Pemimpin Agung Iran, Ayatollah Ali Khamenei didakwa mengawal empayar perniagaan bernilai hampir AS$95 bilion (RM305 bilion), melebihi jumlah eksport tahunan petroleum negara itu.
Menurut laporan siasatan selama enam bulan oleh Reuters, organisasi yang dikenali sebagai Setad tersebut merupakan salah satu kuasa utama yang memegang kepentingan dalam kebanyakan sektor industri termasuk kewangan, minyak dan telekomunikasi di Iran.
Jun lalu, Jabatan Kewangan Amerika Syarikat mengenakan sekatan ke atas Setad dan beberapa pegangan korporat dan menggelar syarikat itu sebagai rangkaian syarikat besar yang menyembunyikan aset bagi pihak kepimpinan Iran.
Susulan daripada pendedahan itu, Pejabat Presiden Iran dan Kementerian Luar enggan memberi sebarang kenyataan balas.
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Reuter investigate assets of the ayatollah
THE ECONOMIC EMPIRE BEHIND IRAN SUPREME LEADER
An organization controlled by Iran’s supreme leader generates billions of dollars a year, helping to solidify his control over a country hobbled by sanctions.
Seven years ago, the United Nations and Western powers began subjecting Tehran to steadily harsher economic sanctions. Around the same time, an organization controlled by Supreme Leader Ayatollah Ali Khamenei started to study how some developing economies managed to grow fast.
According to an account this year by a senior official in the unit that oversees Setad's financial investments, Ali Ashraf Afkhami, the organization also picked the perfect candidate to create an Iranian national champion: Setad itself.
The ayatollah's organization would go on to acquire stakes in a major bank by 2007 and in Iran's largest telecommunications company in 2009. Among dozens of other investments, it took over a giant holding company in 2010.
An organizational chart labeled "SETAD at a Glance," prepared in 2010 by one of Setad's companies and seen by Reuters, illustrates how big it had grown. The document shows holdings in major banks, a brokerage, an insurance company, power plants, energy and construction firms, a refinery, a cement company and soft drinks manufacturing.
Today, Setad's vast operations provide an independent source of revenue and patronage for Supreme Leader Khamenei, even as the West squeezes the Iranian economy harder with sanctions in an attempt to end the nuclear-development program he controls.
"He has a huge sum at his disposal that he can spend," says Mohsen Sazegara, a co-founder of the powerful Islamic Revolutionary Guard Corps military force, who is now living in exile in the United States. "When you have this much money, that's power itself."
Even as Setad was gaining ever-greater control over the Iranian economy in recent years, the Western powers knew of the organization and its connection to the supreme leader - the one man with the power to halt Tehran's uranium-enrichment program. But they moved cautiously, and Setad largely escaped foreign pressure.
In July 2010, the European Union included Mohammad Mokhber, president of Setad, in a list of individuals and entities it was sanctioning for alleged involvement in "nuclear or ballistic missiles activities." Two years later, it removed him from the list.
In June, the U.S. Treasury Department added Setad and 37 companies it "oversees" to its list of sanctioned entities. Khamenei wasn't named in the announcement, but a Treasury official later told a Senate committee that Setad is controlled by the supreme leader's office.
Asked why Khamenei himself wasn't targeted, U.S. officials told Reuters they did not want to play into the hands of Iranian officials who maintain that Washington's ultimate goal in pressuring Iran with sanctions is to topple the government.
"Regime change is not our policy," said one U.S. official. "But putting pressure on this regime certainly is."
By the time Setad felt the pressure, it was already a giant.
As reported in Part 1 of this series, Setad was founded with modest ambitions. Its genesis was a two-paragraph order issued in 1989 by Khamenei's predecessor, Ayatollah Ruhollah Khomeini, shortly before he died. The order directed two aides to sell and manage properties that had supposedly been abandoned during the chaotic years following the 1979 Islamic Revolution, and channel much of the proceeds to charity. The edict ultimately sparked a new organization whose full name in Persian is "Setad Ejraiye Farmane Hazrate Emam" - the Headquarters for Executing the Order of the Imam.
