Iran banks lose $2.6b in giant credit scam

Several Iranian banks have been targeted in one of the biggest frauds in the Islamic republic's history, losing nearly $2.6 billion (Dh9.5 billion) in more than two years, media reports said yesterday. The fraud was reportedly orchestrated by one man, referred to as ‘Mr X' in Iranian media, who developed a network and used forged letters of credit to purchase assets, including one of Iran's largest steel production companies, Khuzestan Steel Company. Mr X ran his master plan from June 2009 to last Aug-ust, pocketing around 28 trillion rials (nearly $2.6 billion) and also unsuccessfully attempting to form a new bank, said central bank chief Mahmoud Bahmani in remarks published yesterday. Bank of Saderat CEO Mohammad Jahromi, whose organisation was one of the victims of the fraud, said seven other banks were also hit. Lead of general inspection organisation, Mustafa Pour Mohammad, labelled the fraud: "The most unprecedented financial corruption case," in the Islamic republic's history. He did not elaborate. Corruption Influential conservative lawmaker Ahmad Tavakoli said the case represented, "a terrible corruption disease [lurking] in [Iran's] banking system and administrative apparatus." On Wednesday, judiciary chief Ayatollah Sadeq Larijani said: "The people involved in this case have been arrested," before the media got wind of the story. He did not elaborate. The Germany-based corruption watchdog Transparency International last year ranked Iran 146th out of 178 countries on its annual list.