Posts Tagged ‘bonyad’

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Jorisch: blacklist the bonyads

June 28, 2012

Bonyads, the supposedly charitable conglomerates of Iran, are finally getting some international scrutiny.  Security analyst Avi Jorisch has called for a new phase in the sanctions regime against Iran:  targeting the bonyads:

Bonyads are tax-exempt Iranian charitable trusts that control an estimated 20–40% of Iran’s GDP. Subsidized by the government, they answer only to Iran’s Supreme Leader. Bonyads represent an important target for sanctions because they control such a large share of Iran’s economy.

As charities, they supposedly provide social services to the poor and the needy, but in fact, they are also involved in every major industry, including soybean and cotton production, hotel administration, soft drink firms, shipping line ownership and car manufacturing.

The United States should publicly name, shame, and blacklist all major bonyads, thus making it illegal to make a charitable contribution to them.

The United States and its allies have all the tools necessary to punish the banks, corporations and charities helping Iran achieve nuclearization. If we are truly going to stop Iran from pursuing nuclear weapons, we must use as many of the bows in our quiver as possible.

Indeed, loopholes in the current sanctions regime probably do allow for donations to the bonyads under the guise of food and medical aid.

Money Jihad readers may recall that bonyads have also been described as “massive semi-government foundations with vast religious and philanthropic missions [which] have metamorphosed into huge holding companies that dominate the trade and manufacturing sectors while evading competition, taxes and state regulations,” and about which “analysts agree that the scant supervision has encouraged inefficiencies, mismanagement, and embezzlement,” and it has been asked whether “their funds have been used to procure weapons of mass destruction.”

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OFAC clears way for illusory “food and medicine” donations to Iran

June 22, 2011

Open the flood gates.  Fundamentalist Shia charities and leftists can send materials to Iran to their hearts’ content, as long as they claim that they’re sending “food and medicine.”  This creates all kinds of blurry lines whereby individual donors will give zakat or khums to organizations whose leadership or imams will claim is going toward food shipments to Iran.

Senders of aid will not be required to go through any time of licensing or registration process in order to send these supplies.

This will probably lead to direct money transfers to Iran from Muslim Americans who will claim that they have worked out relationships with Iranian food and drug distributors to disperse the items.  Or the guidance could be interpreted as freedom to work with Iran’s bonyads, the quasi-charitable Iranian institutions which are firmly in control of the theocratic elites.

Yet another exemption to the Iranian sanctions policies (like these) could also help relieve pressure on the Iranian regime to reform.  As Iranian expatriates in American begin sending food relief back home, it could reduce the will of Iranian citizens to demand reforms from their government.

The policy could also create a new black market of food and relief supplies similar to what Iraq experienced in the 1990s, where the wrong people invariably end up benefiting.

Normally, new regulations are published in the Federal Register.  This was apparently published only as a PDF flyer.  Moreover, the announcement does not appear to be the result of any formal rule-making process.  No public comment was considered to our knowledge.

From Treasury’s OFAC on June 17:

Donations of food and medicine to Iran and the non-Specified Areas of Sudan, when intended to be used to relieve human suffering, are exempt from the prohibitions of the Iranian Transaction Regulations (“ITR”) and the Sudanese Sanctions Regulations (“SSR”); thus, such donations by U.S. persons do not require an ITR or SSR license issued pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”). However, the commercial exportation or reexportation of food and medicine to Iran and the non-Specified Areas of Sudan is subject to the licensing requirements of TSRA. OFAC generally regards the exportation or reexportation of medical devices, donated or commercial, to be subject to the TSRA and therefore to require a TSRA license. In addition, the donation of funds to a non-US person for the purchase of food, medicine, or medical devices to be exported to Iran or the non-Specified Areas of Sudan would require a license.

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Rafsanjani’s riches

July 5, 2010

What Ayatollah Rafsanjani thinks of poor people

Allah is bounteous.  And Iran’s clerics are the recipients.