According to one of its co-founders, Setad was meant to last two years. But under Khamenei's control, it remained in business, amassing a giant portfolio of real estate by claiming in Iranian courts, sometimes falsely, that the properties were abandoned. In fact, many were seized from members of religious minorities, and business people and other Iranians living abroad.
Since 2000 it has moved into almost every area of the economy.
In an interview, David Cohen, the Treasury Department's Under Secretary for Terrorism and Financial Intelligence, said Setad now generates "billions of dollars a year" in revenue. He added that "the supreme leader's own money is handled and invested in" a Setad division known as the Tadbir Economic Development Group, although he said the amount isn't known. A Treasury Department spokesman said Tadbir also manages investments for "other leadership figures" in Iran, but didn't name them.
The Iranian president's office, the foreign ministry and Tadbir Economic Development Group didn't respond to requests for comment. Iran's embassy in the United Arab Emirates issued a statement calling Reuters' findings "scattered and disparate" and said that "none has any basis." It didn't elaborate.
Setad's director general of public relations, Hamid Vaezi, said in an email that the Reuters series is "far from realities and is not correct" but didn't go into specifics. In a subsequent message, he said Setad disputes the Treasury allegations and is in the process of hiring U.S. legal counsel to challenge the sanctions.
Setad's total net worth is difficult to pinpoint due to the secrecy of its accounts and because its stakes in companies frequently change. But Reuters was able to identify holdings of real estate, corporate investments and other assets in Setad's control worth about $95 billion. That estimate is based on statements by Setad officials, data from the Tehran Stock Exchange and company websites, and information from the Treasury Department.
About $52 billion of that sum is in property. The head of Setad's real-estate division said the property unit was worth that amount at a press conference in 2008. It is possible that this figure has risen or fallen since then as the portfolio has evolved.
Setad also has an estimated $43 billion or more in corporate holdings, Reuters found:
• The U.S. Treasury Department assessed Rey Investment Co, controlled by Setad, as worth about $40 billion in 2010, the year Setad took control of it. (The Treasury did not put an overall value on Setad).
• Through a subsidiary, Setad bought a 19 percent stake in Telecommunication Co of Iran, the country's largest telecom provider, for about $3 billion.
• Reuters also identified at least 24 publicly traded companies not named in the recent Treasury sanctions in which Setad, or a company it invested in, held a minority stake. At the current official exchange rate, those investments are worth more than $400 million, according to valuations from the Tehran Stock Exchange and data gleaned from the exchange and company websites.
• Reuters further identified 14 companies Setad has investments in - often through other businesses - that couldn't be valued because they are not publicly traded.
The Revolutionary Guards, the powerful military unit tasked with protecting Iran from both domestic and foreign threats, has long held a pivotal role in the country's economy, with extensive holdings in defense, construction and oil industries, according to the U.S. State Department.
Setad gives the supreme leader a significant financial resource of his own, one that greatly adds to his power.
Khamenei appoints Setad's board of directors but delegates management of the organization to others, according to one former employee. This person said the supreme leader is primarily concerned about one thing: its annual profits, which he uses to fund his bureaucracy.
"All he cares about is the number," this person said.
"IT'S LIKE A TSUNAMI"
Details of how Setad has acquired so many stakes in public and private businesses are hazy. People familiar with the organization say it has bought shares on the open market and pressured investors to sell it shares. In at least one case, shares Setad now controls were confiscated from their original owner.
Shirin Reghabi, a teacher now living in California, told Reuters she was a major shareholder in Fars & Khuzestan Cement Co, which states on its website it is Iran's largest cement firm. The shares, which she had purchased several years before the 1979 revolution, were seized more than 20 years ago, she said.
