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One of the central figures in Iran’s kleptocracy now heads its government
In 1993, the Rafsanjani administration made bold reforms to resuscitate an Iranian economy devastated by a decade of war and neglect. Taking advice from Western embassies, government-appointed technocrats laid out a far-reaching privatization scheme under which moribund industries would be returned to their prerevolutionary owners. Even in those early days, shadowy parastatal structures stonewalled the government’s efforts.
When the government appointees met to examine the scope of the task before them, one of them drew an intricate spider chart on the board. It depicted the “vertical and horizontal monopolies” controlled by major bonyads. Established after the Revolution to manage confiscated enterprises in accordance with Islamic principles, these paragovernmental foundations had grown into unaccountable conglomerates that resembled, as one observer put it, “Frankenstein monsters” in how they cobbled together revenue from multiple strategic economic sectors.1
At the center of one of these spiders was Astan Quds Razavi (AQR), an organization that oversees an eponymous shrine in the city of Mashhad. This entity, which behaves like a bonyad though it’s structured differently, is closely associated with Iran’s new hardline president, Ebrahim Raisi. The president is also a former trustee of Setad Ejrai Farman Imam (EIKO), the secretive bonyad dubbed “the supreme leader’s slush fund” by the Trump administration.
Part of Raisi’s political success can be ascribed to the fact that he knows how to access this slush fund and others like it. Though his election was hardly the result of a democratic process, Raisi’s populist campaign centered on fighting economic corruption—a brazen political position given his involvement in bonyads, which form the very heart of Iran’s kleptocratic system. This system, rooted in the foundations of the Islamic Republic and amplified by Rafsanjani’s privatization processes, is a form of institutionalized corruption designed to divert public funds into the bank accounts of elite businesses and individuals. An intensive examination of the bonyads and their assets reveals an intricate mechanism that benefits a chosen circle of individuals, making it difficult to determine where bonyads end and the government begins.2
Untaxed and unaccountable to the government, bonyads are allocated trillions of dollars in state benefits. The only institution with any oversight over their opaque finances is the Office of the Supreme Leader (Beyt-e Rahbari). As the bonyads under its purview expanded their portfolios, the office staff has grown to thousands of employees under the leadership of Ayatollah Khamenei’s son Mojtaba, who acts as its chief of staff.3 Whoever oversees the bonyads wields power over Iran’s economy, a dynamic unlikely to change under Raisi’s administration.
The largest bonyads are managed by leading clerics, politicians, and generals, while members of the Islamic Revolutionary Guard Corps (IRGC) sit on the boards of important bonyad-run companies in nearly all economic sectors. Selecting people close to him to run the bonyads—and, in Raisi’s case, also the presidency—is Khamenei’s way of ensuring that Iran’s wealth remains in its current hands.
Raisi and Astan Quds Razavi
In the 2021 election, rooting out corruption was one of Raisi’s major political slogans. This mantra was designed to resonate with a population enraged by inflation, income inequality, and the plundering of the commons by unaccountable public officials. From the regime’s perspective, Raisi’s reputation as an aggressive prosecutor and former AQR custodian gave him the authority to crack down on perpetrators of “corruption on earth,” a crime punishable by death in Iran. In another interpretation, Raisi’s institutional proximity to the supreme leader made it possible for him to use the money and power of AQR for his personal benefit, all while remaining at a safe distance from the corrupt practices of its subsidiaries.
