How companies “privatized” under Ahmadinejad’s scheme only serve state-backed owners
A Doublethink investigation identifies bonyad-linked oil companies as part of Iran’s failed Justice Shares scheme
Since 2008 Iran’s lower house, the Majlis, has been questioning the integrity of a government-led privatization scheme known as Justice Shares (sahame edalat). The program, launched during Mahmoud Ahmadinejad’s presidency with the stated aim of redistributing the country’s wealth among its most vulnerable, oversaw the privatization of 40 percent of shares of the country’s top-performing state-owned oil companies.
However, according to Iran’s media reports, the Justice Share scheme has enriched corrupt public officials and their families without benefiting those it was meant to serve.
For over a decade, Majles MPs have been launching a series of half-hearted investigations into the misappropriation of Justice Shares. The ongoing investigations have reaped little results, but one official— Ali Ashraf Abdollah-Pouri Hosseini, the head of the Iran Privatization Organization—has been barred from leaving the country at the request of lawmakers.
Justice Shares were a form of compensation for low-income individuals and other disadvantaged groups who qualify for government subsidies. They included welfare recipients, nomadic tribes and unemployed farmers, families of war veterans and retired government employees. In an effort to control the privatization process, the government prohibited recipients from selling the shares for ten years after obtaining them. Share prices have become so diluted they are deemed worthless, according to Iranian media reports.
The government had originally aimed to privatize 60 profitable government-owned companies through a combination of Justice Shares distribution and initial public offerings on the Tehran Exchange. Many Iran observers say these privatization attempts turned out to be a de-facto exchange of hands from one government organization to another.
More recently, some of the more lucrative state-owned oil companies were removed from the Justice Share program and replaced with less profitable ones, a move that the Majles has deemed illegal but has taken no steps to curtail.
A Doublethink investigation has identified the following bonyad-linked oil companies and refineries as linked to the Justice Share scheme. All these companies were at least partially privatized via Justice Shares, and some were later withdrawn from the scheme and replaced with less profitable ones.
Top-earning oil companies privatized under the Justice Share scheme
1. Palayesh Naft Tehran
- Description: Refinery (reportedly) responsible for water and soil contamination in south Tehran
- Ownership breakdown: 90% Justice Shares, 10% unlisted
- Affiliation: Government/National Iranian Oil Co.
- Sales/Revenue: 131,365 billion Iranian rial in 2016-17 (roughly equivalent to $4.4 billion using historic conversion rates)
2. Palayesh Naft Shiraz
- Description: Ranks as number 8 among Iran’s top 10 refineries
- Ownership breakdown: 56% Parsian Oil & Gas (EIKO), 40% Justice Shares, 4.42% Unlisted
- Affiliation: BTS, EIKO, Armed Forces
- Sales/Revenue: 32,055 billion Iranian rial in 2016-17
3. Fajr Petrochemical
- Description: PGPIC-owned company
- Ownership breakdown: 60% PGPIC, 30% Justice Shares, 10% Unlisted
- Affiliation: Government, PGPIC
- Sales/Revenue: 14,921 billion Iranian rial in 2016-17
4. Khouzestan Petrochemical
- Description: PGPIC-owned petrochemical company
- Ownership breakdown: 70% PGPIC, 30% Justice Shares
- Affiliation: Government, PGPIC
- Sales/Revenue: 806 billion Iranian rial in 2016-17
*Originally published by Doublethink Institute