Iran’s biggest financial scam weakens Ahmadinejad

- analysts

TEHRAN (Reuters) – Iranian hardline President Mahmoud Ahmadinejad, whose campaign pledge was to combat corruption, is facing a fresh political blow over the biggest financial scandal in Iran’s history.

The $2.6 billion scam has taken on political dimensions as some hardline politicians have linked the main suspect in the  fraud to a so-called “deviant current”, allegedly led by Ahmadinejad’s chief of staff and closest ally.

Esfandiar Rahim Mashaie is accused by many Shi’ite clerics  and politicians of trying to undermine the central role of the  clergy in politics by emphasising the nationalist strain of  Iranian history and culture.

Mahmoud Ahmadinejad

“Now Ahmadinejad’s hands are filled with the scam …  Weakened in the eye of the nation, Ahmadinejad has been rendered  impotent to initiate any political action ahead of the (March  2012) parliament vote,” said a former senior official, who asked  not to be named.

The judiciary has said corruption at this level could not  have happened “without the involvement and backing of different  individuals”, a reference to high-ranking government officials.

The fraud was made public with Supreme Leader Ayatollah Ali  Khamenei’s approval, said some hardline politicians.
“Ahmadinejad’s allies are determined to win the next  elections and Khamenei’s allies want to block their way … That  is the main reason behind the revelation of this scam,,” said an  economist, who identified himself as Saber Lavasani.
“People will not vote for those linked to the scam.”

Some analysts speculated that Ahmadinejad was grooming  Mashaei to succeed him in 2013 presidential elections.
“The state of economy is the underlying cause of the  nation’s discontent and is considered a crucial factor for  political factions’ electoral win,” said an analyst, who asked  not to be named. “Who will vote for those involved in a $2.6  billion scam that is equal to one per cent of Iran’s Gross  Domestic Product?”

Khamenei’s unprecedented public intervention in April to  reinstate the intelligence minister sacked by the president  displayed “his disapproval of Ahmadinejad’s policies”.

Analysts say by sacking the minister, Ahmadinejad’s allies  wanted to secure a majority in the parliamentary elections,  since the ministry is in charge of checking the backgrounds of  potential candidates. The intelligence minister is appointed by  Khamenei.  “It is like a domino … A parliamentary election win will  pave the way for winning the next presidential vote,” said  analyst Mohsen Sadeghi.

‘National obsession’
The fraud has become a national obsession, increasing  pressure on the clerical establishment to take action at a time  when Iran’s economy is badly flagging.   The scam, which involved illegal bank withdrawals, will  further put economic pressure on the nation by increasing  inflation. It officially hovers around 16 percent. Critics say  the figure is really over 30 percent.  Iranian newspapers and websites have given wide coverage to  the scandal, criticising Ahmadinejad and his inner circle of  allies. The president has rejected the allegations, calling his  government “the cleanest in Iran’s history”.

Khamenei criticised the government for failing to prevent  the embezzlement but warned the media not to cover the scam in a  way to make ordinary Iranians “lose hope and become  disappointed” in the Islamic state.

“Khamenei’s red-line is the economy … more economic  pressure on ordinary Iranians means less support for the  establishment. His aim is to preserve the establishment,” said  analyst Hamid Farahvashi.

Frustration is simmering among lower and middle-class  Iranians. Prices of most consumer goods have risen and many  Iranians struggle to make ends meet.

“I am struggling to meet my children’s school fees … I am  unable to even grasp the number of zeros in this corruption,”  said taxi driver Reza Bakhshi, 45, a father of three.

Some MPs say the government was linked to the scam in order  to fund monthly compensation of $40 per person introduced since  eliminating fuel and energy subsidies in 2010.

Despite having been criticised for squandering petrodollars  and fuelling inflation, Ahmadinejad has shown no hint of  revising his unorthodox economic policies.

Oil earnings still account for up to 60 percent of state  income and a surge in consumer imports under Ahmadinejad and  subsidy cuts have hit local industries and forced some plants to  close.