Oil Mafia and Passdaran’s Billion-Dollar Contracts

Hamid Ahadi, Rooz Online:

Following the signing of an agreement for $7 billion between Iran’s Oil Ministry and the Khatam al-Anbiya Reconstruction Organization belonging to the elite Passdaran Revolutionary Guards Corps, informed sources have expressed their concerns that the events that had in the past followed the Passdaran’s intrusion into business activities at the expense of murders, imprisonment of investors, suspension of investments, and the flee of managers would be repeated again, and there would be no body to contain the destructive consequences of the trend. READ MORE

The disclosure of the events that led to this large contract, and the purchase of shares of the Oriental Oil Kish, one of Iran’s largest private oil companies with controversial management, were the reasons for the negative publicity of Iran’s hardline media against the company and the hostility of the Passdaran to the management of this oil enterprise. Fars news agency, which is under the influence of Iran’s hardliners, quoted ‘an informed source’ and revealed that the value of Oriental Oil Kish was about $90 million, and that ‘talks for a final price were underway.”

Oil Kish was created about four years ago through a number of private investors and the express permission from senior officials of the Islamic regime. The mission of the company was to develop oil and gas resources over fields that Iran shares with some of its regional neighbors. Soon, the company won on-shore and off-shore contracts for its mission. This included Paydar fields shared with Iraq, Foroozan offshore fields shared with Saudi Arabia, and Salman and Hengam fields shared with Qatar. But perhaps the biggest victory for the company came when it acquired permission to work with the American giant Halliburton.

Even at that time some had informed the company that they would not be able to cooperate with it without the participation of individuals connected to the military. Oil Kish rejected those warnings. And that is when the ‘revelations’ about the company began to appear in the pro-government media such as Keyhan newspaper and Baztab news website which has strong links to the economic branches of the Passdaran. The first attacks were for the cooperation that the company was pursuing with Halliburton, which forced Oil Kish to cancel. But the pressures continued leading to the arrest of Sirus Nassseri, the vice-chairman of the Board of Directors of the oil company, who was also a member of Iran’s negotiating team with the international community over the nuclear issue. This forced the company to suspend its activities altogether.

At the same time, Oil Kish began to have a formidable rival every time it bid for a contract from no other than Passdaran Corps’ Khatam al-Anbiya Reconstruction Organization. But the Khatam company mostly lost the competition due its lack of expertise.

When Mahmoud Ahmadinejad became president last year and announced his policy of fighting the oil mafia, the ground-work for arresting the mangers of Oil Kish gained momentum. In one of their first acts, supporters of president Ahmadinejad tried to install a Passdaran commander as the minister of oil, which was rejected by the Majlis (Iran’s Parliament). Vaziri Hannaneh, the then minister of oil displayed his decision not to participate in the fake scandals under the name of ‘oil mafia’ and thus did not remove the valuable managers and personnel of the oil industry. This is when the battle went underwater, but continued even more fiercely, but eventually reached a compromise.

Apparently, with that agreement, the managers of Oriental Oil Kish company, including Nasseri, were acquitted while the Passdaran Revolutionary Guards Corps were the given the oil contracts, while it would purchase all the shares of Oriental, including its contracts. This happened last week when Rahim Safavi, the supreme commander of the Passdaran signed the multi billion dollar contract with Khatam al-Anbiya.

It is reported that Passdaran’s commercial organization which is now the largest business and economic trust in the country, especially in the oil sector, had as its goal to achieve this status even from the days of the presidency of Mohammad Khatami in the late 90s. In those days, however, few thought it would succeed in its goal. But as events have turned out, the recent $7 billion contract was signed without the normal bidding process and outside any controls.

A veteran oil industry specialist said of the recent contract that Khatam al-Anbiya is not going to implement anything and only acts as a primarily contractor who will subcontract the actual work to others, mostly foreign experts, thus reaping large profits as a middle-man. What is worrisome, he said is that this new arrangement may again produce the same kind of criminal activities that took place when the military institution got involved in business deals in the past.

This is why two Majlis deputies have already asked cabinet ministers to appear before the legislature and respond to the questions about contracting the oil deal to the Passdaran and what is the role of the private sector in the arrangement.