Tehran turns to disgraced tycoon amid economic woes

In the latest chapter of convicted oil embezzler Babak Zanjani's saga, an official claims the former insider has returned more assets than legally required, casting him in a favorable light amid the country's economic crisis.

Mohammad Dehghan, Iran's Vice President for Legal Affairs, mentioned the Judiciary in stating that the Central Bank currently holds the assets returned by Zanjani in unspecified forms of goods. Dehghan notably refrained from providing details about their type or value.

Zanjani, an intermediary in selling Iran's sanctioned oil, was arrested in 2013 and initially sentenced to death for embezzling billions in oil revenue. However, his sentence was commuted in April to a 20-year prison term. The Iranian judiciary asserted that Zanjani's cooperation with authorities and the successful identification and repatriation of his foreign assets were pivotal factors in the commutation of his sentence.

"These goods have the potential to bolster the national currency. Moreover, as per his [Zanjani’s] statement, should the Central Bank, due to certain considerations, choose not to use these goods as backing for the national currency, it has the option to sell them and utilize the proceeds," Dehghan said on Friday.

Despite the secrecy surrounding the government's deal with the tycoon, gold seems to be the only commodity that could potentially back the currency. Many commentators and politicians over the years have hinted that Zanjani had accomplices in high places, otherwise he could not have embezzled large sums, or would have been executed by now.

Dehghan further attempted to bolster Zanjani's reputation, noting that he had already served over a decade of his sentence. Dehghan added, "According to our information, he has stated that if the assets he transferred to the country encounter issues being sold and converted into cash, he can sell them himself.”

Zanjani, once hailed as Iran's richest man, described himself as a soldier of the Islamic Revolution, working on the economic front to help the country evade crippling sanctions imposed by the United Nations over Iran's nuclear program in the early 2010s.

To address the sanctions and economic challenges, ultraconservative President Mahmoud Ahmadinejad permitted the private sector to sell oil internationally. In response, Zanjani and other individuals established complex networks. They laundered money globally, including in Turkey, Indonesia, and Central Asia, aided by a clandestine team.

Once valued at approximately $13.5 billion, Zanjani's wealth was extraordinary in a nation where the state controls most of the economy. Today, one-third of Iran’s population lives below the poverty line.

By evading sanctions, Zanjani faced international penalties from the EU in December 2012 and the US in April 2013. Domestically, under President Hassan Rouhani, he was arrested and convicted, with the Ministry of Oil claiming he owed the government $1.9 billion in oil revenues.

Zanjani's alleged repatriation of assets unfolds against a backdrop of monumental economic challenges. The country grapples with persistent oil export and banking restrictions, capping oil exports at approximately $70 billion. Consequently, the government continually faces substantial budget deficits, necessitating the perpetual printing of money.