Bonyad Mostazafan Foundation
The Mostazafan foundation is one of the largest charitable foundations in Iran and an important element in the Iranian economy that wields considerable influence particularly in terms of its economic activity. The foundation is directly controlled by the Supreme leader and is highly affiliated with the IRGC. This combination of political and economic might not only turns the Mostazafan to an effective tool of influence over the Iranian economy and politics but, also facilitates the penetration of this influence into international markets.
Mostazafan Foundation General InfoCompanies owned by Mostazafan FoundationTop Companies of Mostazafan FoundationMostazafan Operational Scheme
# Bonyad Mostazafan
Brief History
Bonyad-e Mostazafan or the Mostazafan charitable (Foundation of the Oppressed) is an Iranian charitable foundation that is directly under the authority of Iran’s supreme leader and also maintains close ties with the IRGC. The Foundation was established on March 5, 1979 by virtue of a decree issued by the Ayatollah Khomeini in order to manage the properties and assets of the Pahlavi Dynasty (by taking over the Pahlavi Foundation). After its establishment, the foundation more than doubled its original assets after the property of some fifty Iranian millionaires were confiscated by the new regime. In wake of the outbreak of the Iran-Iraq war, its official name was changed into the “Foundation for the Oppressed and Disabled” (Bonyad-e Mostazafan va Janbazan). By the late 1980s, the foundation’s assets, totaled more than 20 billion$, owning some 140 factories, 470 agricultural related companies, 100 construction firms, 64 mines, and 250 commercial companies. (According to their official website)
According to a 2009 Rand report, the foundation had an estimated net worth of over 3 billion$, employed over 200,000 employees and owned 350 affiliated companies. Moreover, in 2003, it represented approximately 10% of the Iranian government’s annual budget. Even though its holdings, compared to the first decade of the second millennium, were reduced (in part because of privatization), economically, it is still one of the largest foundations in Iran let alone enterprises, if not the largest one, and is well integrated into the Iranian economy. According to recent information, the Mostazafan foundation owns over 150 companies. Its activities encompass a wide range of industries including: oil and gas, shipping, real estate, chemicals, banking and finance, food and agriculture, trading and commerce, tourism, mining and metals, textiles, housing and construction, engineering and technical services, cement, lubricants, transportation, insurance. Among the more prominent companies owned by the foundation, the following can be mentioned: Behran Oil, Sina Bank, Tehran Cement Company, Zamzam Company, Irancell.
# International Links
Sina Financial and Investment Holding Company
In an interview conducted with Behzad Golkar in early 2016, the CEO of “Sina Financial and Investment Holding Company”, the banking and investment arm of the Mostazafan, stated that the holding Company has applied for permission from Iran’s Central Bank to launch a new investment bank during 2016. According to the Company the bank would be established with the initial sum of $100 million, and is planned to grow to $500 million within the next five years. The purpose of this bank would be to seek to invest in capital markets in Iran and beyond, serving as a bridge into foreign markets. According to reports, the holding company held talks with banks in Germany, Austria, Switzerland and the United Kingdom offering them to take as much as a 25% stake in the new bank, which would initially be based in Tehran and could open European branches in two to three years. In addition, according to its CEO, Sina Financial and Investment Holding Company also plans to establish a fixed-income and equity fund, each with a value of 56 million USD), targeting the UK and Germany. The Company already has advisers in both countries aiding it with its fundraising.
Bank Sina
The bank, which is part of Sina Financial and Investment Holding , was sanctioned in July 2010 for being linked to Iran’s illegal nuclear activities. In October 2016, following the JCPOA agreement, the bank was de-listed from the EU’s sanctions list (after a similar decision was received in 2014 and then overturned in the same year). One of the main reasons put forward by the EU court decision to de-list the bank was that the reason given for placing the Bank on the sanctions list (i.e. that the bank controlled and ‘very closely linked to the interests of “Daftar”’ (Office of the Supreme Leader) was too vague (in particular the control element).
