The US media almost entirely ignores news regarding the Islamic Republic of Iran. As Tony Snow of the Fox News Network has put it, “this is probably the most under-reported news story of the year.” Most American’s are unaware that the Islamic Republic of Iran is NOT supported by the masses of Iranians today. Modern Iranians are among the most pro-American in the Middle East.
There is a popular revolt against the Iranian regime brewing in Iran today. I began these daily threads June 10th 2003. On that date Iranians once again began taking to the streets to express their desire for a regime change. Today in Iran, most want to replace the regime with a secular democracy.
The regime is working hard to keep the news about the protest movement in Iran from being reported. Unfortunately, the regime has successfully prohibited western news reporters from covering the demonstrations. The voices of discontent within Iran are sometime murdered, more often imprisoned. Still the people continue to take to the streets to demonstrate against the regime.
In support of this revolt, Iranians in America have been broadcasting news stories by satellite into Iran. This 21st century news link has greatly encouraged these protests. The regime has been attempting to jam the signals, and locate the satellite dishes. Still the people violate the law and listen to these broadcasts. Iranians also use the Internet and the regime attempts to block their access to news against the regime. In spite of this, many Iranians inside of Iran read these posts daily to keep informed of the events in their own country.
This daily thread contains nearly all of the English news reports on Iran. It is thorough. If you follow this thread you will witness, I believe, the transformation of a nation. This daily thread provides a central place where those interested in the events in Iran can find the best news and commentary. The news stories and commentary will from time to time include material from the regime itself. But if you read the post you will discover for yourself, the real story of what is occurring in Iran and its effects on the war on terror.
I am not of Iranian heritage. I am an American committed to supporting the efforts of those in Iran seeking to replace their government with a secular democracy. I am in contact with leaders of the Iranian community here in the United States and in Iran itself.
If you read the daily posts you will gain a better understanding of the US war on terrorism, the Middle East and why we need to support a change of regime in Iran. Feel free to ask your questions and post news stories you discover in the weeks to come.
If all goes well Iran will be free soon and I am convinced become a major ally in the war on terrorism. The regime will fall. Iran will be free. It is just a matter of time.
Rafsanjanis are Iran's Power Brokers for Investors
April 21, 2004
Bloomberg Markets Magazine
Bloomberg
At 6 p.m. on Sept. 11, 2003, agents from Oekokrim, Norway's financial crimes police unit, raided the Stavanger headquarters of Statoil ASA, the nation's largest oil company. They were seeking records of a $15 million contract with Horton Investment, a London-based consulting firm with links to a son of Iran's former president, Ali Akbar Hashemi Rafsanjani. Oekokrim said in a Sept. 12 press release that a $5.2 million Statoil payment that wound up in a Turks and Caicos Islands bank account might have been a bribe to drill in Iran's natural gas fields, the largest in the world after Russia's. Oekokrim charged Statoil with violating Norway's General Civil Penal Code, which prohibits influencing foreign officials. The Statoil scandal reveals the risks of dealing with Iran - - a country that ranks with Armenia, Lebanon and Mali as ``highly corrupt'' in a survey by Berlin-based Transparency International, which polls business executives and academics on investing. Two weeks after the raid, Statoil Chairman Leif Terje Loeddesoel, 69, Chief Executive Officer Olav Fjell, 52, and Executive Vice President Richard Hubbard, 53, resigned. None of the executives has been charged with any wrongdoing.
Iranian Revolution
Twenty-five years after Ayatollah Ruhollah Khomeini led the revolution that toppled Shah Mohammad Reza Pahlavi, a dozen families with religious ties control much of Iran's $110 billion gross domestic product and shape its politics, industries and finances, says Ray Takeyh, a professor and director of studies at National Defense University's Near East and South Asia Center in Washington and coauthor of ``The Receding Shadow of the Prophet: The Rise and Fall of Radical Political Islam'' (Praeger, 2004). The Rafsanjanis -- who have investments in pistachio farming, real estate, automaking and a private airline worth a total of $1 billion -- are among the best connected and most influential of the families, Takeyh says.
Rafsanjani, 69, has wielded power since the creation of the Islamic Republic in 1979, when he served on the Revolutionary Council under Khomeini.
Mohsen Hashemi, 43, Rafsanjani's oldest son, heads a $2 billion project to build Tehran's subway. Yasser Hashemi, 32, the youngest son, runs a horse farm north of Tehran in the exclusive suburb of Lavasan, where an acre of land costs $2 million. Mehdi Hashemi Rafsanjani, 34, the son whose contact with Statoil led to the police search, was a director at National Iranian Gas Co. and heads the unit that develops compressed natural gas for cars. ``The whole Iranian economy is set up to benefit the privileged few,'' Takeyh says. ``Rafsanjani is the most adept, the most notorious and the most privileged.''
