Iran counts $22 billion in forex abuses under Ahmadinejad
Author: Arash Karami Posted August 27, 2014
An Iranian official tasked with fighting corruption has said that in the final three years of the administration of former President Mahmoud Ahmadinejad, $22 billion in exchange-rate abuses took place, with companies using access to government-subsidized exchange rates to to buy luxury items or resell goods at a free market rate and pocket the difference.
“Huge amounts of currency at a prime exchange rate was given to importers who, after investigation, it became clear that some of them are not real, meaning they had no foreign existence,” Kazem Palizdar, head of the office for coordinating the fight against economic corruption, to;d Industry and Development Monthly.
Palizdar continued, “They would get a large amount of currency at a prime rate to acquire essential goods. Not only did they not do this, but we realized that these import companies did not even exist. It’s not clear where this currency went.”
He continued, “Other companies would get currency at a prime rate, meaning 1,226 toman per dollar, in order to import essential goods, but when the goods were imported they were sold at free market prices. These companies had 100% profits and sometimes more.”
Palizdar went on to describe a third type of violation, in which companies would acquire dollars through the prime exchange rate and instead of buying essential goods, the purpose for which the prime rate is offered by the government, they would buy luxury items, such as high end cars.
According to Palizdar, “From the end of [Iranian calendar year] 1389 [the beginning of 2011], … this crisis pretty much continued until the beginning of [President Hassan] Rouhani’s administration.”
He continued, “During this era, the price of currency had a lot of fluctuations that could be said to be bigger than a lot of the current violations. Meaning, events took place such that it is not clear what happened to the currency resources of the country.”
“During these years, the Central Bank has made $22 billion of currency interventions in the market. [Rouhani’s Vice President Eshag] Jahangiri has made a reference to this in Kermanshah, and we are currently investigating it.”
Khabar Online, which picked up the interview, described Palizadar as a low level official whose picture does not appear anywhere and suggested that his claims have no political motivations.
Since Rouhani’s election, Iran’s annual inflation rate has decreased by 20%, in comparison to Ahmadinejad’s last month in office, which saw an inflation rate of 45%. The current administration has been active in uncovering some of the corruption under the management of the previous administration.
In regard to claims by Ahmadinejad-era officials, Palizdar said, “They say this currency has been distributed and the exchange rate dealers outside of the country in United Arab Emirates, Iraq and Turkey distributed [the currency] so that, in their words, a balance would be created in Tehran’s market.”
Read More: http://www.al-monitor.com/pulse/originals/2014/08/iran-22-billion-exchange-rate-violations.html