The “trustee companies” case is now more than just a judicial case. It has become one of the most important signs of the Iranian regime’s opaque economy. Judicial officials have announced that 59 cases have been opened against managers of trustee companies. In 43 cases, orders to proceed with prosecution have been issued. In addition, 22 defendants have been referred to prison, and Red Notices have been issued by Interpol for 15 people.
The head of Iran’s General Inspection Organization said that around $11 billion in resources had been placed at the disposal of trustee companies. The state-run IRNA news agency writes: “Trustee companies are considered an emergency mechanism in Iran’s economy that was created because of sanctions.”
What Are Trustee Companies?
Trustee companies emerged amid the intensification of international sanctions. Restrictions on oil sales and the closure of conventional banking channels pushed the regime to use intermediaries. These intermediaries sold oil or export products. The task of transferring the money was then assigned to networks outside the formal banking system.
Financial Corruption Network Operating in Shadow of Iran Sanctions Exposed
This mechanism could be used to keep exports going under sanctions. When the identities of the buyer and intermediary, the bank account, and the route for transferring money remain hidden, the possibility of public auditing also disappears—quite apart from the fact that such economic oversight essentially does not exist within Iran’s governing structure.
Failure to Return Billions of Dollars in Foreign Currency
In recent weeks, different figures have been cited regarding foreign currency that has not been returned. One is the approximately $11 billion in resources held by trustee companies. Another figure of approximately $1.6 billion has been cited in connection with funds that were misappropriated. These two figures should not be considered the same. An official from the General Inspection Organization has explicitly said that not all of the $11 billion constitutes wrongdoing.
A figure of €94 billion in unresolved foreign-exchange obligations has also been cited. However, this figure concerns the total foreign-exchange obligations of 20,676 individuals and legal entities. No transparency has been provided regarding the €94 billion.
At the same time, the existence of dozens of judicial cases and billions of dollars in resources under the control of corrupt networks raises serious questions about the oversight system.
Who Chose the Intermediaries for Corruption and Rent-Seeking?
Perhaps the most important economic question in the case is not about the trustee companies themselves. The more important question is who selected them. An intermediary needs managerial decisions and authorizations to gain access to hundreds of millions of dollars in oil resources. Therefore, investigating the case cannot be completed simply by arresting the intermediaries. It must be determined who signed the contracts.
This question becomes even more significant. A published report, quoting the former CEO of NIOC’s international trading arm NICO, says that in one case involving $200 million worth of oil, only $1 million in guarantees had been obtained. Such a situation could indicate serious weaknesses in oversight and behind-the-scenes involvement by power structures, including the Islamic Revolutionary Guard Corps (IRGC).
Why Does Transparency in the Trustee Companies Case Matter?
The trustee companies case also shows that sanctions have not merely imposed an external cost on Iran’s economy. The opaque mechanisms arising from sanctions have also created the conditions for intermediary networks to emerge. The larger these networks become, the greater the gap between the country’s actual revenues and its auditable resources.
The fundamental question remains: What structure entrusted billions of dollars in oil revenues to a network of opaque intermediaries?
From an economic perspective, corruption becomes entrenched when only the recipient of the money is visible while the decision-maker behind the scenes remains hidden. People should know how much of the country’s resources has been placed at whose disposal and how much of it has not been returned. Undoubtedly, amid the fog created by state-run media and influential figures within the power structure, efforts are being made to keep the main actor—the IRGC—in the shadows and conceal the organization’s involvement.
