Iran Makes New Arrests in Fraud Case

The Iranian authorities have widened their investigation into what they say is a record $2.6 billion embezzlement uncovered in a network of Iranian banks last month, interrogating at least 67 people and putting 31 of them under arrest, state media reported.

The top prosecutor, Gholam Hossein Mohseni Ejei, said in an interview broadcast Monday night on Iranian state television that some of the suspects had begun to provide information about the mechanics of the embezzlement case, which the authorities said involved using forged documents to obtain credit from at least seven Iranian state and private banks. The money was then used to purchase state-owned companies, they said.

The fraud case, portrayed as extending over a four-year period, was first identified at Bank Melli, Iran’s largest commercial bank, in September.

The embezzlement case has political significance. Conservative opponents of President Mahmoud Ahmadinejad in Parliament have sought to link some of his close associates, including his chief of staff, Esfandiar Rahim Mashaei, to the chief suspect in the case, Amir-Mansour Khosravi, a prominent Iranian business executive.

Mr. Khosravi owns at least 35 companies, including some that prosecutors say may have been purchased as part of the embezzlement scheme.

Mr. Ejei said Mr. Khosravi that had undergone a change of heart while in custody and that he was now cooperating. In the early stage of the inquiry, Mr. Ejei said, Mr. Khosravi had “pinned hope on his crime and corruption network and imagined that he could escape justice, but after he realized that his accomplices could not help him he started making a series of confessions.”

Mr. Ejei said that in the beginning, the embezzlement scheme resembled “a too complicated maze, but fortunately, today we have come to a point that we have unraveled the knot and realized its dimensions.”

He did not identify any of the other suspects by name, but said they included “some managers of certain bank branches, and even a number of bank clerks were bribed by the suspects.”

The former managing director of Bank Melli, Mahmoud Reza Khavari, fled to his second home in Canada just before news of the scandal first broke in September, and Iranian prosecutors say he has not responded to their requests to return for questioning.

Mr. Ejei said that if Mr. Khavari refused to come back, he would then be considered a suspect and “we will then take action through the Interpol and try other options to return him to the country.”

The prosecutor did not specify what those options might be. Iran does not have an extradition treaty with Canada.

Iranian media have reported that Mr. Khavari had sent a letter of resignation to the finance minister, Shamseddin Hosseini, as word of the scandal spread, seeking forgiveness from Ayatollah Ali Khamenei, Iran’s supreme leader, who has raged about the fraud and ordered judicial authorities to “cut off the hands” of those guilty of embezzlement.

Mr. Hosseini, who is one of President Ahmadinejad’s allies, accepted Mr. Khavari’s resignation but has come under criticism himself because the time frame outlined in the embezzlement case was during his watch.

The Associated Press reported that Iranian lawmakers gave Mr. Hosseini a 10-day deadline on Sunday to appear before them to answer questions and warned that his job may be at risk.

Source: NYTimes.com