Her husband, attorney Ross K. Reghabi, said when he looked into the matter a few years ago, he learned that the shares had been confiscated by a foundation called Bonyad Mostazafan, but then transferred to another company that was connected to Setad. He estimates the shares are now worth close to $100 million.
"It's like a tsunami now. They are in control of all these companies," he said.
The Reghabis concluded they had no recourse against the ayatollah's organization. "I gave up," Mrs. Reghabi said.
In 2000, Setad took one of its earliest steps to formalize its move beyond property, setting up an investment management firm called Tadbir Investment Co. It would eventually become one of at least five main vehicles through which Setad holds corporate stakes.
Mahmoud Ahmadinejad, a hard-line conservative, was elected Iran's president in 2005, replacing a more moderate leader. Iran holds regular presidential and parliamentary elections, though the real power remains with the supreme leader. Two months later, Tehran announced it had resumed uranium conversion as part of a nuclear program. The West believes Iran wants to build atomic weapons. Iran has long said the program is for peaceful energy development - a position Tehran reiterated in recent days when it and Western powers held marathon talks aimed at a possible rapprochement. Those talks failed to reach a deal; negotiations will resume soon.
In December 2006, the United Nations Security Council imposed sanctions on Iran's trade in nuclear-related materials and technology, and froze assets of key individuals and companies involved in the nuclear program.
A SPECIAL BANK
Meanwhile, Setad was making a push into banking. Parsian Bank had opened for business in 2002, and it was different from other Iranian lenders. It offered interest rates that were slightly higher than government-run banks. But while other financial institutions typically capped the size of their mortgage loans, Parsian was willing to finance 80 percent of a property's value, making financing a real option for many new homebuyers. "People could actually buy houses," said one former employee who requested anonymity.
Parsian was particularly unusual in another aspect: It had a lenient dress code. Men wore ties and women used makeup, which Iran's religious conservatives criticize for contributing to the spread of Western culture.
"People liked to come in the bank just to watch the people working there," said the ex-employee, who added that in its hiring practices, Parsian "was very much valuing people based on brain and intellectual capacity, not based on their connections."
By 2006, Parsian had opened more than 100 branches and become Iran's largest non-state bank. But the institution faced trouble.
According to people familiar with the matter, in 2005, Mohammad Shariatmadari, who had served on Setad's board of directors, asked Parsian's managing director, Abdollah Talebi, for a $44 million loan for a foundation he managed.
Shariatmadari offered no collateral for the loan; Talebi refused. Meanwhile, President Ahmadinejad publicly criticized the lending practices of private banks, accusing them of making huge loans to favored clients. News media reported that he had Parsian Bank in his sights. Under pressure, Talebi resigned as managing director in 2006 and later quit the bank's board after Iran's Central Bank disqualified him for allegedly violating its rules on loans.
Neither Talebi nor Shariatmadari responded to requests for comment.
It was during this period that Setad's investment firm, Tadbir Investment Co, acquired a stake in Parsian. Although the stake was small - a Setad official later suggested it was 16 percent - the former employee likened Tadbir's arrival to "a hostile takeover."
The atmosphere at Parsian changed dramatically, according to the ex-employee. Ties were banned for men. Female employees began receiving letters asking, "Why are you wearing jeans? Why are your lips red?"
New managers arrived. "Even the customers of the bank changed," the ex-employee said. "They brought their own customers and clients."
The bank's board also changed. According to Parsian's website, its members now include Aref Norozi, who it also says serves on the board of Tadbir Investment. Norozi was also head of Setad's enormous real-estate division, which sells and manages confiscated properties. It was Norozi who in 2008 put the value of Setad's real-estate holdings at about $52 billion.
SANCTIONS AND RESILIENCE
Despite the sanctions, Iran's economy grew at a healthy 6 percent in the two years leading up to the financial crisis of 2008. After a sharp drop, growth was back to just below 6 percent in 2010, according to the International Monetary Fund. Oil exports kept the money flowing. Iran exported $70 billion worth of oil in 2009 and $90 billion in 2010, according to IMF figures.