Raisi ran unsuccessfully for president in the 2017 election, when he came in second behind incumbent Hassan Rouhani. In the weeks preceding the vote, several media outlets alleged that Raisi diverted funds and political resources from AQR to fund his campaign.4 Others pointed out Raisi’s use of AQR-owned newspaper Quds as his campaign mouthpiece.5 A recent review of campaign finance legislation and practices in Iran reveal that such misuses of public funds are standard among the country’s political elite. In the Iranian legal system, no law provides for the transparency of presidential election campaign funding.6
With vast holdings in the real estate, agriculture, and construction sectors, AQR is an ideal source of clandestine income for political campaigners close to the supreme leader. The exact size of its multi-billion-dollar empire is shrouded in opacity, as is the case with all the major bonyads. In the most recent government budget from this year, the Iranian state acknowledges a debt of approximately $230 million to AQR. That’s roughly equivalent to the starting share capital of Iran’s largest bank.7
Unlike other bonyads, which were founded as a consequence of the 1979 Revolution, AQR’s institutional history dates back to the Qajar period, when it functioned as a waqf managing religious donations to the Mashhad shrine.8 After the Revolution, AQR competed with other bonyads to swallow up controlling shares of lucrative industrial firms. Though it behaved like a bonyad in the sense that it was a predatory parastatal conglomerate overseen by Beyt-e Rahbari, it had a different legal structure.9 Today, AQR owns one in ten acres of land in Khorasan Razavi Province. It is the largest non-state landowner in Iran, and is by some accounts, the largest owner of land endowments in the world.10
Raisi headed AQR from 2016 until 2019, when he was appointed chief of Iran’s judiciary. That is a relatively short stint compared to his predecessor, Ayatollah Abbas Vaez Tabbasi, under whose 35-year patronage the organization grew from a small charitable foundation into a predatory conglomerate. Raisi is the son-in-law of cleric Ahmad Alamolhoda, a Mashhad Friday prayer leader and Assembly of Experts representative closely linked to AQR. While Alamolhoda did not openly endorse his son-in-law for president from the Friday prayer podium, he made use of Raisi’s campaign talking points during his sermon and added that anyone who invites the people to boycott the election is an apostate.11
During Raisi’s tenure, AQR was involved in at least two corruption scandals—the first involved environmental degradation. Caspian Forest Development Company, an AQR subsidiary, came under public scrutiny in 2017 for illegal logging in the Caspian Sea region.12 Under media and public pressure, Raisi issued a statement that the company had been privatized, denying AQR’s responsibility for the illegal activities.13 Raisi’s statement contradicts publicly accessible beneficial ownership data, which shows that Caspian Forest Development Company’s board members have not changed since 2013.
In the second case, AQR features in a network of pharmaceutical companies and government regulators charged with financial corruption, misuse of public funds and importation of expired pharmaceuticals.14 In 2019, high-ranking officials at Iran’s Food and Drug Administration were accused of negligently licensing a hypertension-treating drug deemed carcinogenic by international watchdogs. The FDA’s director, Mohammad Reza Shanesaz, is linked to several bonyad-associated drug companies—a clear conflict of interest. He is on the board of the Astan Quds Razavi–owned Samen Pharmaceutical company.15
Although Raisi was no longer at the helm of AQR in the run-up to this June’s election, his campaign made use of the vast resources of EIKO and Mostazafan Foundation (BM), two bonyads that had since 1979 seized a large proportion of Iran’s businesses and real estate. His campaign manager, Ali Nikzad, was a long-time EIKO executive.16 Nikzad appointed Safar-Ali Baratlou, head of Mostazafan Foundation’s Herasat Office, as Raisi’s campaign manager in Tehran Province.17
Raisi had announced he would forgo the comfort of a campaign headquarters. Calling himself a “servant of the nation,” he appealed to the people, claiming that every home could be a campaign headquarters for Raisi.18 Shortly after Baratlou’s recruitment, empty homes previously seized by EIKO and BM were festooned with Raisi banners—these were the “headquarters” Raisi was using for his campaign.19
No country for reform
Raisi’s proximity to Khamenei and the bonyads all but invalidate his preelection promises of cracking down on economic corruption. Iran’s new president has been an influential player in that network throughout his career, manipulating the parastatal institutions he oversaw for his own political gain, all while maintaining the public persona of an anti-corruption crusader. One illustration of his role in Iran’s kleptocracy dates back to the Rafsanjani era, when various state institutions and paragovernmental conglomerates morphed into instruments of money laundering and embezzlement in the newly privatized public sector.20
At this early stage in his career, Raisi was head of the General Inspection Office, an anti-corruption body linked to the judicial branch. In a 1997 entry in his memoir, Rafsanjani recalls summoning Raisi to discuss his findings on potential graft in the plethora of local governments, executive bodies, and military institutions the GIO oversaw. Raisi responded that “windfall wealth” was a terrible thing, but that he had not found a single instance of it in his organization.