Tempting Riches
Iran's riches are tempting to companies and private investors. The country -- which, at 1.65 million square kilometers (637,069 square miles), is slightly smaller than Alaska -- holds 9 percent of oil reserves, second in the world behind Saudi Arabia. Iran also holds 15 percent of global natural gas deposits.
With two-thirds of Iran's 70 million people under age 30, the country's appetite for consumer goods is ballooning. GDP will climb 8 percent this year: the same rate as China and almost double the 4.6 percent rate in the U.S., the International Monetary Fund projects.
In 2003, the Tehran Stock Exchange All-Share Price Index more than doubled to 10879.87 compared with a 26 percent increase for the Standard & Poor's 500 Index. The market value of the 350 companies on the exchange rose 7 percent to $37 billion in the first three months of 2004. Automaker Iran Khodro Co.; Melli Investment Co., a unit of Bank Melli, Iran's biggest bank; and Kharg Petrochemical Co., the country's fifth-biggest company by market value, powered the gains.
Stock Market
The government of President Mohammad Khatami, 60, who replaced Rafsanjani in 1997, introduced legislation last year to open the stock market to foreign investors. A 1996 ban keeps the exchange closed to all but Iranians. Khatami also proposed creating an independent regulatory body like the U.S. Securities and Exchange Commission.
Jim Rogers, 61, who founded the New York-based Quantum Fund with George Soros in 1969, is among a handful of foreigners who bought shares in Iranian companies in the early 1990s, before Iran's parliament banned outside investment. The exchange let investors like Rogers keep their shares.
Rogers says his holdings, which he declines to name, have risen ``an enormous amount.'' He says he's aware of Iran's attractions -- as well as its pitfalls. ``The country has oil, lots of minerals, a young population,'' Rogers says.
``Transparency is a problem. They only send me information about my companies when they want to.''
Legal Traps
Companies and investors that want to break into Iran need to understand how to navigate legal and ethical traps like the one that rocked Statoil, says Arwa Hassan, program director for the Middle East at Transparency International.
In 1979 and 1980, U.S. President Jimmy Carter imposed a series of bans on Iran that barred travel, trade and financial transactions after militants held 52 American embassy staff members hostage in Tehran for 444 days. In 1995, President Bill Clinton banned U.S. companies from helping to develop Iran's energy industry. In 1996, the U.S. Congress authorized the president to impose sanctions on non-U.S. companies that invested more than $20 million in Iran's energy assets.
Interest From Europe
European and Asian companies aren't bound by U.S.-style prohibitions against Iran -- and they're rushing to get a piece of the action. France's Total SA, Europe's No. 3 oil company, is in talks to construct a $2 billion liquefied natural gas plant. Alcatel SA, the world's second-biggest maker of telecommunications gear, is building Iran's phone system and supplying lines for high-speed Internet service.
In February, Japan's state-run oil company, Inpex Corp., and Osaka, Japan-based trading company Tomen Corp. agreed to spend $2.5 billion to develop the Azadegan oil field.
Michael Thomas, an adviser to the U.K. Department of Trade and Industry, says Iran is ripe for foreign investment. ``Iran has everything the West needs: cheap energy, lots of raw material and a large labor pool,'' he says.
Statoil pursued Iran's oil and natural gas. The North Sea reserves that produced more than 90 percent of Statoil's output began to decline in 1999. Hubbard, the former executive vice president, said in a January interview that the onus of finding new fields fell to him as head of international exploration. Fjell and Loeddesoel declined to comment for this story.
Meeting With Junior
In a letter given to Statoil's board after his resignation, Hubbard said that when he got a chance to talk with the son of Iran's former president, he took it. In 2001, Hubbard met Mehdi Hashemi Rafsanjani, whom he called Junior, in Statoil offices in Bergen.
According to Hubbard's Oct. 22 letter, Mehdi Hashemi asked if Statoil would pay ``a success fee'' to develop the Salman oil field in the Persian Gulf. Hubbard turned down the proposal after his development team rejected Salman on technical and cost grounds. ``Junior led us to believe several companies had paid success fees for various contracts,'' Hubbard wrote.