These were years of expansion for Setad. In 2006 or 2007, Setad conducted a study to explore why certain developing countries were outgrowing Iran. The deliberations were described in an interview given to the reformist Iranian newspaper Shargh in April this year by Afkhami, whom the paper identified as chairman of the Tadbir Economic Development Group, the unit that oversees most of Setad's financial investments.
"In South Korea, companies like Samsung, LG and Hyundai have had an impact on development. In China, Japan, Brazil, Germany and America it's the same," said Afkhami. "We saw that in Iran we don't have these large corporations. With this in mind, within the Tadbir Investment Company we started slowly, slowly discussing the strategy of entering various arenas," he told the paper. "This strategy was approved by the management of Setad."
And it was soon implemented. In September 2008, Norozi, then managing director of Setad's property division, announced a restructuring of the entire organization at an official Setad ceremony in the city of Bushehr, according to a report by the semi-official Fars news agency. He said Setad had been transformed "from a collective that sells property into an economic conglomerate" that held investments in publicly traded companies. He said it had invested $833 million so far, including a 16 percent share in Parsian Bank.
Norozi noted that Setad also had another "subsidiary": the Barakat Foundation, which he said "has the duty of eliminating poverty and empowering poor communities."
Shahin A. Shayan, who spent two years working at Goldman Sachs in New York, told Reuters Barakat started about six or seven years ago and was based on a model he developed. A U.S.-born, Columbia University graduate and standout college soccer player, Shayan had spent most of his childhood in Iran and returned there in the mid-1990s.
Shayan said Barakat, a non-profit, was designed to create jobs in rural areas of Iran. The foundation raised capital from private sources, local governments and Setad, and initially began with about $4 million or $5 million, he said. But he said Barakat remained "totally independent from any entity." The foundation offered assistance in agriculture and to food businesses and small mining operations, he said, as well as building schools, roads and houses. "It wasn't billions of dollars," he said.
Shayan said he left Barakat about three-and-a-half years ago. "I wanted to go back and do research and lectures and things like that," he said. He said he didn't know what became of the organization after his departure. "Don't ask me what it is now because I have no idea."
It is now part of Setad's empire, according to the foundation's website.
In his interview with Shargh newspaper in April, Setad's Afkhami said "nearly 100 percent of the income of Setad and the Tadbir Group is placed at the disposal" of the Barakat Foundation. The foundation, he said, had spent more than $1.6 billion in the past five years on development projects, as well as building 200 schools, 400 homes and health clinics.
Setad's claims about its charity spending are impossible to verify because its accounts are not publicly available. Moreover, in the same interview in which Afkhami claimed nearly 100 percent of Setad's income went to Barakat, he later said: "Of course part of the income has been spent on developing companies in the Tadbir Group."
Officials at Barakat could not be reached for comment.
"SENSITIVE LEGAL ISSUES"
One of Setad's biggest deals came in 2009, when it acquired a large minority stake in Iran's biggest telecommunications company, which has a near monopoly on the nation's landline telephone services.
According to a 2010 slideshow prepared by a Setad subsidiary company, Setad that year held 38 percent of a consortium called Tose'e Etemad Mobin Co. A year earlier, the consortium had acquired 50 percent plus one share of Telecommunication Co of Iran (TCI), for $7.8 billion. The buyers got favorable terms: The slideshow says the winning consortium - whose largest stakeholder was a company controlled by the Revolutionary Guards - was required to put down 20 percent and had eight years to pay the rest.
In 2010, Setad obtained control of an even bigger prize: Rey Investment Co, whose value the U.S. Treasury in June put at about $40 billion as of December 2010. A conglomerate within the larger conglomerate of Setad, Rey has investments that include an oil company, a mining company and two ostrich farms. The Treasury Department says Setad took control of Rey Investment after the Iranian government cut off its funding because of alleged mismanagement.
