Welcome to an excerpt from Empire of Terror, Iran’s Islamic Revolutionary Guard Corps, written by Mark Silinsky and published by Potomac Books, an imprint of the University of Nebraska Press. This is presented by Kensington Security Consulting, which brings education to national security. This excerpt comes from chapter seven and discusses corrupt elements in the IRGC.
Persian Mafia
The U.S. Internal Revenue Service defines the underground economy as income earned off the books. It includes laundered income and trade in explicitly illegal goods, such as narcotics and weapons. Many developing countries have shadow economies of 35 to 44 percent of their stated GDP.
Some estimates place the underground economy at 36 percent of Iran’s GDP. The Guards control port facilities and docks throughout Iran, which generate approximately $12 billion annually. Docks are venues for smuggling, tax evasion, and shakedown activities related to hiring and firing dock workers. Organized crime has thrived on the docks in many countries, including the United States. American federal authorities and state governments established waterfront commissions to control criminal syndicates. In Iran, however, the Guards cannot be displaced from their plum positions and dock-operation extortion because the organization is so intricately connected to the government.
The Guards have a vertical monopoly over many projects in Iran. For example, they control construction of the Tehran metro. The Guards purchase construction materials from other Guards-owned companies, such as those that produce cement and steel. The Guards also have significant ownership in seven of Iran’s seventeen private banks. It is difficult for even the most honest financial regulators to monitor the banks. Iranian and foreign firms often hire intermediaries to navigate the intricacies of the local business environment. The Guards reinvest some capital into the corporations. They also distribute some of their profits to Guards officers and funnel some money to politicians to secure their loyalty.
Basij have their business networks. At least twenty businesses, collectively known as the Basij Cooperative Foundation, create shell companies to conceal Basij ownership and control of multibillion-dollar entities that are “deeply entrenched” in Iran’s automotive, mining, metals, and banking industries.
The Great Profiteers
Profiteering is common in both developed and underdeveloped economies, and in some countries it is systemic. This was the case in the waning days of the Soviet Union, during the Third Reich, and in Iran today. The Russian mafia emerged in the eighteenth century as a bandit group. In the Soviet Union under Lenin and Stalin, it was difficult for criminals to organize enduring, large-scale syndicates, yet a shadow economy always existed. In late-twentieth-century Russia, some former Soviet intelligence and security personnel moved into organized crime. In Nazi Germany, corruption was rampant among the ruling circles. The government awarded large estates to Goering, Goebbels, Hitler, and many leading generals. The historian Richard Evans has called the Third Reich both a dictatorship and a kleptocracy. Leaders fought among themselves over the booty.
Corruption became a target of jokes as civilian morale plummeted. Many popular jokes circulated about Nazi corruption: “What is a reactionary? Someone who has a well-paid job that a Nazi wants.” Similar jokes with a cultural spin exist in Iran today. Many Iranians today can empathize with the fears and frustrations of Russians and Germans who endured shakedowns and bribes in earlier decades. The NGO Transparency International characterizes Iran’s economy as highly corrupt and cites the substantial involvement of the Guards in shadow transactions. Long involved in the black market and smuggling illegal goods, including weapons, the Guards also have a large stake in the illicit narcotics industry.
In August 2018, in response to public demand for greater accountability, Ayatollah Khamenei established special courts to try suspects for corruption. Several of those tried were directly tied to the Guards. In December 2018, Babak Zanjani was sentenced to death for embezzling funds from government-sanctioned black-market oil exports; he was a middleman who sold Iranian oil through companies primarily affiliated with the Guards. Another was Vahid Mazloomin, known as the “Sultan of Gold Coins,” who was convicted of “corruption on earth through sabotage in the economic system” and of creating an illegal trade network in foreign currency and gold coins. In November 2018, he and another man convicted of corruption were executed by hanging. A third execution followed in December 2018, when the “Sultan of Bitumen,” a substance used in making asphalt, was executed. Comparative Examples of Early Leaders. In the Soviet Union, Nazi Germany, and contemporary Iran, national leaders have exploited vulnerabilities and opportunities to enrich themselves. Boris Berezovsky, Herman Goering, and Ali Rafsanjani were three such men.
With a talent for advanced mathematics and a burning desire to succeed, Boris Berezovsky left academia to navigate the economic chaos following communism’s collapse in Russia. He began by importing used cars from Germany and, with access to capital, was well positioned to profit from the privatization of the Russian economy. Soon, he bought media outlets and a substantial share of Aeroflot, then acquired rights to oil and gas businesses.
He ran afoul of the new political elite under Vladimir Putin and took refuge in Britain. But Berezovsky’s fortune faded, and he fell behind on British taxes. Depressed and nervous, he hoped to return home to Russia but never did. He was found hanged in his home at age sixty-seven in 2013. According to the psychologist who examined him in his Nuremberg cell, Herman Goering was a narcissistic psychopath. He was among the more intelligent members of Hitler’s inner circle. He also had an insatiable appetite for treasure, amassing enormous wealth during the war and boasting six hunting estates, a villa, a castle, and over one thousand priceless paintings. He used his position as minister for economic development to build an industrial conglomerate, the Hermann Göring Werke, in which he held substantial shareholdings. German businessmen understood the need to bribe Goering or one of his associates to secure large contracts.
Speaker of parliament, a two-term president, and Khomeini’s closest associate for years, Ayatollah Ali Akbar Hashemi Rafsanjani was also among Iran’s wealthiest men. Some Iranians hailed him as a pragmatist. Later, he paved the way for the rise of Mohammad Khatami, who was hailed as a “reformist” president. In 2013, Hassan Rouhani won the presidency largely due to Rafsanjani’s vital support. Rafsanjani had two monikers, the “Shark” and the “Shah of Pistachios.” The first nickname acknowledged his political acumen and cunning. He almost succeeded Ayatollah Khomeini as supreme leader but was outmaneuvered by Khamenei. True to his name, the Shark issued harsh fatwas against dissidents, communists, Kurds, and Baha’is.
The moniker “Shah of Pistachios” referred to his vast wealth and control over the leading export commodities. Over the years, some of his countrymen came to envy him, while others were appalled by his and his family’s wealth. One of his brothers headed the country’s largest copper mine, and another ran the state-owned TV network. He appointed other family members as provincial governors and as managers of oil, construction, and automotive firms. But when he died in 2017, at age eighty-two of natural causes, he was mourned in the largest funeral processions since Khomeini.
All three personalities—Berezovsky, Goering, and Rafsanjani—were early leaders of the authoritarian governments they helped to create. They were well positioned to exploit licit and illicit economic opportunities.
