Tehran, Iran – Iranian authorities are creating more unofficial channels to sell oil and import essential goods under the weight of United States sanctions and a looming war, but judges and experts have raised alarms over risks of corruption.
An expanding network of state-linked “trustees” has been handling shadowy deals to export Iranian petroleum and other sanctioned products with billions of dollars in proceeds yet to return to the country, according to oil executives, lawmakers and judicial officials.
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Speaking to judges and provincial officials at a meeting this month, judiciary chief Gholam-Hossein Mohseni-Ejei said he has been going after the unnamed trustees through financial authorities and they must return the money.
“Who gave them this oil and other facilities? You at the Central Bank and the economy ministry and other places, was it not you who said you audited these trustees?” he asked.
Billions unaccounted for
For years, Iranian governments have struggled with returning foreign currency revenues yielded from selling the country’s vast oil resources, something that has worsened an ailing economy marked by rampant inflation and a depreciating national currency.
In an interview in mid-February that has since captured much attention in local media, a senior former oil executive described a major shift in how Iran’s oil money was handled as hopes faded for resurrecting the 2015 nuclear deal with world powers and lifting sanctions.
Ali Akbar Pour Ebrahim, a former CEO of Naftiran Intertrade Company (NICO), the arm of the Ministry of Petroleum that sells most of Iran’s crude oil, told the semiofficial Iranian Labour News Agency (ILNA) the ministry has lost its agency in handling the funds.
He explained that during the administration of former President Hassan Rouhani – when US President Donald Trump started his “maximum pressure” sanctions in 2018 after unilaterally reneging on the nuclear accord – the ministry directly handled oil proceeds, but it was sidelined during the administration of his successor President Ebrahim Raisi.
“They forced the Petroleum Ministry to shut down its own trustees and created bank trustees who operated under the purview of the country’s commercial banks, which operated under the Central Bank,” Pour Ebrahim said without identifying the people and entities responsible.
The official, who is now a banking and investment executive, said “we knew from the start” the trustees would take the money for themselves, adding that as much as $11bn was not returned after being handled by them.
According to Pour Ebrahim, the trustees “mushroomed” after taking the money and using nationals from neighbouring Pakistan and Afghanistan to open bank accounts in the United Arab Emirates and funnel the funds through shell companies.
He said Raisi was following up on the issue before his death in a 2024 helicopter crash and President Masoud Pezeshkian was also informed and ordered a review but no thorough investigation has been conducted.
“Through the country’s oil money, these people became Rolls-Royce owners in the UAE overnight and are now living in penthouses of expensive hotels there,” Pour Ebrahim said.
Hossein Samsami, a member of the parliament’s economic commission, confirmed to state-affiliated media that some of the agent banks have been colluding with the trustees to declare receipt of oil money to the Central Bank even when no funds were deposited.
Mahmood Khaghani, a career oil official who formerly led the Caspian and Central Asia department of the Petroleum Ministry, was quoted as saying by state media on Saturday that if an independent audit is allowed, it would emerge that the misappropriated money amounts to much more than $11bn.
He said the trustee-based system was originally created about two decades ago when a “shadow government” emerged as international pressure grew over Iran’s nuclear programme, leading to the country eventually being hit with United Nations sanctions.
According to the official, experts were sidelined at the Petroleum Ministry and other bodies in favour of actors affiliated with the Islamic Revolutionary Guard Corps (IRGC) and other unelected state bodies.
“In effect, a number of people in the parliament, judiciary, government, and security and intelligence apparatuses entered oil deals,” Khaghani said. “This did not remain limited to selling oil. … The mafia is not active exclusively in oil but everywhere.”
Food importers become oil traders
A Tehran-based oil expert, who spoke with Al Jazeera on background, said the nontransparent trustee model only begets corruption as powerful interest groups are given large sums with little to no accountability.
Economist Morteza Afghah told the reformist Shargh newspaper that the misappropriated funds could have played a crucial role in bringing some stability to the country’s currency markets and reducing pressure on Iranians losing their purchasing power by the day.
“Allocating a strategic and complicated commodity to actors outside of their technical areas – under sanctions and faced with a currency crunch, without any transparent guarantees for the return of funds – appears neither logical nor low risk,” he said.
But the theocratic establishment is signalling it only plans to increase its reliance on the so-called trustees as authorities put in place contingencies for war.
Agriculture Minister Gholamreza Nouri Ghezeljeh announced this month that importers of essential goods, including food, will now be officially given oil to sell and will be allowed to barter the oil for food.
“From next year [starting in late March], it has been decreed that importers of essential goods will be introduced by the agriculture ministry to the Petroleum Ministry so they can get oil shipments,” he said, adding that the new trustees will be able to barter up to $1.5bn.
This comes weeks after the Pezeshkian administration launched an initiative to eliminate a preferential currency exchange rate for imports of essential goods, based on the rationale it was breeding corruption.
With the new scheme by the Ministry of Agriculture Jihad, the same importers who had their profits slashed with the elimination of the cheaper currency rate will now benefit on a new level after becoming oil trustees.
According to state-affiliated media, the Mostazafan Foundation of Islamic Revolution could be among the new recipients of Iranian oil, but the head of the top state-run bonyad, or charitable trust, said last week it has received no shipments so far.
In late January, Pezeshkian convened the governors of Iran’s border provinces and announced on state television he is delegating some authority to them.
The empowered governors may import “all goods that are directly linked with the livelihoods of the people and the needs of the market” in case of war, including importing without using foreign currency, bartering and allowing sailors to bring in products under simplified customs rules.
Selling Iranian ships for scrap
Another major development emerged last week also linked to Iran’s efforts to circumvent US and UN sanctions to sell its oil through its shadow fleet of tankers that turn off transponders and conduct ship-to-ship transfers outside official ports.
A former Ports and Maritime Organization official, who now consults for the state-run oil seller NICO, told ILNA the leaders of the establishment have greenlit a process to sell Iran’s sanctioned ships for scrap metal to replace them with new vessels to evade sanctions.
Majid Ali Nazi said NICO has already sold a sanctioned vessel for about $14m – several times lower than a nonsanctioned tanker would be worth.
“It costs $8m to rent nonsanctioned vessels from Singapore to China or Malaysia with a daily demurrage cost of $110,000 in addition to the issue of the shipment’s security. So if we purchase a nonsanctioned ship costing $70m that can work for us for a year, it is undoubtedly worth it, and we can take care so it does not enter the sanctions list for a year,” he said.
Iranian authorities have not publicly commented on the claim about the vessels but maintain oil sales remain strong despite Washington’s stated efforts to drive them to zero.
The Trump administration has been increasingly focusing on intercepting tankers carrying Iranian oil, also pressuring China through sanctions and threats to stop oil purchases from Iran, which has in turn threatened to shut down the strategic Strait of Hormuz.