* Islamic Republic's biggest bank scam tainted government
* Ahmadinejad denies fraudsters linked to top officials
* Four condemned to hang, others get jail, flogging
(Adds context, further details)
By Yeganeh Torbati
DUBAI, July 30 An Iranian court has sentenced
four people to death for a billion-dollar bank fraud that
tainted the government of President Mahmoud Ahmadinejad, state
media reported on Monday.
Iranians, hit by sanctions and soaring inflation, were
shocked by the scale of the $2.6 billion bank loan embezzlement
that was exposed last year and by allegations it was carried out
by people close to the political elite or with their assent.
Of the thirty-nine people tried for the fraud - the biggest
in the Islamic Republic's history - four were sentenced to hang,
the IRNA state news agency reported.
"According to the sentence that was issued, four of the
defendants in this case were sentenced to death," prosecutor
general Gholam-Hossein Mohseni-Ejei told IRNA.
Two people were sentenced to life and others received jail
sentences of up to 25 years, Mohseni-Ejei said. In addition to
jail time, some were sentenced to flogging, ordered to pay fines
and banned from government jobs.
Mohseni-Ejei did not name the defendants and Iranian media
have identified them only by their initials. State television
broadcast parts of the trial but blurred out the faces of the
The man described by Iranian media as the mastermind of the
scheme, businessman Amir Mansoor Khosravi, is said to have
forged letters of credit from Iran's Bank Saderat to fund dozens
of companies and buy a state-owned steel factory.
Mahmoud Reza Khavari, the former head of Iran's biggest
bank, state-owned Bank Melli, resigned over the affair and fled
to Canada where records show he owns a $3 million home, Iranian
and Canadian news agencies reported.
CORRUPTION AND PRIVATISATION
The case has been politically awkward for Iran's leadership
as it aims to show it is tough on corruption and raised
questions about whether the government's privatisation drive has
largely benefited friends of the political elite.
Ahmadinejad has rejected claims that the investment company
at the heart of the scandal has links to his closest aide,
Esfandiar Rahim Mashaie, a powerful figure who has become the
prime target for the president's adversaries within the hardline
Ahmadinejad's economy minister, Shamseddin Hosseini,
survived an impeachment vote last year, where members of
parliament accused him of lax banking supervision.
Acknowledging the political damage, Iran's Supreme Leader
Ayatollah Ali Khamenei, while criticising financial corruption,
said in televised comments last year that the media should not
"drag out the issue."
"Some want to use this event to score points against the
country's officials," Khamenei said. "The people should know the
issue will be followed up on."
Mohseni-Ejei has held up the case as a demonstration that
Iran can deal appropriately with high-level fraud. "The
government, parliament, and all available devices were used to
pursue the issue so that corruption can be fought in an open
manner," he was quoted as saying earlier this month by IRNA.
But one of the defendents complained that, while the
judiciary had pursued some low-level players in the fraud
vigorously, senior officials involved in the scandal had gone
"Many other banking officials are outside of prison right
now. Why are you able to put us on trial and have nothing to do
with them?" the unnamed steel company official said, according
to Iran's Fars news agency.
The anti-corruption group Transparency International ranked
Iran 120 out of 183 countries on its 2011 Corruption Perceptions
Index, which measures countries according to their perceived
levels of government corruption.
(Reporting By Yeganeh Torbati; Editing by Robin Pomeroy)