If toothless federal regulations is your pet cause, look to Iran for inspiration: It just sentenced four bankers involved in a billion-dollar financial scandal to death. On Monday, an Iranian court dished out sentences in the country's biggest bank-fraud scandal to date: The embezzlement of $2.6 billion. Besides the four death sentences, 39 people were tried, two people were sent to life in prison and the others received jail sentences of up to 25 years. By comparison, Bernie Madoff, who defrauded investors of more than 20 times that amount, will live to see another day and not a single top finance exec has faced U.S. criminal charges since the economic collapse began. While Wall Street critics in this country aren't literally blood thirsty, it's a bold crackdown on financial malfeasance nonetheless. But before you start lobbying for Mahmoud Ahmedinejad as the next Securities and Exchange Commission chairman, there are a few things about this case you should know.
For one, it's kind of sketchy, and probably involves collusion with Iranian government officials at some level. As Al Jazeera points out, there are continued allegation that the embezzlement scheme was carried out by people "close to the political elite" or with their tacit approval. "The case has been politically awkward for Iran's leadership as it aims to show it is tough on corruption and raised questions about whether the government's privatisation drive has largely benefited friends of the political elite," writes Al Jazeera. "The man described by Iranian media as the mastermind of the scheme, businessman Amir Mansoor Khosravi, is said to have forged letters of credit from Iran's Bank Saderat to fund dozens of companies and buy a state-owned steel factory." The former head of Iran's state-owned Bank Melli, resigned over the scandal and skipped town for Toronto, where he owns a $3 million home.
Another aspect of this case that should be familiar to American audiences is the lack of prosecution of top level executives. As The Guardian reports, allegations are rife that the judiciary only cracked down on low-level conspirators in the fraud, leaving senior officials and executives unscathed. "Many other banking officials are outside of prison right now. Why are you able to put us on trial and have nothing to do with them?" said an unnamed steel company official, a defendant in the case, according to Iran's Fars news agency.
Thirdly, it appears the harsh sentencing has more to do with political pressure than following the letter of the law. As The New York Times' Christine Hauser reports, Ahmedinejad's political opponents have been hammering him on this scandal, which plays well given Iran's sky high inflation, heavy international sanctions and overall dreadful economic outlook. "The case had political significance for ... Ahmadinejad, whose conservative opponents in Parliament tried to tie his chief of staff, Esfandiar Rahim Mashai, and other associates to the main suspect, Amir-Mansour Khosravi, a businessman who owns at least 35 companies," she writes. "Mr. Mohseni-Ejei has said that Mr. Khosravi confessed while in custody and started cooperating with the authorities. The other suspects were not named, but have been said to include managers of bank branches, and a number of clerks who were accused of accepting bribes. Fars quoted Mr. Mohseni-Ejei as saying that the other sentences that were handed down included prison terms of 10 and 20 years, as well as lighter sentences." Obviously Iran isn't a beacon of court room justice: Transparency International ranked Iran 120 out of 183 countries in 2011. But it's certainly a spectacle to see at least some bankers get nailed on fraud charges.