A long list of corruption and embezzlement in the Teachers' Reserve Fund

The Parliament's Education Commission sent the report of its investigation into the performance of the Teachers' Reserve Fund to the judiciary after approving it. Corruption and financial embezzlement in this fund have been causing factional conflicts between supporters and opponents of the Rouhani government for two years.

The public session of the 10th Parliament, held on Sunday, April 9, was dedicated to reviewing the investigation report into the performance and violations of the Farhangian Reserve Fund. In the 60-page summary of the report, which is 580 pages long, the figures for violations of the fund, Farhangian Investment Company, and Bank Sarmeh were announced and reviewed.

The report states, among other things, that investigating and investigating the Education Reserve Fund and all its subsidiaries, and examining and auditing the resources and expenditures of this economic enterprise, requires a long time and the participation of many experts, but in every case that the delegation visited, "major violations" were observed: "To the extent that it led the experts to comment that violations and crimes were institutionalized in the Education Reserve Fund."

The embezzlement of 8 trillion tomans from the Farhangian Reserve Fund with 25 subsidiary companies was one of the reasons why representatives impeached Ali Asghar Fani, the Minister of Education. On October 18, 2016, while the 10th Majlis was preparing for Fani's impeachment session, Fani resigned from his post.

The main points of the report of the investigative committee on the Iranian Educationalists' Reserve Fund are as follows:

● The Ministry of Education was obligated to comply with the country's general laws and regulations, but the then minister, at the time of establishing the fund, violated the provisions of Article 130 of the Public Accounts Law and created deviations in the fund's operating methods from the beginning.

● The total assets of the fund, based on the financial balance sheets as of September 2016, are approximately 5.6 trillion tomans, and the only physical asset in the fund's possession is the central building located in Vanak Square, No. 10, Attar Street, with a book value of approximately 147 billion tomans.

●About 788 million Tomans have been paid to managers as bonuses and meeting fees without any authorization or order from the fund's board of trustees.

● Bank Sarmeh has paid 800 billion rials at a rate of 1.5% as a facility to the broker, without having any obligation in this regard in the amendment agreement.

● The broker company was initially named Faz Rayane Mandager, which was later renamed Faraz Aftab Caspian Company with the same registration number. Furthermore, the subject of Faraz Rayane Mandager's activities at the time of the contract was not consistent with the nature of the contract.

● In September 2012, an investment and legal partnership was made in the construction, completion, financing, and sale of units of a commercial and administrative center known as "Gol Nabi" for an amount of 3,900 billion rials, which lacks a credible expert in calculating real estate and costs in the context of the contract. After the above project failed to materialize on December 13, 2015, again, without considering the latest valuation by three official experts of the judiciary, the managers of the Farhangian Reserve Fund have proceeded to exchange and purchase shares of the project known as Mashhad Page for an amount of 5,040 billion rials.

High-loss investments

According to the investigation board's report, part of the violations relate to losses incurred by Farhangian Investment Company's subsidiaries. The report states, among other things:

● In the meeting of September 15, 2014, the board of directors of the Atlas Investment Company agreed to invest and sign a contract for 6 billion Tomans with the Emirati company Century General Trading LLC, represented by the full authority of Hooman Tejarat Amin Company, for the import of cars. Ultimately, due to the failure to fulfill the obligations of the contracting party and the return of all checks from the Emirati company, and due to the unknown location of the check issuer, a total of more than 14 billion Tomans was lost to the fund-affiliated Tadbirgaran Atlas Company for the principal and subsidiary of this investment.

● Contract with Hormoz Pasargad Company with the brokerage of Tejarat Afarin Seven Qeshm Company, which resulted in losses of approximately 28 billion Tomans due to the round of guarantees issued by Farhangian Investment Company.

The contract with Hormoz Pasargad Company for the purchase of bitumen amounted to 660 billion rials in exchange for guarantees issued by the Capital Bank to the beneficiary. Hormoz Pasargad Company provided the purchased bitumen shipment to a company in four stages, but the contract for the work commission of the Atlas Tadbirgaran Investment Company - Bitumen Trading Company, the amount of this company's debt to the Capital Bank for the paid guarantee and interest and late penalty as of October 3, 2016, was equivalent to 24 billion tomans.

● In the project to purchase shares of the Amirabad Steelmaking Company, Farhangian Investment Company has identified the equivalent of about one hundred billion tomans in shares of a company in which it had no ownership. Also, the penalty for the delay in the construction of the company in two documents totaled about 7 billion tomans, which is not recognized in the investment company's accounts due to the uncertainty and formal realization of ownership.

“A handful of examples”

The report emphasizes that this document only mentions a few examples of violations, and that all competent authorities, including the Court of Accounts and the Space Force Inspectorate, must investigate the cases that have not been investigated and return the embezzled property.

The formation of the capital bank and family shareholding are also examined in the report.

● In 2006, some shareholder companies and a number of shareholders with less than one percent transferred their shares in Sarmeh Bank to companies under the Tehran Municipality, and until 2012, there were no significant changes in the composition of shareholders. Finally, in 2012, all of the proxy shares of Sarmeh Bank that were in the possession of companies under the Tehran Municipality were transferred to the group attributed to Mr. Behrouz Riteshgaran.

● In 2014, 38.14 percent of the capital increase was paid by the Casters Group to 8 individuals, all of whom were relatives of Mr. Casters, such as his sister's wife, brother's wife, cousin, brother's wife, etc.

● Payment of facilities to Bank Sarmeh was made by order, telephone call, and without registration in the audit system.

The report states that according to the law, all of the fund's assets belong to educators, who have not yet shared in the profits of 42 percent of the fund's assets, which amount to 36 trillion rials. Therefore, when calculating the profits of the Education Fund, after setting up legal reserves and including reserves and deducting expenses, the entire profit should be calculated and paid in the name of educators.

At the end of the report, it is hoped that the judiciary will take a decisive action against the official justice experts who made unrealistic and exaggerated assessments. The report says that the official justice experts were one of the factors causing corruption in the fund complex; the Central Bank did not fulfill its duty in supervising Bank Sarmeema, and there is suspicion of collusion and collusion in this matter.

The process of forming a fund

The Farhangian Reserve Fund was established in 1995 with the aim of “improving the livelihood and welfare of the Farhangian.” The fund currently has 27 subsidiaries in the construction, welfare services, educational and IT industries, energy, industry and stock exchange, banking and insurance groups.

The fund's capital is provided by deducting 5% from the salaries of the fund's members, depositing a 5% government contribution, and voluntary contributions from members.

The Minister of Education is the chairman of the board of trustees of this fund and the deputy director of development, management and support of this ministry is the vice chairman of the board of trustees, and 5 to 7 members of this board are also selected by the chairman for a term of 4 years or more.

In the fall of 2016, four people were arrested in connection with “corruption in the Farhangian Reserve Fund.” Shahabuddin Ghandali, CEO of the Sarmeh Bank, was among those arrested. A plan to investigate this fund was first presented to the Eighth Parliament.

Jabbar Kouchkinejad, head of the investigation committee of the Educational Reserve Fund, said in the fall of 2017 that the exact amount of embezzlement and financial irregularities in this case is close to 15 trillion tomans.

The investigation report on the performance of the Iranian Educators' Reserve Fund was sent to the judiciary for review and follow-up, with 183 votes in favor, 10 votes against, and 3 abstentions out of a total of 238 representatives present in the parliament.

Source: DW