After the sanctions against it were lifted, Sina Bank did not waste time and began to take steps to expand its activity outside of Iran. In Early December 2016, the Iranian Financial Tribune reported that Sina Bank opened an account with the Swiss bank, BCP, which allows the former it to make transfers in Euros and Swiss francs. The Report further states that Sina Bank had already established links with Bank Muscat, and the state-owned Turkish Bank, Halkbank. In October 2016, officials from Sina visited Oman and signed primary agreements for expanding the Iranian bank’s ties with Bank Nizwa. In September 2016, Akbar Komijani, the Deputy Governor of Iran’s Central Bank, announced that the Middle East Bank and Sina Bank will open Branches in Munich. Bank Sina’s Branch is set to open in August 2017. Some German banking experts suggested that Sina Bank would prefer to establish a subsidiary in Germany in place of opening a branch. This way, it would be able to benefit from the European Passporting Privilege which allows European Economic Area (EEA) member states to operate within the EU without the need for an additional license. By doing this, entry into the German market may become Bank Sina’s entry into the European market.
Beh Tam Company
Formerly known as “Beh Total”, the Company was established as a joint venture between French energy giant, Total, and Behran Oil, a subsidiary of the Mostazafan. According to Total’s 2016 annual report, it sold its entire interest in the Company (50%) in December 2012 in the joint venture. But, Total did not completely severe its ties Behran Oil. According to a financial analysis report on Behran Oil written by Bank Keshavarzi’s securities company, Total and Behran Oil reached an agreement according to which once sanctions are lifted, 50% of Beh Tam’s shares will be transferred back to Total.
Also, as part of the 2012 sales agreement, Total agreed to license the trademark “Total” to Beh Tam for a 3 year period for the sale of the Iranian Company’s lubricants in Iran. Total E&P Iran (TEPI), a wholly owned affiliate of Total, received royalty payments from Beh Tam, in 2014 (almost 1 Million USD). Since 2015, royalties were suspended due to procedures that have been brought up by the Iranian tax authorities against TEPI. Interestingly enough, in its 2016 annual report, Total characterizes Behran Oil as ‘a Company controlled by entities with ties to the government of Iran’ thereby it inadvertently both confirms the Mostazafan’s connection to the Iranian regime and admitted that it had knowledge of this link.
Irancell
The Mostazafan’s Iran Electronic Development Company (IEDC) owns the controlling share of Irancell (51%). The latter is the second largest mobile phone network operator in Iran and is a joint venture between IEDC and South African based Telecommunications giant, MTN Group.
The Alavi Foundation
The foundation also has an American branch, which was also part of the property of the Pahlavi dynasty that was confiscated. After it was taken over by the new regime in Iran, its name was changed to the Alavi Foundation (Bonyad-e Alavi). According to the Southern District of New York’ U.S. Attorney’s Office, ‘The Alavi Foundation has been providing numerous services to the Iranian Government, including managing the Building for the Iranian Government, running a charitable organization for the Iranian Government, and transferring funds from 650 Fifth Avenue Company to Bank Melli Iran.’ According to the same source, the foundation is directed by the Iranian ambassadors to the U.N. On December 17, 2008, the Alavi foundation was designated for its connection to Bank Melli.
Among the Foundation’s most valued assets was the Piaget building on 650 Fifth Avenue in New York of which it owned 60% and the other 40% owned by a front company of Bank Melli. As a result of a civil lawsuit brought against it because of its ties to Iran in 2008, the building was forfeited by the U.S. government in 2013. The decision was overturned in 2017 and the foundation continues to hold the controlling share of the building.
