London, Asharq Al-Awsat—Iran’s police forces became involved in international oil trading under former President Mahmoud Ahmadinejad, according to press reports from inside Iran.
Reports in Iranian media sources earlier in the week highlighted a section of this year’s police budget which shows revenue from a sale of 185 million US dollars of crude oil.
Police officials said the transfer of oil for sale to the police budget was an effort by the previous administration to cover a shortfall in funding the country’s national police force, the Law Enforcement Forces (LEF).
LEF chief, Brig. Gen. Esmail Ahmadi-Moghaddam, objected to the accusation of “corruption” in a press conference on the sidelines of a police management conference held in Tehran following the disclosure of the payment.
Ahmadi-Moghaddam said: “The matter of such money transfer was mentioned in the annual budget monitoring report. However, some people mentioned the name of the police in lists of corrupt entities.”
“Last year former President Ahmadinejad held a meeting and paid the government’s debt to the LEF with an oil cargo. We sold the oil cargo as a compensation of the government debt.”
Although Ahmadi-Moghaddam maintained there was nothing untoward about the payment, the Supreme Audit Court of Iran has criticized the measure.
Ahmadi-Moghaddam said: “Former Minister of Economic Affairs and Finance Shamseddin Hosseini held a meeting with the then oil minister and a representative of the audit court about this matter in March 2013. The transaction was clear. Since the transaction is budgeted in April 2014, the audit court does not accept a 2014 transaction for a 2013 budget calculation.”
Ahmadi-Moghaddam said the matter was resolved after a correspondence between the current cabinet and the audit court.
The controversy over this oil trade is not the first—and is unlikely to be the last—to emerge in regards to Iran’s attempts to cope with the financial and oil sanctions imposed by the US and its allies, which led the administration of former president Mahmoud Ahmadinejad to turn to unorthodox measures in an attempt to circumvent them.
Iranian businessman Babak Zanjani is alleged to have earned a fortune, as well as accumulating massive debts, from such oil trades. He was arrested and held in Tehran’s Evin prison, accused of owing over 2.7 billion dollars to the government for oil traded on behalf of the oil ministry.
An Iranian judicial spokesman said Zanjani has not returned the funds earned from the oil sale.
Iran’s Prosecutor General Gholam-Hossein Mohseni-Eje’i announced the latest investigations had led to the arrests of a number of people. According to Mohseni-Eje’i, no more arrests are planned, and authorities will focus on investigating the case of the defendants they already have in custody.
Mohseni-Eje’i said: “During his interrogations, Zanjani gave the judiciary system a list of his assets inside and outside Iran. He also provided us with an estimate of their value. The primary calculations show his assets can compensate his debt.”
While Iran has been granted some limited sanctions relief since the signing of an interim agreement with six world powers on its controversial nuclear program, many of the economic sanctions imposed by the US and its allies remain in force.
In particular, many of the sanctions block both Iran’s ability to sell its oil abroad and its access to the international financial system, making it difficult to process oil payments. Many attempts by the Ahmadinejad administration to circumvent the sanctions reportedly centered on quasi-official exchange deals brokered by middlemen like Zanjani.