First, the imams receive copious revenues through the 20 percent Islamic khums tax on their parishioners as we have covered here.

Also, Shariah Finance Watch recently pointed to a Reuters article (via the Washington Post) noting that imams make a pretty penny selling prayers.

Lastly, the clerical establishment is a big winner of the bonyad racket.

Sooner or later all that money starts adding up.  Iran Focus provided a list in 2006 of the eight richest men in Iran.  It just so happens that six of those eight men are ayatollas/clerics.  One of the other two is the son of a cleric.  Only one appears to be a non-cleric.

Suppose that six of eight richest men in America were Billy Graham, Rick Warren, James Dobson, Pat Robertson, T.D. Jakes, and Joel Osteen.  Imagine the national outcry that would follow that report!

In Iran, the richest man (and ayatollah) of them all is Hashemi Rafsanjani.  Forbes provided this detail several years ago on how the Rafsanjanis were able transform themselves from little pistachio farmers into bigtime hacienda owners:

Most of the good properties and contracts, say dissident members of Iran’s Chamber of Commerce, ended up in the hands of mullahs, their associates and, not least, Rafsanjani’s family, who rose from modest origins as pistachio farmers. “They were not rich people, so they worked hard and always tried to help their relatives get ahead,” remembers Reza, a historian who declines to use his last name and who studied with one of Rafsanjani’s brothers at Tehran University in the early 1970s. “When they were in university, two brothers earned money on the side tutoring theological students and preparing their exam papers.”

The 1979 revolution transformed the Rafsanjani clan into commercial pashas. One brother headed the country’s largest copper mine; another took control of the state-owned TV network; a brother-in-law became governor of Kerman province, while a cousin runs an outfit that dominates Iran’s $400 million pistachio export business; a nephew and one of Rafsanjani’s sons took key positions in the Ministry of Oil; another son heads the Tehran Metro construction project (an estimated $700 million spent so far). Today, operating through various foundations and front companies, the family is also believed to control one of Iran’s biggest oil engineering companies, a plant assembling Daewoo automobiles, and Iran’s best private airline (though the Rafsanjanis insist they do not own these assets).

None of this sits well with the populace, whose per capita income is $1,800 a year. The gossip on the street, going well beyond the observable facts, has the Rafsanjanis stashing billions of dollars in bank accounts in Switzerland and Luxembourg; controlling huge swaths of waterfront in Iran’s free economic zones on the Persian Gulf; and owning whole vacation resorts on the idyllic beaches of Dubai, Goa and Thailand.

One might think that Iran’s oil and gas wealth would enrich the population.  But a khums/sharia-based economy like Iran’s primarily enriches the religious “scholars.”

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Foundation for the “Oppressed and Disabled”

June 30, 2010

In the book Bazaar and State in Iran, Arang Keshavarzian gives us a closer look at the largest bonyad in Iran, the Bonyad-e Mostazafan, or the Foundation for the Oppressed and Disabled (often called the Foundation of the Oppressed and Disabled Veterans after the Iran-Iraq War).

Keshavarzian writes:

The Foundation of the Oppressed and Disabled, the principal holder of assets seized from the royal family, is the largest of these [bonyad] foundations and is sometimes referred to as the “government within the government.”  In 1982, the foundation owned 203 manufacturing and industrial factories, 472 large farms, 101 construction firms, and 238 trade and service companies.  In the past two decades it has used these already large assets to expand its activities into all areas of the economy, including manufacturing, commerce, banking, tourism, and telecommunications.

It is difficult to estimate their total assets because the foundations’ accounts are not public, but whatever the exact extent of these parastatal organs’ asset base, analysts agree that the scant supervision has encouraged inefficiencies, mismanagement, and embezzlement.  For instance, in 1995, a court found several key figures of the Foundation of the Oppressed and Disabled guilty of embezzlement, although the head of the foundation escaped conviction.