# Ties to the Supreme Leader and the IRGC
While, ostensibly, it operates as a non-governmental organization which promotes various charitable and cultural activities, the Mostazafan is in fact directly supervised by the Supreme Leader, who personally appoints its director. Moreover, according to Mohsen Rafiqdoost, former director of the foundation, because many of the foundation’s assets are ownerless or their ownership is suspect, they are under the direct authority of the supreme leader. It is the vast assets and considerable sums of money that are controlled by the highest echelon of power in Iran that allow Iran’s Supreme Leader, Ali Khamenai, as a 2001 RAND report put it, ‘considerable autonomy and the ability to exercise policy without support from other Iranian institutions. ’
According to a 2010 report by the UN Security Council – ‘It is well-known that IRGC is a complex amalgam of military, political and economic forces and has large financial resources that influence the Islamic Republic of Iran’s economy. Financial wings of IRGC, IRGC Cooperative Foundation (Bonyad-e Taavon-e Sepah) and the Mostazafan Foundation (Bonyad-e Mostazafan), are actively pursuing investments in a variety of sectors. The Mostazafan Foundation invests in diverse businesses from agriculture to service sector. Together with the Mostazafan Foundation, IRGC financial wings control 43 companies through public trading on the Tehran Stock Exchange, and 218 small and medium-sized companies with 1,073 managers with IRGC affiliation .’
The above description may be a bit misleading. While closely affiliated with the IRGC it is not, as can perhaps be mistakenly understood from the above report, part of the IRGC controlled financial apparatus in Iran, but cooperates with it. The Telecommunication Company of Iran (TCI), is owned by “Tosee Etemad Mobin Company”. The latter is jointly held by the IRGC, the Mostazafan Foundation and the Execution of Imam Khomeini’s Order (both of the latter entities are in fact directly controlled by Khamenei). (It also means that along with its control of Irancell, the foundation (and in turn the supreme leader) holds a commanding influence over Iran’s communication sector). In addition, according to the Mostazafan’s 2015 report, it deals extensively with the IRGC and the Iranian security forces.
Snapshot from the Bonyad Mostazafan Foundation’s 2015 Annual report (in English) showing its extensive dealings with the IRGC
Moreover, between the years 1989-2014, the Mostazafan foundation was headed by Mohsen Rafiqdoost (1989-1999) and Mohammad Forouzandeh (1999-2014) both former senior IRGC officials. Rafiqdoost, considered to be a founding member of the IRGC, has continued to be involved with the foundation after his term as its head as a member of its board of trustees (at least until 2015). According to an article published by the “American Spectator” in September 1995, while the foundation was under the leadership of Rafiqdoost, it was also complicit in circumventing the sanctions against Iran. According to the report, the Mostazafan established a Company in Singapore called Bonyad Marketing Industries. The company purchased large quantities of Hewlett Packard and Sun SparcServer computers for use in Iran, as well as spare parts for Iran’s F-4 and F-5 fighter jet fleet. In the UAE, the Mostazafan had two direct subsidiaries, in Dubai and the Jebel Ali Free Trade Zone. These and a series of other smaller trading companies served as fronts engaged in the purchase of American technology and equipment which Iran was blocked from buying because of the embargo. According to “Iran Watch”both of the latter entities are in fact directly controlled by Khamenei, the foundation was also engaged in procurement of chemicals and equipment for the use of the Iranian nuclear program.
# Conclusions
The Mostazafan foundation is an important element in the Iranian economy that wields considerable influence particularly in terms of its economic activity. In the aftermath of the JCPOA it is slowly starting to expand its international dealings. It is able to do so in Europe as well as the US (as the case of the Alavi foundation shows) despite its clear ties with the Supreme Leader and the IRGC. The fact that such an organization which holds vast economic abilities and proven ties to the “bad elements” of the Iranian regime, is able to forge new economic ties and revive older ones (or in the case of the Alavi foundation regain assets) with such ease is indeed a sign of grave concern.
Because, the Mostazafan is not simply a rogue entity that has business ties with the Iranian regime. Rather, its ties with the IRGC is one of shared interest borne out of shared political, financial and, given the transition of senior IRGC officials to the foundation, perhaps even personal ones. But, the Mostazafan is much more than that, it is also a tool of power, allowing the more radical and intransigent elements of the Iranian regime, particularly the Supreme Leader, Khamenai, to act with greater political and economic freedom in Iran.
