From Oil Sales to Death Row, Iranian Businessman Awaits His Fate

  • Zanjani faces execution unless he repays about 2 billion euros
  • He's been trying to repay money since 2013 arrest, lawyer says

Babak Zanjani speaks at a court in Tehran, Iran, Nov. 1, 2015.

Photographer: Hemat Khahi/EPA

Babak Zanjani knows exactly the price of his life: $2.2 billion.

It’s how much the fallen Iranian businessman has to repay to stand a chance of avoiding execution. He was sentenced to death along with two others on March 6 for embezzling from the national oil company during the embargo on exports. According to his lawyer, Zanjani has been trying to return the money since he was first arrested in December 2013 following the change of government in Iran.

“This was a simple issue about paying back debts at first,” Zohreh Rezaei, a member of the legal team preparing an appeal against the conviction, said by telephone last week. “Instead, it’s been turned into this big political issue.”

Zanjani’s descent from intermediary to inmate tracks Iran’s journey as it reconciled with western powers and ended a decade in the economic wilderness when sanctions were lifted earlier this year.

Fall Guy?

President Hassan Rouhani has said he needs to weed out corruption to reboot the economy and attract foreign investment. The question of who aided Zanjani and where the money went still needs answering, he said last week.

Now in his early 40s, Zanjani came to symbolize the new class of wealthy men accused of using their ability to circumvent trade restrictions and enrich themselves in the latter years of Mahmoud Ahmadinejad’s presidency, which ran from 2005 until 2013.

“He’s a fall guy,” said Kamran Bokhari, an academic at George Washington University and the University of Ottawa specializing in the Middle East. “He’s useful for Rouhani by saying there’s a stark difference between what was happening under Ahmadinejad and what’s happening now.”

Zanjani was accused of embezzling $2.7 billion in total from the government via branches of his First Islamic Investment Bank in Tajikistan and Malaysia, revenue from selling oil. He was found guilty of “corruption on earth,” an Islamic crime that carries the death penalty, which is usually by hanging in Iran.

So far, Iranian authorities have confiscated between $600 million and $700 million of Zanjani’s assets. His mother and two sisters have also had their assets seized and are barred from leaving Iran, according to Rezaei, the lawyer. The debt now amounts to 1.967 billion euros ($2.2 billion), she said.

Waiting to Appeal

Zanjani denies embezzlement and fraud. Rezaei expects the official legal notice of the sentence to be submitted to court this week. There would then be 20 days to lodge an appeal.

She said he was trying to help Iran sell its biggest source of national income and provide a banking channel for sanctioned entities at a time when the country was isolated from global markets. As he was being sentenced in Tehran, a tanker in Spain was offloading the first Iranian oil to arrive in Europe since 2012.

The irony is that if sanctions made him wealthy, their legacy could cost him his life.

Two Billion Euros

Financial transactions remain complicated. Rezaei, who also represents First Islamic Investment Bank in Kuala Lumpur, said his assets were effectively cut off from the international banking system and there was also nowhere to transfer the money.

The Oil Ministry only provided an account last month that Zanjani could use to pay into, she said. The European correspondent bank, though, refuses to accept the deposit, Rezaei said.

“He’s been dealing with this issue from solitary confinement for more than two years now and trying hard to work with the authorities to make these payments,” said the lawyer.

Justice Minister Mostafa Pour Mohammadi said on March 8 that only when the money arrives can it be said that Zanjani cooperated, according to a report by the state-run Iranian Students News Agency.

Jewelry Store

Zanjani was born in the south of Tehran before his family moved to the Golha Square district, a central, middle class neighborhood a few blocks away from the imposing yellow-brick tower of Iran’s Interior Ministry.

His father still lives in the area, said the owner of an antiques store. Up the street, a kiosk vendor said he remembered Zanjani as a boy who would come and buy toy guns. Both men declined to be identified.

Zanjani started out working in a jewelry store before taking a job in the gold market in Tehran’s central bazaar. In an interview published in the now shut-down Aseman magazine in September 2013, he said he later ran a number of businesses in Turkey while he was a student in Izmir.

Selling Sheepskins

During his military service, he was a driver for the central bank governor and was asked to distribute millions of dollars to the black market to control currency rates, according to the uncorroborated account he gave to the magazine. He got to know sheepskin traders who converted their money and it led him to a new venture, he said.

“I always wanted to go into business and jobs that would turn over a quick profit,” Zanjani told Aseman. “On the first container of skins, for every 50 cents I spent, I made $19 to $20.”

His business interests spread from investments in film production and the sheepskins to cosmetics, pasta and coffee imports, an airline, a soccer club, real estate in Tehran and, crucially, the banking network. They linked Iran with Dubai, Malaysia, Turkey and Tajikistan.

They also connected Zanjani with the Iranian authorities, who were always on the look out for potential banking links to the outside world.

As the screws tightened on Iran’s economy because of sanctions over its nuclear program, Zanjani said he was asked to help private oil companies, a conglomerate controlled by the Iranian Revolutionary Guard Corps and eventually the Oil Ministry to find buyers for crude. According to the magazine interview, his work was to “fight sanctions” and he sold 24 million barrels of oil, the equivalent of a dozen tankers.

Power Struggles

It’s that role that ultimately led to his downfall.

Situated on Tehran’s ancient Vali Asr Street, the city’s main thoroughfare, there’s a prime piece of real estate that Zanjani used to own before it was seized by the government.

Two years ago, a perforated perimeter fence guarded a vast hole to accommodate the foundations for a building project. Today, the void has been refilled with dirt and construction work halted.

“This goes back to the disputes between the different power factions inside Iran,” said Saeed Laylaz, an Iranian economist who was an adviser to former President Mohammad Khatami. “Who was he? What was the story here? What really enabled him to take almost $3 billion and not be held to account?”

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