Banks Required to Disclose Executive Compensation in Financial Statements

An official from the Central Bank of Iran announced that, following a directive from the bank and based on a new financial statement format, banks are obligated to disclose the salaries and benefits of their executives and board members in their financial statements. According to the state news agency IRNA, Ali Divandari, head of the Central Bank's research institute, stated on Saturday evening, June 5, that 'banks must prepare their financial statements in the new format mandated by the Central Bank, and accordingly, the compensation of executives and board members must be specified in the financial statements.' Mr. Divandari noted that the new format for banks' financial statements was issued in Bahman (January-February) of the previous year, but as July is the season for holding banks' general assemblies, the issue of the new financial statements has become a 'hot topic.' In recent weeks, the issue of salary slips for several managers from Hassan Rouhani's government, including those from the Central Insurance of Iran, managers from several banks including Bank Refah, and the head of the National Development Fund, has made headlines. The President, the Speaker of the Parliament, and the head of the Judiciary of Iran have separately ordered investigations into the salaries of government managers, and the First Vice President of Iran has formed a three-member committee to 'align these payments' with 'laws and regulations.' Meanwhile, the Attorney General stated in a press conference on Sunday that the Inspection Organization, the Court of Accounts, and other supervisory bodies had 'failed' in this regard and 'did not monitor these payments in a timely manner.' Mohammad Jafar Montazeri called for the dismissal of managers who received 'unreasonable salaries' and stated that if these salaries are not returned to the government, they would 'carry out this important task' in cooperation with the Inspection Organization. He also urged the media to investigate this issue 'in a cross-partisan manner' so that 'public trust is not undermined.' Mr. Montazeri added, 'Whether in the previous government, the former government, the current government, or the next government, this undesirable phenomenon is unacceptable.' The publication of salary slips from Hassan Rouhani's government in recent days has also sparked political debate, with some conservatives strongly attacking the government. In contrast, some officials from Hassan Rouhani's government have claimed that these salaries were paid using 'legal loopholes' approved during Mahmoud Ahmadinejad's presidency. In this context, the state newspaper Iran reported on Tuesday, July 1, that according to available documents, 'bonuses of 1.4 billion tomans, 680 million tomans, and 456 million tomans' were paid to the boards of banks and state companies during the previous government. Some conservative websites have also attributed the origin and beginning of high salaries for executives to the governments of Akbar Hashemi Rafsanjani and Mohammad Khatami. Meanwhile, Gholamhossein Mohseni Eje'i, the spokesman for the Judiciary, stated on Sunday in a speech referring to the salary slips that some 'law violations' began during the so-called 'Construction Government,' meaning during Akbar Hashemi Rafsanjani's presidency. He added, 'One of the issues raised during the so-called construction period was that it was announced that ministries and organizations should become self-sufficient and generate some income. Even this permission was granted to some sensitive intelligence ministries.' In contrast, Mohammad Khatami, the former president of Iran, emphasized on Saturday that the origin of this incident 'whoever and whenever it may be, is ugly and condemned' and called on 'senior officials of the system' to apologize to the people. 'The prison sentence of a manager for refusing to provide salary documents' Nasser Seraaj, head of the Inspection Organization, reported that a report from three of this organization's deputy offices regarding 'unreasonable salaries' would be sent to the leaders of the three branches of government on Sunday, and this report 'includes the names of individuals and the amounts received.' Mr. Seraaj also stated without naming anyone that a prison sentence had been issued for a manager of one of the institutions who failed to report the amount of their salary and benefits to the Inspection Organization and 'refused to provide documents and evidence.' He added, 'This individual was sentenced to imprisonment under Article 8 of the Inspection Organization Law, and soon the sentence will be executed due to refusal.' Mr. Seraaj did not provide further details regarding the amount of the prison sentence issued or the timing of this sentence.