Mehdi Hashemi made other proposals, Hubbard wrote. One was a plan to divert funds to Iranian Islamic charities, or Bonyads. Hubbard rejected those. In early 2002, he found one offer acceptable, he wrote in his letter: Mehdi Hashemi proposed acting as Statoil's political adviser and said he would commission a consulting agreement with Abbas Yazdi, 34, an Iranian who had set up Horton Investment and was living in London. In a September interview, Yazdi confirmed that he ran Horton.
Consulting Deal
In June 2002, Statoil and Horton Investment signed a formal agreement for an 11-year, $15 million consulting deal, Hubbard said in the January interview. Four months later, Statoil announced plans to invest $300 million to drill and pump natural gas from the South Pars field, the world's largest, with 800 trillion cubic feet of reserves.
That December, Yazdi asked Statoil to wire $5.2 million to his account in Turks and Caicos, according to Hubbard's letter. A few months later, Statoil's internal auditors questioned the payment, says Jan Borgen, national director for Norway at Transparency International.
``The auditors became suspicious because of the size of the contract and the fact that Statoil paid a 35 percent lump sum, which is unusual,'' says Borgen, who followed the case as an official at Transparency International. The consulting agreement was for 11 years and Statoil paid 35 percent of the value after six months, he says.
Hubbard confronted Yazdi about the transfer, he said in his letter. Yazdi said it had always been his intention to use an offshore account. ``There was a clear understanding that companies that are active in Iran are expected to contribute to the society one way or another,'' Hubbard wrote.
Suing Iran
Houshang Bouzari, 51, an adviser to Iran's oil minister in the 1980s, says doing business in Iran without paying someone in power is impossible. When he refused to pay a bribe, he says, he wound up in a Tehran prison. Now a Canadian citizen, Bouzari is suing the government of the Islamic Republic of Iran for torture, abduction and false imprisonment.
In 1988, Bouzari left his post and set up an oil trading and consulting firm with offices in Rome and Tehran. Four years later, he says, he began working with Saipem SpA, Europe's second- biggest oil field services company, and Tecnologie Progetti Lavori SpA, an Italian subsidiary of France's Technip SA, Europe's largest oil field services company.
With Bouzari's help, the companies secured a $1.8 billion contract to help develop Iran's South Pars gas field, the area Hubbard targeted a decade later. Bouzari would have made as much as $36 million, or 2 percent of the total contract, he said in February 2002 in testimony at the Ontario Superior Court of Justice, where he's taken his case against the Iranian government.
Tortured in Prison
Instead, Bouzari got nothing. On June 1, 1993, he told the court that three agents from Iran's Intelligence Ministry arrested him as he was finishing his morning coffee. They took him to Evin, a Tehran prison where Iranian political prisoners are detained. Jailers whipped the soles of his feet with metal cables and pushed his head in a toilet, he testified. On three occasions, he was told to prepare for his imminent execution, according to the court transcript.
Bouzari spent more than eight months in prison. His wife paid $3 million to Iran's Ministry of Information before he was released, court documents show. Bouzari then paid another $250,000 to secure his passport. He left Iran for Rome in July 1984 and emigrated to Canada in 1988.
Bouzari testified he was tortured because he'd refused to pay $50 million as a bribe to Mehdi Hashemi. ``I didn't believe at that time in paying money to a government official or son of the president,'' Bouzari said.
Pressed for a Commission
In a February interview in London, Bouzari elaborated on his ordeal. ``Mehdi and Yazdi pressed me to give them a commission, but I didn't need the Rafsanjanis because I had done all the hard work in lining up the contract,'' he said. ``I was detained and tortured illegally. No shred of paper was ever presented to me or my family as to why I was jailed or tortured.''
Bouzari sued in February 2002, seeking to regain the $3.25 million he says his imprisonment cost him. That May, Judge Katherine Swinton said she accepted the truth of Bouzari's testimony. She ruled the Canadian court had no jurisdiction over Iran as a sovereign nation. In December 2003, Bouzari appealed to Ontario's Court of Appeal, where the case is pending. While he waits, he has set up the International Coalition Against Torture, which aims to end state-sponsored abuse.
``I would have been killed had I tried to take this action in Iran,'' Bouzari says.
`Psychological Warfare'
Mohammad Hashemi, 52, Rafsanjani's younger brother, dismisses such stories. He says his family is a victim of rumors, gossip and propaganda.
In a December interview at the former Saadabad Palace in northern Tehran, in a complex of buildings that once belonged to the deposed shah's sister, Hashemi says enemies of the Islamic regime are lying about the family wealth.
``This is part of the psychological warfare to create a rift between the people and their government,'' says Hashemi, who abandoned his studies at the University of California, Berkeley, in 1978 to join the revolution. He served as Iran's vice president from 1995 to 2001 and headed state radio and television for 13 years. Today, he often acts as family spokesman with the international press.
