Iran’s leadership is using Islamic charities to conceal and control massive economic empires, some of which are connected to sanctioned businesses and a designated terrorist organization, according to a new report.
These organizations, known as bonyads, act as holding companies for regime members handpicked by Supreme Leader Ali Khamenei. One bonyad, Astan Quds Razavi, has been unveiled in a report by the American Enterprise Institute, offering a rare glimpse into the inner workings of Iran’s shadow economy. It “serves as one of the regime’s key financial vehicles,” the report says, and should be sanctioned.
“[T]hese bonyads have long since ceased to be, if they ever were, charitable organizations in any meaningful sense that the West would recognize, or that we would recognize in the United States, and have become, largely, huge holding companies that control vast segments of the Iranian economy,” Frederick Kagan, director of AEI’s Critical Threats Project, told the Washington Examiner.
The leaders of Iran’s Islamic Revolution used bonyads, Farsi for “foundation,” to nationalize private businesses and take control of state-run industries after seizing power in 1979. Putting companies under a bonyad offered the revolution’s leaders the ability to seize control of the economy under the “veneer” of charitable organizations, according to Kagan. Today, they are doled out to the regime’s elite and rising political stars.
Ebrahim Raisi, who some consider the supreme leader’s heir apparent, controlled the Astan Quds Razavi bonyad for nearly three years before he was replaced in April. One year after taking control, Khamenei supported him in his run against President Hassan Rouhani in 2017. In May, he made Raisi the head of Iran’s judicial council, a move largely seen as a way to groom him to become the next supreme leader. While the report does not prove Raisi used the bonyad for personal gain, Kagan believes it likely given the level of corruption inside the Iranian economy.
“Raisi wold have to be a paragon within that system not to have been benefiting from this economically,” Kagan said. “It is possible that he is, although I would be surprised. But it would be normal for someone in this position to be benefiting directly from the degree of control over all of these resources that he has.”
Officially, Astan Quds Razavi manages the Imam Reza shrine, Iran’s holiest religious site and the world’s largest mosque. Unofficially, it is a convenient front for the Razavi Economic Organization, which controls shares and business interests in at least 70 companies across multiple industries, including energy, construction, agriculture, medicine, and finance. Whoever is in charge of it has remarkable economic power.
To illustrate the reach of the Razavi bonyad, the report focuses on one of its subsidiaries, the Quds Razavi Bread Company, which produces various baked goods and cakes common throughout Iran. The Quds Razavi Bread Company maintains more than 20 satellite offices across the Middle East and claims to have another in California. The international nature of this business is indicative of the types of companies the bonyad prefers, according to the report.
Some of Astan Quds Razavi’s associations are not as benign. It is known to have connections to companies affiliated with Iran’s hard-line Islamic Revolutionary Guards Corps, which the Trump administration designated a terrorist group in April. To avoid sanctions, bonyads will divest their stake in targeted companies and instead use interlocking networks of boards of directors to maintain their interests unofficially, according to Kagan.
The IRGC also controls its own bonyads. In one case, it set up a bonyad under the guise of a retirement account. Another, known as the Execution of Imam Khomeini’s Order, is reportedly run by Khamenei himself.
As the Trump administration continues its “maximum pressure” campaign against Iran, Kagan said he believes it is important the administration know what it should be targeting.
“First of all, we need to expose to the world, and to the extent that we can to the Iranian people, how the Iranian economy is actually working,” said Kagan. “And among other things, we need to expose that to all of the companies and investors around the world who are so eager to invest in that economy what exactly they would be investing in. … I think it’s important to help people understand what this thing actually is, because it’s not actually an economy in any normal sense.”
Brian Hook, the U.S. envoy for Iran, told members of the House Foreign Affairs Committee last week that the administration’s maximum pressure campaign has yielded results, despite escalations in the Persian Gulf. Iran shot down a U.S. drone over international waters, the Pentagon said Thursday. President Trump decided at the last minute Friday to pull back from a retaliatory strike.
Source » washingtonexaminer