Over time the foundations’ economic prominence and prosperity have continued, if not expanded.  They have been able to circumvent the official trade system, while their political ties have given them access to subsidized foreign currency without performance criteria.  Therefore, the foundations can import, export, and sell goods below market prices and the production costs of local producers… Moreover, independent capitalists cannot compete with the state-affiliated establishments that are exempted from duties and time-consuming bureaucratic hurdles…”

According to IranWatch, Bonyad-e Mostazafan is “listed by the German government as a risky end-user in warnings supplied to its exporters; identified by the British government in February 1998 as having procured goods and/or technology for weapons of mass destruction program.”

Law professor Russell Powell recently wrote, “The largest bonyad, Bonyad-e Mostazafin, supports the family members of martyrs and has $12 billion in assets and employs 400,000.”

Suicide bombing pay-outs, palm-greasing, commercial rackets… remind me again which department at Bonyad-e Mostafazan serves the poor, the oppressed, and the disabled?

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Bonyads and Iranian sanctions evasion

June 27, 2010

During a 2006 hearing in Congress on energy and the Iranian economy, Dr. Kenneth Katzman, a specialist on the Middle East, summed up a major problem with the bonyads, the Iranian charitable foundations we described in the last post:

The most controversial allegation about the bonyads has been whether or not their funds have been used to procure weapons of mass destruction (WMD) technology.  This allegation has long surrounded the largest bonyad, the Foundation for the Oppressed and Disabled, primarily because this bonyad has been run by hardliners and former officials of the Revolutionary Guard (example, Mohsen Rafiq-Dust, a former Minister of the Revolutionary Guard).  The theory underlying the allegation is that the bonyads, because they are not formally part of Iran’s government, can operate outside official scrutiny of foreign governments, and could therefore illicitly procure equipment that might not be approved for export to Iran.  During an official visit to Dubai in 1995, observers at the US consulate there told me that Foundation employees were present in significant numbers in Dubai, holding large quantities of cash which they were using to procure technology from Russia and other arms and technology brokers in the emirate…

Did somebody mention Iranian “technology” procurement from Russia?  More on that tomorrow.

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Weekly word: bonyad

June 25, 2010

Bonyads are “charitable” Islamic foundations in Iran.

Wikipedia offers this introduction to the concept:

Bonyads are controversial charitable trusts in Iran that dominate Iran’s non-petroleum economy, controlling an estimated 20% of Iran’s GDP.  Exempt from taxes and government control, they have been called “bloated”, and “a major weakness of Iran’s economy”, and criticized for reaping “huge subsidies from government”, while siphoning off production to the lucrative black market and providing limited and inadequate charity to the poor.

Founded as royal foundations by Shah Mohammad Reza Pahlavi, the original bonyads were criticized for providing a “smokescreen of charity” to patronage, economic control, for-profit wheeling and dealing done with the goal of “keep[ing] the Shah in Power.”  Resembling more a secretive conglomerate than a charitable trust, these bonyads invested heavily in property development – such as the Kish Island resort – but the developments’ housing and retail was oriented to the middle and upper classes, rather than the poor and needy.

After the 1979 Iranian revolution, the Bonyads were nationalized and renamed with the declared intention of redistributing income to the poor and families of martyrs, i.e. those killed in the service of the country. The assets of many Iranians whose ideas or social positions ran contrary to the new Islamic government were also confiscated and given to the Bonyads without any consequence.

Today, there are over 100 Bonyads, and they are criticized for many of the same reasons as their predecessors. They form tax-exempt, government subsidized, consortiums receiving religious donations and answerable directly (and only) to the Supreme Leader of Iran.  (Internal citations omitted)

Putting it more succinctly, Middle East expert Ray Takeyh describes bonyads as “massive semi-government foundations with vast religious and philanthropic missions [which] have metamorphosed into huge holding companies that dominate the trade and manufacturing sectors while evading competition, taxes and state regulations.”