Where does corruption in Iranian automakers come from?

With the discovery of widespread corruption in Saipa, which has also led to the conviction of the company's former CEO, the question arises: where does the widespread corruption in the company's structure come from?

Iranian automotive companies have had a completely monopolistic, uncompetitive market for years. These companies have been able to influence the regulatory agencies in Iran through various factors. On the other hand, in the absence of a free media environment, these companies also put pressure on the Iranian media through both judicial and advertising means.

Many Iranian media outlets do not usually try to seriously challenge these companies due to the influence of advertising.

The press that criticizes these companies faces widespread complaints from these companies and endures widespread pressure from various organizations.

Many people in Iran complain that when buying a car, they cannot access the car's websites during pre-sale at the time of registration.

It has now been revealed that Saipa, during the sale and pre-sale of the car, had made the car available only to some of its sales representatives in a completely controlled manner. These sales centers, in turn, made these cars available to dealers in the market.

Gholamhossein Esmaeili, a spokesman for the Iranian judiciary, told the Iranian Broadcasting Corporation, "With 600 dealerships, Saipa only sold its cars to 15 dealerships, and 93 percent of the company's sales were made through these dealerships. Through corruption in Saipa's sales and management system, a person named Vahid Behzadi and his wife Najwa Lashidai were able to pre-purchase 6,700 cars."

Managers and some members of parliament were also involved in the corruption at Saipa.

But is the work over at this point?

Some experts have attributed the increase in car prices in Iran to the performance of car manufacturers in car sales. These companies are accused of trying to increase car prices by reducing supply.

For example, the Tasnim news agency said it had various images showing that "automakers' warehouses are still full of cars."

The news agency continued, "Last September, following the unrest in the automobile market, Tehran Prosecutor Ali Al-Qasi raided one of the Saipa Automobile Company's warehouses in response to the company's officials' claim that the reason for the cars being stored in the sun for several months was a shortage of parts; he had said that if there is a shortage of parts, then why are cars produced that will remain in the sun for months?"

Another case that is considered corruption in automakers is the change in some financial methods to change the profit and loss statement.

Farbod Zaveh, an automotive expert, wrote on Twitter, "The biggest accusation of former Saipa CEO Mehdi Jamali is the formal conversion of losses into capital, which was done with the cooperation of the then Minister of Public Security and has not been addressed! The people in charge of these problems were the Competition Council and the Support Organization, who were not tried! Introducing inflation into financial statements to eliminate losses is the only correct way to increase capital in cash, not converting losses into capital and taking out new loans! Iran Khodro increased its capital 20 times in late March of last year without receiving a single rial in cash."

In recent years, Iranian automobile companies have tried to cover up financial losses caused by mismanagement and Iran's economic conditions by taking money from the public through pre-sale of cars, selling part of the land and properties they own, and taking out loans.

There have been many reports in Iranian media that Iranian automakers are delivering pre-sold cars to customers with delays of several months and even years.

These companies raise a large amount of capital by announcing each pre-sale to cover their annual financial losses and pay off part of their past loans.

Some experts believe that these automakers are directly trying to increase the factory price of cars by stockpiling and pressuring the government. On the other hand, by selectively selling cars to a portion of the market brokers, which has now been proven in the Saipa case, they are trying to manage and increase the price of cars in the free market.

This situation occurs while the Iranian automobile market is monopolistic and the conditions in Iran have made foreign companies unwilling to invest in this market. Of course, even during the period when foreign investment is possible, they use various pressures to prevent foreign direct investment from going anywhere in order to prevent their monopoly market from disappearing.

An example of these measures can be seen in Renault's direct investment in Iran; this investment was delayed due to pressure from Saipa on the Industrial Development and Modernization Organization of Iran. This delay lasted until the new US administration completely withdrew from the JCPOA and Renault left Iran.

Source: Radio Farda