Outcry as Iran’s stock exchange officials secure cheap personal loans

Exposing Iran’s ruling elite, the pro-reform Shargh daily has revealed a letter detailing how five officials appointed under President Ebrahim Raisi granted themselves loans totaling 105 billion rials ($175,000).

The officials, members of the Supreme Council of the Stock Exchange, orchestrated the generous loans with lenient repayment periods and minimal interest rates while Iran’s economy remains on the brink of collapse.

Majid Eshghi, Chairman of the Board of the Securities and Exchange Organization, received the largest loan, 27 billion rials ($45,000), with just 4% interest over a 10 year period. To put this amount in perspective, and ordinary worker in Iran earns just $200 a month.

The loans were approved during the final days of the Raisi government, bypassing orders from both acting president Mohammad Mokhber and president-elect Masoud Pezeshkian. Experts warn that the move threatens to destabilize Iran’s capital market by further eroding investor confidence.

Other council members, including Alireza Nasserpour, Reza Eivazlou, Mehrdad Masoudifar, and Hassan Farajzadeh Dehkurdi, each received 19 billion rials (over $31,000) in loans.

On Thursday, Abdolnasser Hemmati, Iran’s Minister of Economy, announced the launch of an “urgent expert review” into the scandal. Many view this as a mere formality, with little expectation of accountability in a system where officials have long shielded themselves from public scrutiny.

Iman Aghayari, a political activist, told Iran International that corruption in Iran has evolved into a kleptocracy, becoming ingrained as a behavioral model. “At the top, there is a person [Ali Khamenei] who treats the entire country as his personal property, and at the lower levels, others believe they must plunder the limited resources available to them," he said.

Iran’s Central Bank is already under fire for reports of astronomical loans being granted by major banks to their own employees and subsidiaries. According to a report released by the Central Bank last week, these institutions funneled over 9,100 trillion rials ($1.5 billion) in loans to their employees, managers, and board members in 2023 alone.

Two of the most politically influential banks, Mellat and Sepah, are the lead suspects, both notorious for their involvement in Tehran’s military and nuclear programs, which have brought crippling international sanctions upon Iran. Mellat Bank alone issued 190 trillion rials ($315 million) in loans to its subsidiaries last year, with Sepah Bank not far behind, distributing 145 trillion rials ($240 million).

Not only are these government banks controlled by regime insiders, but their subsidiary companies also serve as strongholds for political appointees and nepotism.

In contrast, ordinary Iranians face challenges securing loans for housing, marriage, or entrepreneurship, with delays and denials becoming the norm. Marriage loans, crucial for thousands of young couples, have been sidelined, while bank employees are handed fortunes with ease.

The disparity in access to loans is vast between Iran's elite and the ordinary citizen. For bank employees, loan ceilings can reach over 10 billion rials ($16,000), while retirees, struggling to survive on meagre pensions, are limited to loans of just 300 million rials ($500). Meanwhile, tenants and entrepreneurs face long waiting lists as banks cite financial shortfalls.

Around one in three Iranians now lives below the poverty line as inflation has exceeded 40% for the last five years leaving many struggling with basic costs such as food and housing.