No one at Rey Investment answered the phone despite attempts by reporters to seek comment.
As it grew, Setad began looking outside Iran. In 2010, a unit of the organization tried to woo foreign investors. The organizational chart titled "SETAD at a Glance," written in English, was part of a PowerPoint presentation by Setad-owned electronics firm Iran Mobin Electronic Development Co. The presentation was aimed at attracting a foreign partner.
"Our main expectation," one slide stated, "is to reach to much higher income with an experienced Int'l partner such as KPN." KPN is the largest telecommunications firm in the Netherlands.
A KPN spokesman said: "Naturally KPN respects the trade embargo with Iran. KPN does not and has not done business with this Iranian company."
By this time, Setad was attracting attention in the West. The Treasury Department says Setad used several companies it gained control of in 2010 to bypass sanctions, including transferring funds from Iran to Europe and Africa.
In July 2010, the European Union issued a 12-page list of Iranian individuals and entities it was sanctioning. Among them: Mohammad Mokhber, president of Setad, which the EU described as "an investment fund linked to Ali Khamenei, the supreme leader." Mokhber and the others were cited for alleged links to Iran's nuclear or missile programs, but the EU gave no further details. The action didn't target Setad itself.
The broader sanctions effort grew tougher. That same month, Washington enacted its strictest measures so far, the Comprehensive Iran Sanctions, Accountability and Divestment Act, which targeted Iran's oil and gas sector. The Act, and a series of EU and U.S. sanctions over the following two years, increased pressure on Iran, in particular its energy exports and its banks.
Growth slowed to 3 percent in 2011, and the economy shrank 1.9 percent in 2012. Oil exports have fallen by around 60 percent in the past two years as European and most Asian buyers reduced imports because of U.S. and EU sanctions. Iran now earns around $100 million from oil sales a day, down from $250 million two years ago.
Setad itself, however, managed to evade the tightening noose. In October 2012, without any explanation, the EU removed Mokhber from its sanctions list.
According to a person familiar with the matter, the EU delisted him in an attempt to fend off a broader Iranian legal challenge to financial sanctions on Iran's banks and bank directors. The EU had listed Mokhber as head of Setad and as chairman of Sina Bank. Sina is among the Iranian banks that have won rounds in European courts seeking to lift sanctions on them. It's not clear whether he had filed an appeal.
A spokesman for the EU's foreign affairs chief, Catherine Ashton, declined to comment, saying, "As I'm sure you understand, these are sensitive legal issues and we'd prefer not to say anything."
INFLUENCE SPREADS
The Treasury Department declined to specify how its June sanctions were affecting Setad. It is possible that the new measures will ramp up the pressure on Khamenei's economic empire. And some of Setad's operations, of course, are in sectors such as oil and banking that have been hammered by prior sanctions.
"Sanctions have had a significant impact on the government of Iran and have pushed the Iranians back to the negotiating table," said a Treasury spokesperson.
Because its holdings are so extensive, however, Setad also has investments that remain relatively untouched.
Take the telecommunications industry, a sector the West has largely spared from sanctions.
Setad's TCI affiliate reported a net profit in 2010, the latest year for which figures are available, of $1.54 billion. Setad's share of those earnings would work out to $290 million.
Although Setad holds a minority stake in TCI, its influence can be seen at the highest levels inside the company. TCI's chairman is Mostafa Seyed Hashemi, who previously served as chairman of Iran Mobin, the Setad electronics subsidiary.
Other Setad officials have been named or nominated to top government, military and economic posts in recent years.
The chairman of the board of the Tehran Stock Exchange, Hamidreza Rafiee Keshtli, is a member of Setad's Tadbir Investment, according to the exchange's latest annual report.
Gholam Hossein Nozari, a former oil minister, is chairman of Tadbir Energy Development Co, Setad's energy-holdings division, as well as Pars Oil, in which Setad holds a stake, according to the companies' websites. Iran has been trying, so far unsuccessfully, to have Nozari named secretary general of OPEC, the Organization of the Petroleum Exporting Countries.