No administration since Rafsanjani’s has managed to impose any legal restrictions on the bonyads. Iran’s judiciary, which is close to both Khamenei and Raisi, have blocked all parliamentary attempts to bring the bonyads under government regulation. In fact, Khamenei’s sole notable act against the bonyads came in 2018, when he reportedly rejected a suggestion by a group of bonyads that they take de facto control of the national government.21
Under Khamenei’s protection, AQR and other large bonyads have grown into unwieldy monopolies whose financial networks extend far beyond the borders of the Islamic republic. Given their disproportionate power over Iran’s economy, their resistance to reforms also impedes any efforts to stymie graft, create jobs, or overhaul major industries. Such improvements would contradict the bonyads’ main function, which is to form the underlying structure of a network of companies through which Iran’s kleptocrats loot the commons.
- Shahram Kholdi, interview by author, June 1, 2021.
- Tehran Bureau, “A Deep Dive into Bonyads and How They Work,” Doublethink Media, Sept. 26, 2019, doublethink.institute/report/bonyad-findings.
- Amir Toumaj, “After Khamenei,” Newlines Magazine, May 13, 2021, newlinesmag.com/argument/after-khamenei.
- For more on this, see “شائبه استفاده تبلیغاتی رئیسی از آستان قدس,” Ensaf News, Apr. 18, 2017;
“توزیع نبات و پارچه سبز سنت آستان قدس است/ رئیسی آماده مناظره با روحانی است,” Islamic Students’ News Agency, May 13, 2017.
- “راستیآزمایی مناظره سوم؛ کدام ادعاها درست بود؟,” BBC Persian, May 12, 2017.
- “Elections for Sale,” Tehran Bureau, June 8, 2021.
- Eghtesad Novin, Iran’s largest bank in terms of clients, was founded in 2001 with 2 trillion IRR, or $200 million at the time. As with other major bonyads, whose combined annual national budget lines well exceed Iran’s GDP, we use this figure to illustrate the scale to which the government is financially beholden to AQR while remaining unregulated and unaccountable to state institutions.
- Ali A. Saeidi (2004), “The Accountability of Para-governmental Organizations (Bonyads): The Case of Iranian Foundations,” Iranian Studies, 37:3, 479–98, DOI: 10.1080/0021086042000287541.
- Astan Quds Razavi is legally defined as a “public benefit” (عام المنفعه) institution, according to a 1989 regulation.
- Andrew Higgins, “Inside Iran’s Holy Money Machine,” Wall Street Journal, June 2, 2007;
“آستان قدس رضوی، بزرگترین موقوفه جهان ”, مجله معارف اسلامی تابستان سال ۱۳۸۸ شماره ۷۶، ۲۰۰۹ (Hawzah.net), Summer 2009.
- “جدول: بررسی شعارهای لاریجانی؛ رئیسی و جهانگیری,” Alef News, May 22, 2021.
- “آیا بهرهبرداری از جنگلهای شمال کشور توسط شرکت زیر مجموعه آستان قدس ادامه دارد؟,” Khabargozari Kar Iran (ILNA), May 10, 2017.
- “توضیح آستان قدس رضوی درباره بهرهبرداری از جنگلهای شمال کشور,” Mehr News, May 15, 2017.
- “Iran’s Big Pharma Leaves Patients in a Bind,” Tehran Bureau, Aug. 27, 2020.
- “Samen Pharmaceutical,” Rooznameh Rasmi, accessed July 1, 2021.
- Nikzad is CEO and vice chairman of Setad Omran Developers Co (EIKO Civil Developers), where he represents the interests of the EIKO Assets and Properties Organization.
- Herasat Offices, found in most public facilities and all universities, represent the Ministry of Intelligence and state security apparatus. “Mostazafan Foundation News,” Mostazafan Foundation, Aug. 19, 2019.
- “آغاز به کار کمپین تبلیغاتی رئیسی؛ هر خانه یک ستاد,” Eghtesad News, May 14, 2021.
- See, for example, “تصاویر خانه احمد شاملو ستاد رئیسی شد؟,” Fararu, June 15, 2021.
- Shahram Kholdi, interview by author, June 1, 2021.
- In 2001, the Organization for Collection and Sale of State-owned Properties of Iran (OCSSPI) was founded, challenging EIKO’s monopoly over properties seized according to Article 49 of Iran’s constitution. For the following decade, these two organizations were in conflict over jurisdiction. Chief Justice Sadeq Larijani settled the dispute in a 2013 directive, recognizing Setad as “the only organization with jurisdiction over properties belonging to (the supreme leader).”
This post is also available in: فارسی (Persian)