New York Times
Sunday, 17 July 2016
Less than a year before new elections, President Hassan Rouhani of Iran is confronting a major scandal involving inflated salaries for the managers and executives of state-run companies.
In recent weeks, the Iranian news media have been publishing payment slips showing many top managers of state-run companies earning what for Iran are astronomical bonuses and salaries, often hundreds of thousands of dollars a month.
Mr. Rouhani was elected in 2013 promising to end corruption in government and revive the economy by completing a nuclear deal and ending sanctions. With sanctions still largely in place, however, the economy remains moribund.
Now, having cleaned house after supplanting the corruption-riddled administration of President Mahmoud Ahmadinejad and putting his own people at the top rungs of state-run enterprises, Mr. Rouhani finds himself increasingly vulnerable as the disclosures of inflated salaries multiply.
“Mr. Rouhani’s friends are his enemies,” said Mohammad Reza Sabzalipour, the head of the Tehran office of the World Trade Center organization. “They are cronies.”
Among those implicated in the scandal are the brother of Vice President Eshaq Jahangiri; dozens of top managers working in health care, energy, insurance and banking; and others who are paid from state coffers. Mr. Jahangiri and the president’s brother, Hossein Fereydoun, stand accused of nepotism and cronyism for placing relatives and friends in top executive positions.
Iran’s supreme leader, Ayatollah Ali Khamenei, has harshly criticized the inflated salaries, which far exceed the legal cap of $2,353 a month for government employees. Mr. Rouhani, who has kept a low profile since the scandal broke, has ordered an investigation. Several ministers have apologized to the nation, and managers have been forced to resign.
The disclosures first emerged in conservative news outlets that oppose the president, and have since mushroomed beyond his inner circle to managers and executives from all political factions.
They started in May, when Mizan, the news agency belonging to Iran’s judiciary, published the payment slips of eight managers of the state-owned Central Insurance Company, who had each received yearly bonuses of over $50,000.
The news agency added that the financial rewards had to be judged against a backdrop of seven million laborers who earn just $200 a month.
The chief executive of the company, Mohammad Ebrahim Amin, resigned over the affair.
In June, a hard-line website, Ensafnews, published the paycheck stubs of the top managers of the state-owned Tejarat Bank. Its chief executive, appointed after Mr. Rouhani was elected in 2013, made $208,115 over 21 months, the documents showed. He had also been given an interest-free loan of $289,000.
Since then, the wages of doctors, auto executives and others have been disclosed in the news media, as hard-line and moderate publications have competed to see which can more severely embarrass the other. Managers in health care have topped the charts with monthly wages over $200,000.
A fabric store in Tehran’s ancient Grand Bazaar. Few Iranians expressed surprise at the latest allegations of corruption within the government. Credit Atta Kenare/Agence France-Presse — Getty Images
“This government has drastically increased wages and bonuses,” said Hamidreza Taraghi, a hard-line political analyst. “Now we are seeing the results.”
No official announcements of salary increases are made, but Mr. Taraghi, who is usually well informed about government matters, said 285 state managers now made more than $6,000 a month.
Official salaries have always been capped — in theory, at least — in keeping with the official policy of frugality and soberness that forms the Islamic Republic’s ideological base.
But Mr. Taraghi acknowledged that those caps were often unrealistically low, and that, while unpopular, higher salaries were needed to attract talented managers.
“Lets face it,” he said. “Everywhere in the world, managers make a lot of money.”
Pro-government figures have accused some generals in the Islamic Revolutionary Guards Corps and the Office of the Supreme Leader of receiving similar wages.
A spokesman for the Revolutionary Guards denied the charges but refused to divulge the salaries of military commanders, saying they were “state secrets.”
“What is emerging is a mechanism similar to that in the former Soviet Union,” said Saeed Laylaz, an economist close to the government. “The elites are rewarded with money and privileges in return for their loyalties.”
Corruption has always been endemic in Iran, with billions of dollars in oil revenue being distributed by the government.
Under the two four-year terms of Mr. Ahmadinejad, corruption grew to extraordinary levels.
The banking system was left with huge debts because some with the right connections were granted enormous loans that often were not repaid, even as most of Iran’s young adults and private businesses were shut out of credit markets.
Perhaps the most damaging revelations for Mr. Rouhani have involved those closest to him.
His brother, Mr. Fereydoun, has been accused by Raja News, a conservative outlet, of using his influence to place a friend, Ali Sedighi, in charge of the Refah bank.
The head of Iran’s General Inspection Office, Naser Seraj, complained that Mr. Sedighi had been appointed after “insisting and lobbying by a government official.”
The vice president, Mr. Jahangiri, who is leading the official investigation into the salary scandal, was awarded a bonus of around $200,000 from a state-run cement factory where he is a member of the board, Kayhan, a hard-line newspaper, reported.
Frustration with the steady stream of accusations is widespread, though Iranians are accustomed to an entrenched culture of corruption, and few expressed surprise.
“I need to work morning to night in order to prevent bankruptcy,” said Mostafa Zandvakili, a distributor of mineral water, working the hot summer streets of the capital. “Look what they are getting. For what? Unfortunately, this scandal is not surprising at all, because there is so much corruption.”