In August, newly elected Iranian President Hassan Rouhani named Hossein Dehghan as defense minister. Dehghan served as chairman of Iran Mobin. Last month, Rouhani named Mohammad Shariatmadari - the person who had served on Setad's board and who allegedly sought a loan from Parsian Bank - as vice president for executive affairs.
Keshtli, Nozari and Dehghan did not respond to interview requests.
NO ORDINARY CHARITY
Setad's expansion appears to continue. In May, its charitable foundation, Barakat, announced it was entering "into new pharmaceutical fields," including biotechnology, nanotechnology and gene therapy. The charity runs a unit called Barakat Pharmaceutical Co that, according to the unit's website, has more than 20 subsidiaries and had more than $1 billion in sales in 2011.
One of Barakat Pharmaceutical's units is ATI Pharmed Pharmaceutical Co. Barakat Pharmaceutical describes ATI as a joint venture between it and a Swiss company, Stragen Pharma SA, to produce oral contraceptives. ATI's website displays information about a number of Stragen products that the Iranian company says it has licensed to produce in Iran. It is not clear whether production has begun.
Officials at Geneva-based Stragen - which according to Barakat Pharmaceutical owns 34 percent of ATI - didn't respond to requests for comment.
Last October, Khamenei warned that family planning would lead to an aging population. "One of the mistakes that we made - and I am also responsible for this mistake - is that the issue of limiting the population growth should have been stopped from the decade of the '70s (1991 in the Western calendar) onward," he said in a speech.
"Families and the youth must increase the birth rate, increase the population," he continued. "This limiting of children in homes, the way it is today, is a mistake."
The business empire controlled by Iran's supreme leader had grown so large that it now owned companies whose products Khamenei opposes. That expansion was the direct result of a legal strategy that came from the very top.
(Additional reporting by Yeganeh Torbati in Dubai)
"IN THE NAME OF THE REVOLUTION"
In 1982, with factions and organizations feuding over properties, Khomeini tried to control the chaos, issuing a decree that banned confiscations without a judge's order. "It is unacceptable and intolerable that in the name of the revolution and being revolutionary-minded, God forbid, an injustice should be done to someone," Khomeini declared in the order.
Two years later, in 1984, parliament created a special class of property confiscation courts - dubbed "Article 49 courts" - in each of Iran's provinces. They were a branch of the Revolutionary Courts, which had been established to dispense justice to purported enemies of the republic.
The Article 49 courts continue to operate today, but they failed to end the free-for-all. "In practice, the establishment of the Article 49 courts systematized and continued the expropriations, and even today the confiscations continue," Raeesi said.
The war with Iraq ended in 1988. It left hundreds of thousands of Iranian soldiers and civilians dead. That meant many mouths to feed.
In April 1989, Khomeini issued his brief order that marked the genesis of Setad, whose full name in Persian is "Setad Ejraiye Farmane Hazrate Emam" - the Headquarters for Executing the Order of the Imam.
He directed two senior officials to take over all "sales, servicing and managing" of properties "of unknown ownership and without owners." The revenues were to be spent on sharia issues "and as much as possible" to help seven bonyads and charities he named. The officials were to use the money to support "the families of the martyrs, veterans, the missing, prisoners of war and the downtrodden."
At this point, though he had been president for more than seven years, Khamenei wasn't counted among Iran's first rank of power brokers. The presidency had been stripped of key powers during Banisadr's short rule, because he was viewed as a threat to Iran's new clerical elite.
After Khomeini's death in June 1989, Iran's Assembly of Experts selected Khamenei as his successor. Some senior clerics regarded him as unqualified for the job of supreme leader. He hadn't achieved the required rank among Shi'ite clerics that the constitution stipulated. But key supporters backed a constitutional amendment that sealed his elevation, and Khamenei took office in July.
