Life In The Fast Lane For Iran's Well-Connected Super-Rich

Iranian financiers suspected of growing rich through links to the Islamic Revolutionary Guard Corps (IRGC) are flaunting their wealth through the import of exclusive fast cars, an investigation backed by the European Union has found.

Models including Italian-made Bugattis and British-manufactured Rolls Royces are believed to have been purchased by senior shareholders of recently opened private banks.

Investigations have revealed that import duties -- which should amount to millions of dollars -- have not been paid on many of the purchases, fueling suspicions of increasing corruption in Iran's economy.

Some 48 exclusive top-of-the-range sports cars were reportedly imported between March and July 2011 by buyers in just three cities: Tehran, Isfahan, and Shiraz.

The finding, by the British financial-analysis company Betamatrix, comes amid reports of rising numbers of fast cars being driven on the streets of Tehran and other major cities. Such vehicles were previously rare in a country whose roads have long been clogged with aging Iranian-built saloon cars, most notably the Peykan, based on a 1960s British model.

Mehrdad Emadi, chief analyst with Betamatrix, says the company discovered the trend in fast cars while investigating, on behalf of the EU, possible illegal imports suspected of breaching international sanctions.

"We looked into this when we actually learned that a very exclusive batch of sports cars had been sent to Tehran and Shiraz, which included three Bugattis, five Maseratis, and two Rolls Royce Phantoms with a total retail value of 9 million pounds," or $14.2 million, Emadi says.

"But the most noticeable thing was that these were actually ordered by two people. Two individuals between themselves had ordered this batch."

Shady Bank Financiers

Import duties of around $12.5 million had not been paid, according to inquiries that involved talking to Iranian customs officials. Instead, the vehicles were handed over to the buyers in return for temporary registration documents that appeared to have been forged. Senior police officers said they had no record of having issued the documents.

Many of the cars are owned by shareholders in banks that are heavily indebted to the government, Emadi notes. "One person, who is now in Europe, is one of the co-founders of one of the most controversial private banks and also the founder of the biggest furniture manufacturer in Tehran," he adds.

"His bank owes something close to $1.8 billion to state-owned banks and to the government. Yet this person has a fleet of expensive cars -- six as far as we've been able to establish."

Applicants for licenses to open private banks in recent years have had close ties with the IRGC or with senior figures in the government of President Mahmud Ahmadinejad, Betamatrix has found. Six private banks currently being investigated by the Iranian authorities for suspected fraud are headed by former commanders with the IRGC or the Basij militia, according to Emadi. Four are said to have close ties to Mohammad Reza Rahimi, Ahmadinejad's vice president, and Esfandiar Rahim-Mashai, his chief of staff.

The IRGC's control over Iran's economy is believed to have increased dramatically during Ahmadinejad's tenure.

Gaping Wealth Divide

Ahmadinejad's government is already embroiled in one banking scandal, after Mahmud Reza Khavari, chief executive of the country's largest state bank, Bank Melli, resigned in September over allegations of embezzlement worth $2.6 billion. Kahvari is reported to have fled to Canada. Prosecutors say they have arrested 36 people in connection with the case.

The increasing presence of fast cars had been noted before Betamatrix's investigation. Last year, Porsche opened a new headquarters in central Tehran, selling models from a starting price of around $200,000.

Maserati, the Italian manufacturer, is understood to be planning to open a showroom in the city's main thoroughfare, Vali Asr Avenue, in the coming weeks.

According to reports from Tehran, there are at least 10 car showrooms in the city's central and affluent northern neighborhoods selling up-market models, including BMW and Mercedes.

The proliferation of prestige cars comes at a time when vast numbers of Iranians are experienced plummeting living standards in a stagnant economy characterized by rising inflation and high unemployment. It is also at odds with Ahmadinejad stated social-justice agenda, as voiced in his promise to bring Iran's oil wealth to people's tables.

Meir Javedanfar, an Iranian-born commentator with the Israel-based Middle East Economic and Political Analysis Company, says the Islamic republic has long suffered such wealth disparity.

"You don't have to convince ordinary Iranians that there's no edalat [justice] in the regime. They basically see it every day. They don't have to look at these flashy cars. They can just look at the way they are losing their income, they are losing their economic status while a small group of elite are siphoning off the country's funds to finance their own lives," Javedanfar says.

"This is nothing new. It is just that the people who are doing this are now doing it more in the open. But whereas before they used to do it by buying mansions in Toronto or flats in Dubai, now they are buying flashy cars in Tehran. The only difference is now they are doing it at home and not being shy about it."