Tea and Almonds
``Our Mehdi has said he had nothing to do with bribery,'' Hashemi says, speaking over a snack of tea and salted almonds in a room furnished with Louis XVI chairs, silk wallpaper and a Persian carpet. ``If foreign companies want to do business, they should do so in a correct way without resorting to any middlemen.''
Mehdi Hashemi declined telephone, fax and e-mail requests for an interview. In a March interview with the Shargh newspaper, a Tehran daily, he said he had no knowledge of Horton Investment and has had no consulting agreements with Statoil or Horton. The discovery that a Rafsanjani figures in controversy over money and power doesn't surprise Ali Ansari, an Iranian lecturer in Middle Eastern history at Exeter University in southwest England.
``Rafsanjani operates on the principle of what's good for him is good for the country,'' says Ansari, who has written two books on Iran: ``A History of Modern Iran Since 1921: The Pahlavis and After'' (Longman, 2003) and ``Iran, Islam and Democracy: The Politics of Managing Change'' (Royal Institute of International Affairs, 2000). ``His family has long tentacles.'' Rafsanjani stepped down as president in 1997 after serving Iran's limit of eight years. Today, he leads the religious organizations that shadow Iran's official government. He's deputy chairman of the Assembly of Experts, which appoints Iran's Supreme Leader, the ultimate political and religious authority. In 1999, the assembly named Ayatollah Ali Khamenei to the post.
Extending His Reach
Rafsanjani also heads the Expediency Council, which sets strategic economic policy and mediates between parliament and the Guardian Council, a 12-member clerical body that oversees parliament. ``He is one of the most powerful men in Iran,'' Ansari says. ``His reputation is that of a Mr. Fix-it.'' Rafsanjani extends his reach through his family. Cousin Ahmad Hashemian is managing director of the Rafsanjan Pistachio Growers Cooperative, which dominates the $746 million pistachio export market, according to the Web site of Iran's Customs Ministry.
Older brother Ahmad, now retired, headed the Sarcheshmeh complex, Iran's largest copper mine. Another brother, Mahmud, was governor of Qom, Iran's most important holy city. Nephew Ali Hashemi, 43, is a member of the parliamentary energy commission that oversees oil and gas policy. Mohsen Rafiqdoust, 63, Rafsanjani's brother-in-law, was Khomeini's driver and head of security when the ayatollah arrived from exile.
Role of Bonyads
One way the Rafsanjanis and other clerical families maintain their grip is through the Bonyad foundations, says Shaul Bakhash, a visiting fellow at the Brookings Institution, a Washington- based research organization.
After the revolution, the Bonyads expropriated assets of foreigners and the former shah's friends, says Bakhash, who has written extensively on Iran and is the author of ``The Reign of Ayatollahs: Iran and the Islamic Revolution'' (Basic Books, 1984).
Companies under Bonyad control account for as much as a third of Iran's economy, he says. The Bonyads don't disclose their accounting or pay taxes; they get subsidized loans and report only to the Supreme Leader, he says. ``The economic power structure is even more opaque than the political system,'' Bakhash says. ``The Bonyads funnel money to senior religious figures for patronage and suspected clandestine activities.''
Links to Terrorism?
The Bonyads have been linked with funding terror organizations, he says. In 1989, Bonyad 15 Khordad offered $1 million to any non-Iranian who carried out Khomeini's charge to kill author Salman Rushdie for writing ``The Satanic Verses'' (Viking Press, 1989), a novel that mocks the prophet Mohammad. Over the years, the bounty has increased to $2.8 million. Rafiqdoust, Rafsanjani's brother-in-law, headed the biggest Bonyad for more than 10 years, until 1999. The Bonyad Mostazfan and Janbazan, or Foundation for the Oppressed and War Invalids, owns the former Hilton and Hyatt hotels in Tehran; Zam-Zam, Iran's largest soft drink company; Bonyad Shipping Co., a global shipper with offices in London and Athens; and industrial plants and real estate, according to its Web site.
A 2000 World Bank report put the value of BMJ assets at $3.5 billion; Iranian economist Mohammad Jamsaz, a consultant to Iran's Chamber of Commerce, estimates the number is closer to $12 billion.
Student of Khomeini
Rafsanjani gained entry to Iran's political and religious elite early on. He was one of nine children born into a pistachio farming family from the village of Bahraman, near Rafsanjan, a dusty town in central Iran. When he was 14, his parents sent him to Qom, a seminary town on the northern fringes of the Dasht-e Kavir Desert.
