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iran bank fraud trial

A general view of a courtroom at the revolutionary court in Tehran in August 2009. Photo – Hassan Ghaedi/AFP/Getty Images

Iran announced on Monday it has sentenced to death four men accused of embezzling $2.6bn from banks and committing the largest fraud in the nation’s history.

Iranian Prosecutor-General and Judiciary Spokesman Gholam Hossein Mohseni Ejeii presented the court’s decision in front of reporters in Tehran. The chief prosecutor said that the judge has issued verdicts for 39 suspects of which 4 were given death sentences, two life sentences and 32 other prison sentences for the multi-billon dollar bank fraud. The convicts will have 20 days to appeal the sentences.

The trials began in February after financial authorities in Tehran uncovered fraudulent activity in September 2011.

According to Fars news agency, the embezzlement case started in 2007 when Amir Mansour Arya Investment Group of companies, headed by Amir Mansour Khosravi, also the founder of private Arya Bank, started taking loans from Iranian major banks, including Bank Saderat and Bank Melli.

Iranian officials said that the case involved the use of fraudulent documents to obtain credit for his investment company. The firm used them to purchase assets such as state-owned companies.

Reports said a private group had made trillions of rials by obtaining loans from at least 6 different Iranian banks through forged or illegal letters of credit. Those letters of credit allegedly came from state companies, and the loans were used to purchase companies that were in the process of being privatised.

Bank branch managers and clerks have also been accused of forging documents and accepting bribes.

The surfacing of financial scandal ensued political infighting within the government, with many calling for the dismissal of Economy and Finance Minister Shamseddin Hosseini.

Some observers are questioning the way authorities have handled the fraud investigation with allegations rife about the collusion of Iranian government officials. There are also suggestions that members of the Iranian political and economic elite were involved in the scam.

However, financial critics are pointing out that Bernie Madoff, who defrauded investors of more than $50 billion, received a life sentence but his close associates are yet to be put on trial. “Not a single top finance executive has faced US criminal charges since the economic collapse began,” John Hudson, financial pundit, wrote in his commentary on The Atlantic Wire website in response to the Iranian sentencing.

Meanwhile, Iranian judiciary officials said Interpol has placed fugitive banker Mohammad Reza Khavari on its wanted list and issued a warrant to arrest and prosecute alleged fraudster.

Khavari, who has been a dual Iranian-Canadian citizen since 2005, left Iran in September 2011 as prosecutors in Tehran announced they wanted to question him in connection with a $2.6-billion embezzlement scandal.

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