Iran's Economy: Jamshid Bismillah and the Sultan of Coins

In Mehr 1390 (October 2011), the free currency market had been facing price shocks for months, and even the announcement of a rate of 1226 tomans for each dollar in Bahman 1390 (February 2012) by Mahmoud Bahmani, the then Governor of the Central Bank, did not calm the fluctuations in Istanbul Crossroads, Monoucheri sidewalks, and Afshar passage. Among the government's and Central Bank's supplementary policies to control an out-of-control market was the arrest of brokers and speculators. This time, it was Mohammad Reza Rahimi, the first vice president of Mahmoud Ahmadinejad, who introduced the main culprit behind these endless fluctuations to the public: Jamshid Bismillah. A broker among the active players in the currency market whose hangout is Afshar passage, and as the Vice President of Iran stated, "he used to stand on a stool and set the dollar price." Jamshid Bismillah and his brothers were arrested, but the dollar and other currencies did not decrease in value. Jamshid Bismillah was released two years after his arrest and denied the accusations against him in an interview with the newspaper Ta'adol in Tir 1393 (July 2014), stating, "A currency dealer is always at risk." In that interview, he said, "Mr. Rahimi made me international." These days, Jamshid Bismillah might be the most grateful currency market player in Iran, as he did not share the fate of Vahid Malekzadeh, the Sultan of Coins, who was executed. Vahid Malekzadeh was arrested six years after the wave of price increases in the currency and coin market during another turmoil. Although Malekzadeh's name is intertwined with all the price shocks in the currency market during the 1990s, 1390, 1391, 1392, 1396, and finally 1397, he has been one of the arrestees each time. The crime that caught him this time, according to the indictment issued against him, was "corruption on earth" through leading and forming a corruption network disrupting the economic, currency, and monetary system of the country by conducting illegal and unauthorized currency and coin transactions and large-scale currency smuggling out of the country. Nemat Ahmad, a lawyer and legal expert in Tehran, states: "In Iranian laws, more than any other subject, issues related to economic disruption or corruption have been focused on, and besides the Islamic Penal Code, other laws such as the Law on the Intensification of Punishments for Fraud, Bribery, and Embezzlement passed in 1989 or the Law on Combating Economic Corruption or in the Monetary and Banking Law, these crimes are defined and there are many legal clarifications on these matters." This lawyer also expresses regret that "the use of these laws is seasonal and occurs occasionally, depending on the wave that arises." According to Nemat Ahmad, in the same law passed in 1989, "the creation of networks, leadership, and gangs that carry out such acts falls under the title of corruption on earth, for which the death penalty is also foreseen." Unanswered questions regarding the execution of Vahid Malekzadeh and Mohammad Ismail Qasemi, his assistant, just 43 days after the start of their trial, have raised many questions. One of these questions is the doubt about whether buying and selling coins, even if the number reaches several thousand coins, is a crime that warrants execution by itself? Nemat Ahmad, a lawyer, emphasizes that his information about this case is limited to what has been published in the media, stating: "In this case, there are three accusations: first, buying and selling coins, second, buying and selling currency, and the last accusation is creating a network that smuggled currency out of Iran, and this last accusation is considered a disruption of Iran's economic system through illegal currency exit." This legal expert also refers to news and reports published in recent months about numerous gold coin purchases by individuals who did not share a fate similar to Malekzadeh, who had other accusations attached to their activities. The Central Bank; the defendant's lawyer Previously, Gholamhossein Mohseni Ejei, the spokesperson for the judiciary, stated that Malekzadeh was even released during one of his arrests, which was likely related to currency market developments in the years 1390 or 1391, with the defense of the then Central Bank officials. According to Ejei, the then head of the Central Bank's security and legal deputy stated that he was the bank's agent for injecting currency into the market and controlling the rates. The volume of Malekzadeh's activities and his network in the Central Bank's currency supply program to the market, based on the information provided by Mohseni Ejei, was 36 instances, and each time between 4 to 7 million dollars was handed over to him. In simple terms, during an unspecified period, 144 million to 252 million dollars were delivered to Vahid Malekzadeh to supply in the free currency market. The special court for economic offenders; "Hitting water in a mortar or a definitive cure?" However, why did the Central Bank, despite having a network of authorized exchange offices, some of which are affiliated with official banks operating in Iran, choose a currency broker to regulate the market? Who made such a decision and how was he and other brokers and potential currency dealers monitored? These are among the unanswered questions in this case. We only know that the names and traces of several Central Bank managers in various periods are linked to the severe currency fluctuations in recent years. The former currency deputy of the Central Bank has been arrested, and Valiollah Seif, the former head of the Central Bank, is also banned from leaving the country to answer the judiciary's questions regarding the Central Bank's currency policies in recent months. This is not the end Nemat Ahmad, a lawyer and legal expert, also refers to these ambiguous matters and believes that this case "should not end here," as this legal expert states, "currency and coins are not something that can be printed or minted in every shop or workshop, and their source is the Central Bank." The sad tale of Babak Zanjani, Jamshid Bismillah, and the Sultan of Coins is a recurring story in Iran's economy; every few years, we hear the name of one of the "economic offenders" or "disruptors," a trial takes place, a verdict is issued, and the story returns to square one. How has Iran's economy become a fertile ground for producing disruptors or offenders? Returning to the Qajar era Fereydoun Khavand, an economist and professor of economics in Paris, likens the execution of these individuals to "the situation during the Qajar period when bakers were whipped and punished for the rising price of bread," while according to Khavand, "after all these years, some economic culture should have developed, and the search for the root causes of economic phenomena should have been pursued." This economist believes that the issue should be addressed as to "why a large number of Iranians are quickly seeking to convert their rial assets into gold, coins, or currency, creating such a situation." Khavand, who is an economist believing in the mechanisms governing free markets and competitive economies, sees the root of such a situation in "the 70% share of the government in Iran's economy and the existence of golden signatures." Fereydoun Khavand believes that the presence of "organizations, foundations, and military and security institutions in Iran's economy, which in some cases have a monopolistic presence, has fueled the roots of such corruptions." "The lack of transparency, artificial pricing in Iran's economy, widespread money laundering, and the absence of an efficient judiciary" are other roots and causes of such phenomena in Iran's economy, according to this economist. Nemat Ahmad, a lawyer and legal expert in Tehran, also states: "As long as the currency price in Iran's economy is not uniform and the economy remains trapped in a dual and multiple currency rent, these corruptions, disruptions, and executions will continue, and no problem will be solved." Symptoms instead of causes According to this lawyer, the "decision-makers and policymakers" who have created this situation in the economy should be questioned. He calls individuals like Malekzadeh "tools" whose execution, according to this lawyer, "is a cover-up for the violations or mistakes of the officials who created this situation." Fereydoun Khavand also describes such approaches as addressing "symptoms instead of causes." According to Khavand, "the main finger of accusation from the public and public opinion points towards high-ranking officials and influential families who have ties to political powers." He asks, "How can one confront the volume of factors generating corruption in Iran's economy by executing one or several individuals?" and predicts: "Soon, it will be the turn of others to sit at the trial table." Although this economist residing in France immediately emphasizes: "These executions will not affect the main factors that create corruption nor convince public opinion that decisive actions are being taken against corruption in Iran." Mahmoud Khavari, Babak Zanjani, Vahid Malekzadeh, Jamshid Bismillah, the Sultan of Sugar, the three thousand billion tomans corruption, the missing oil platform, just some of the names and titles that have been recorded in the chapter of economic corruption in Iran over these years, without mentioning the institutions, organizations, and mechanisms that water this root.