadinejad is now backfiring on him under a new regime.

By Charles Kennedy of Oilprice.com

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