Lawmakers Demand Answers In Iran's $3.5bn Tea Corruption Case

Scrutiny and calls for answers surround one of the largest corruption cases in the Islamic Republic, involving $3.5 billion of foreign currency and many officials.

“Where and when this corruption happened is not important to us. What matters is that such a thing should not happen in the Islamic Republic, whatever you want to call it, embezzlement, wasting public funds, or illegal possession,” Ghani Nazari-Khanghah, a member of the parliament’s economic committee, told moderate conservative Asr-e Iran news website Tuesday.

"Why do they pay so much for importing tea if there is no money? It is a tragedy that so much money is allocated to [import] tea when tea is not an essential commodity," he said, adding that he is always told there is no money when he asks for a budget for things such as the removal of dangerous road curves in his constituency. "Obviously, there is a strong group with influence in the government behind the allocation of so much foreign currency."

Debsh Tea company sold $1.4 billion of the more than $3.3 billion cheap foreign currency allocated by the government at much higher rates in the black market between 2019 and 2022. This substantial amount of foreign currency was designated for importing tea and tea factory machinery.

As of now, the government and the judiciary have not provided the public with significant information about the case, such as the individuals responsible for the corruption. Not any notable arrests have been made except for the CEO of the company, Akbar Rahimi. There are serious allegations that the government is shielding the culprits.

Chief Justice Gholam-Hossein Mohseni-Ejei has affirmed that the current administration, led by President Ebrahim Raisi, allocated the majority of the funds to the company.

In response to reports indicating thousands of schools in need of urgent repairs, renovation, or replacement nationwide, lawmaker Mohammad Vahidi asserted that the embezzled funds could have aided in constructing "at least 100 thousand classrooms." He emphasized, “If this money had been allocated to education, we would not have any rundown schools.”

Heshmatollah Falahatpisheh, a former conservative lawmaker and the chairman of the parliament’s National Security and Foreign Policy, describes the case as one of the biggest corruption cases in the country, mainly happened under the watch of the Raisi administration.

Meanwhile, Iranian tea farmers and factories frequently voice their grievances, expressing a lack of government support to enhance and boost domestic tea production. Domestic production of around 30,000 tons of dried tea leaves only meets about one-third of the country’s total needs with the rest being imported from India, Sri Lanka and other countries.

Tea cultivation in Iran boasts a rich history of over 100 years. The majority of the country’s tea plantations, spanning over 32,000 hectares, are situated across the mountain slopes of Gilan Province, particularly in the city of Lahijan, which is also home to some of the largest tea processing factories.

Farshid Mohebbi, the chairman of the Northern Tea Farmers’ Union, alleges that major importers like Debsh Tea wield influence over policymakers' decisions regarding import tariffs, ultimately impacting domestic producers. Mohebbi emphasizes the need for accountability, saying that government entities such as the Minister of Agriculture, the Central Bank, the Customs Organization, and supervisory bodies should be held responsible for the allocation of substantial foreign currency to the company and its corruption.

“To promote domestic tea production, the tea tariff in countries such as Turkey sometimes reaches 150%. However, they reduced the import tariff from 20% to 5% in Iran,” he said.

Tea import tariffs were reduced in 2019, with authorities claiming it was to offset the increase in the cost of imported tea and stabilize prices after the allocation of cheap import dollars to tea imports ceased.

Debsh has also been accused by the head of the State General Inspection Organization of exporting lower-quality Iranian tea, importing it again mixed with inexpensive Kenyan tea and selling it at a significantly higher price as good-quality imported tea.