Khomeini taught classes there, and Rafsanjani studied Islamic law, morality and mysticism. Khomeini advocated giving clerics more say in running the country, an interpretation that contrasted with the then Shiite leadership, which shunned political entanglements, Bakhash said in his book.
In 1964, Iran's military arrested Khomeini and exiled him to Izmir, Turkey, and Najaf, Iraq. Khomeini opposed the shah's policies on women's rights and land reform, under which the government accumulated property from Iran's mosques. He also fought the growing role of the U.S. military in Iran. During the next 15 years, Rafsanjani landed in jail five times for his own activities against the shah.
Shah's Regime Falls
The shah's regime fell in 1979 after his modernization plans and links to the U.S. sparked a revolution. Khomeini returned as a national hero and pushed his idea that only the religious class may rule. An assembly composed of 82 percent clerics changed Iran's constitution to create an Islamic republic.
Rafsanjani stayed at the center of power. He was a member of the Revolutionary Council, which ordered executions of officials in the shah's regime, Bakhash writes. He was speaker of the Majlis, Iran's parliament, for nine years. He acted as Khomeini's representative on the Supreme Defense Council -- or war cabinet - - during the eight-year war with Iraq. The war ended in a stalemate in 1988, leaving a million casualties. In 1989, Rafsanjani was elected president, replacing Khamenei, the current Supreme Leader.
Today, Rafsanjani's two terms are remembered for corruption and nepotism, says Mehdi Haeri, a lawyer in Bochum, Germany. Haeri, himself a former student of Khomeini and a classmate of President Khatami at Qom Theology School, spent four years in jail for criticizing Khomeini's ideas on Islamic rule.
In 1997, Haeri testified before the U.S. House International Relations Committee in favor of continuing U.S. sanctions against Iran. ``In every major industry and in every financial activity, you find the Rafsanjani family somehow connected,'' Haeri said.
Prevalence of Bribes
Siamak Namazi, managing director of Tehran-based consulting firm Atieh Bahar Consulting, says bribes are prevalent in Iran. ``In a country where you have to pay off the postman to make sure your international packages are delivered, bribes can be a way of life,'' says Namazi, who counts Nokia Oyj and BP Plc as clients. Nokia, the world's biggest mobile-phone maker, sells handsets in Iran and is seeking a contract to expand cell phone coverage. BP, Europe's biggest oil company, is negotiating with the oil ministry for drilling rights.
`Zero Tolerance'
BP spokesman Toby Odone says his company doesn't pay success fees or bribes. Nokia spokeswoman Arja Suominen says the company and employees won't pay bribes or illicit payments to government officials or candidates.
``You have to have zero tolerance toward bribery,'' she says. Namazi says he advises clients not to pay to win business. ``I would advise against paying a bribe,'' he says. ``You'll only bring fire upon yourself.''
At Statoil, CEO Fjell's resignation makes the case for Namazi's statement. ``Looking back, I see that I entered an ethical borderland,'' Fjell said at his September farewell news conference in Stavanger. ``This particular agreement shouldn't have been made. I'm struggling with the fact that I could allow that to happen.''
Iranian Deputy Foreign Minister Mohammad Hossein Adeli says the Statoil episode would have blown over had the company been more open. A former central bank governor and ambassador to Canada, Adeli takes a deep breath, searching for the right words.
``If a Western company wants to come to Iran, should they pay someone to show them around and to help them navigate the Iranian market? Absolutely,'' he says. ``They have to pay. The only thing Statoil did wrong was to keep the payments a secret.'' Foreign investors may not be so generous in their assessment. ``If there's a feeling a country has corrupt officials, it's bad for investors,'' says Karina Litvack, head of governance at Isis Asset Management Plc, a London fund manager with about 62 billion pounds ($111 billion) under management, including Statoil shares. ``It makes it risky because corruption breeds lawlessness.''
Statoil shares fell as much as 11 percent on the news of scandal before recovering as oil prices rose. The shares fell 0.8 percent today to 92 kroner ($13) at 9:41 a.m. central European time in Oslo.
Investors seeking riches in Iran are likely to run up against the Rafsanjanis. The challenge is to avoid the pitfalls.
--Editors: Roche, Henkoff, King
To contact the reporter on this story: --Kambiz Foroohar in London at (44)(20) 7330-7018 or
kforoohar@bloomberg.net To contact the editor of this story: Ron Henkoff at (212) 318-2347 or
rhenkoff@bloomberg.net http://quote.bloomberg.com/apps/news?pid=email_us&refer=&sid=a7fJPoIAkw5g
