Ahmadinejad denies aide is linked to bank scam

Iran's president, Mahmoud Ahmadinejad, has been forced to deny that his protege was involved in a $2.6bn (£1.64bn) bank fraud, described as the country's biggest ever financial scam.

The president's official website on Thursday issued a statement , saying his chief of staff and close confidant, Esfandiar Rahim Mashaei, was not linked to the scandal, which has dominated the headlines in Tehran in the past few days.

It emerged recently that Iranian regulators had frozen the assets of a businessman, identified by some local media as Amir-Mansour Aria, accused of forging documents in order to obtain credit estimated at around 30tn rials from various financial institutions, including Bank Saderat Iran, one of the largest financial institutions in the Middle East.

It is reported that Aria used the credit to buy state-owned companies such as the Khuzestan steel company during the government's controversial privatisation scheme, which started in 2004.

Some conservative websites published a leaked letter reportedly signed by Mashaei, in which he appears to give the go-ahead for the purchase of a state-owned steel company by a private company without the necessary formal procedures. The statement from the president's office said Mashaei had done nothing wrong.

"In continuation of damaging policies against the dedicated government, some newspapers and chain websites have discussed the issue of the banking scam 'which had been investigated and found by the government' in order to spread lies and propaganda … and accusing the clean and anti-corruption government of being involved in it," the statement said.

The fraud comes at the time when the president and his allies are caught in the middle of a bitter power struggle with conservatives close to the supreme leader, Ayatollah Ali Khamenei.

Some supporters of Khamenei believe that Mashaei is trying to increase his political influence by undermining clerical power and appealing to young people by advocating greater cultural openness. Some analysts speculated that Ahmadinejad was grooming Mashaei to succeed him in the next presidential elections.

In its attempt to distance Mashaei from the scam, the statement said it reserved the right to file a complaint against the website Mashregh, the semi-official Fars news agency and newspapers including Keyhan and Tehran Emrooz, which played a key role in revealing the financial scandal in recent days. Fars is believed to be affiliated to the revolutionary guards and the head of Keyhan is appointed directly by the supreme leader.

Some analysts believe privatisation has become a cover-up for redistributing the previously state-owned sectors among regime factions and various groups close to the establishment.

However, the IMF in June published a statement in which it praised the economic policies of Ahmadinejad, saying the government had been successful "in reducing inequalities, improving living standards and supporting domestic demand".

Source: The Guardian