One of his early acts was to order a cleric to follow up on the creation of Setad. The new organization's decisions, he said in an edict that September, "should be just and based on sharia and without negligence."
The new supreme leader quickly set about cultivating the Islamic Revolutionary Guard Corps, an elite military group that had emerged from the war as one of Iran's most powerful institutions.
Droves of its soldiers had returned in 1988 from the battlefield and were seeking opportunity. He began securing their support by helping them receive lucrative reconstruction contracts.
According to Mohsen Sazegara, a co-founder of the Revolutionary Guards who is now in exile in the United States, Khamenei allowed the Guards to enter the construction business. That opening eventually enabled an engineering division of the Guards to evolve into a major conglomerate.
In time the Guards became a pillar of Khamenei's power. So too did Setad.
By the early 1990s, courts were seizing assets and turning them over to Setad, according to documents reviewed by Reuters. The organization began keeping funds from property sales, rather than redistributing all the proceeds. It isn't clear when Setad began retaining funds or what percentage of the revenue it keeps.
Khamenei, meanwhile, took pains to show Iranians that he was above exploiting his high office. On a visit to his boyhood home in Mashhad in August 1995, he told the story of how while he was president, a next-door neighbor erected a tall building overlooking his yard.
"As a result, my mother could no longer step in the yard without wearing a chador," a long garment worn by devout women in Iran. He asked the neighbor to reconsider, according to an account by Khamenei on his official website, but the owner wouldn't listen.
Khamenei dropped the matter. "Such events bear testimony to the fact that worldly positions and financial means never cause individuals to regard themselves as distinct from the general public, or that they are entitled to live in greater comfort," Khamenei said.
In 1997, the reformist Mohammad Khatami was elected president. Iran's judiciary soon moved to shield Setad from scrutiny. The General Inspection Office is an anti-corruption body that monitors many Iranian institutions and reports to the head of the judiciary, who is appointed by Khamenei. That year, a government legal commission declared that the GIO had no right to inspect Setad unless the supreme leader requested it to do so.
Setad still faced competitors. Among its main rivals for seized assets, according to attorney Mohammad Nayyeri, was another organization: Sazemane Jamavari va Forooshe Amvale Tamliki, or Department for the Collection and Sale of Acquired Property, which is controlled by the Ministry of Economic Affairs and Finance. In 2000, the judiciary adopted a bylaw granting Setad exclusive authority over property taken in the name of the supreme leader.
AN EXPEDIENT RULING
Setad began expanding into corporate investments, taking advantage of another legal initiative by Khamenei.
In 2004, Khamenei ordered a review of Article 44 of the constitution, which mandates state ownership of critical industries. The Expediency Council, a state advisory body appointed by the supreme leader, issued a new interpretation of Article 44 allowing the privatization of major industries.
"What was the goal?" he asked in a 2011 speech. "The goal was to create a competitive economy with the presence of the private sector and its investments in the economy of the country."
In 2006, with the country facing a ballooning budget deficit under its new hardline president, Mahmoud Ahmadinejad, Khamenei issued an executive order to privatize 80 percent of the shares of some state-owned companies. The targets included banks, insurers and oil-and-gas firms. The step, he said, would change the "government's role from direct ownership and management of companies to policymaking, guidance and monitoring."
In 2009, Setad emerged as a victor in Iran's biggest state asset sale, the privatization of Telecommunication Co of Iran (TCI).
Through a subsidiary, Setad held a 38 percent stake in a consortium that was awarded majority control of the telecommunications provider, Iran's largest, according to Setad documents seen by Reuters. The other big winner was the Revolutionary Guards, which controlled most of the winning consortium.
Even before then, Setad had been drawing attention from the reformist wing of the establishment. During Khatami's second term, moderate members of parliament sought to investigate Setad, according to Nayyeri. The Guardian Council, a body of conservative clerics and jurists who are directly or indirectly appointed by Khamenei, issued a declaration that Setad was beyond parliament's authority, Nayyeri said.
Elections in 2008 brought a strongly conservative parliament deeply loyal to Khamenei. In one of its first steps, parliament amended its bylaws to limit its own power to audit institutions under the supreme leader's supervision, except with his permission.
"This is the reason why no one knows what is going on inside these organizations," says Sazegara, the Guards co-founder.
In 2009, hundreds of thousands of Iranians in the so-called Green Movement protested the re-election of President Ahmadinejad. Amid the unrest, one of the two men who established Setad spoke out against the organization.
That man, Mehdi Karoubi, had emerged as a major reformist politician, serving as speaker of parliament and making unsuccessful bids for the presidency in 2005 and 2009. After the 2009 vote, he wrote a letter to a longtime rival of Khamenei in which he reported that Khomeini had intended Setad to last just two years.
Karoubi went on to accuse Setad and Khamenei's other major power base, the Revolutionary Guards, of corruption. In an apparent reference to the TCI privatization, he wrote that they "put the shares of a government ministry in their own name within half an hour. And in the name of privatization they create another saga that continues and completes the recent saga of the presidential elections?"
Karoubi has been under house arrest in Iran since 2011 and couldn't be reached for comment.
Khamenei is sensitive to suggestions that he and his appointees receive special treatment under the law. "No one is above supervision," he has said in a speech, according to a page on his website titled "The Supreme Leader's View of Supervision." "Even the leader is not above supervision, let alone the organizations linked to the leader," he said. "Therefore, everyone should receive supervision, including those who govern the country. Government by its very nature entails accumulation of power and wealth. That is to say, national wealth and social and political power are entrusted to a few government officials. As a result, they must be supervised."
Driving home the point, he added: "I welcome supervision, and I am strongly opposed to evading it. Personally, the more supervision I receive, the happier I will be."
Today, Khamenei's power in some respects exceeds that of his predecessor. He lacks the religious authority of Khomeini but has far greater resources at his disposal.
Khomeini operated from a modest house in northern Tehran with a small staff.
Khamenei lives in a large compound in Tehran. The grounds contain a variety of buildings, including a large hall where Khamenei gives speeches. Setad helps to finance his administrative offices, which are known as Beite Rahbar, the Leader's House, according to a former senior Setad employee and other people familiar with its operations. It employs about 500 people, many recruited from the Guards and security services.
Setad itself remains veiled from the public eye. It is led today by Mohammad Mokhber, a Khamenei loyalist who is also the chairman of Iran's Sina Bank, according to its website. The European Union sanctioned him in 2010 but lifted the sanctions last year, without any explanation.
Setad reveals little about its income, expenditures or staffing. Its headquarters is in a large gray concrete building with small windows in the heart of Tehran's commercial district.
"You won't even notice it even if you are walking by," a former employee said.
In June, Supreme Leader Khamenei congratulated Rouhani upon his election as president. That same month, the chief justice, a Khamenei appointee, issued a fresh declaration of support for Setad. According to the Iranian Students' News Agency, Justice Sadeq Larijani told lower courts that Setad's old rival, the Department for the Collection and Sale of Acquired Property, had no authority to take property in the supreme leader's name.
Setad, the justice reminded the courts, "is the only authorized organization in the issue of property related to the supreme leader."
About the series
Their reporting began with an internal organizational chart. One branch was labeled "Real Estate and Properties Organization." They soon learned that many of the properties Setad controlled had been confiscated from Iranians, whom the reporters began tracking and interviewing across the Middle East, Europe and North America.
They also discovered that Setad regularly sold off seized properties. Using Iranian auction websites and newspapers, they documented how in May alone, Setad had auctioned nearly 300 properties.
Setad's financial dealings are secret. But through internal Setad documents, interviews with former employees, data published by the Tehran Stock Exchange and on Iranian company websites, and information from the U.S. Treasury Department, the reporters were able to assemble a picture of Setad's vast corporate portfolio.
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