Kuwaiti citizens have lost hundreds of millions of dollars as a result of the collapsing investment firms in Iran, Kuwait’s al-Qabas Arabic daily reported. According to the paper, a sizeable number of Kuwaitis have invested in Iran’s investment institutions that offer returns of more than 20 percent, which is significantly lower than the profit offered by Kuwaiti banks and investment schemes. One money-laundering expert told al-Qabas that there are no official statistics about the number of Kuwaiti citizens and companies that have invested in Iranian commercial schemes and credit institutions; nor is there any information about how much they have invested. Even if the Iranian government, for domestic political reasons, compensates Iranian citizens who have been defrauded, the report adds, foreigners, including Kuwaiti depositors, will receive no compensation.
Quoting unnamed sources, the paper explained that transactions between the banks in Iran and the depositors – or between the Iranian banks and their intermediaries – are not officially recognized as those transactions have been carried out through “informal and illegal ways”. It noted that several Iranian financial firms went bankrupt last year, while many others such as Mehr Bank, Iran Zamin Bank, and Pasargad Bank have stopped disbursing funds to the depositors for unexplained reasons.
Comment: The collapse of financial institutions was a key factor behind the latest anti-regime protests that rocked Iran a month ago. Tens of thousands of Iranians have recently lost their savings as investment firms defrauded the people or went bankrupt because of corruption and mismanagement. This is because many of these firms are owned and run by IRGC or religious institutions. Videos circulating in social media showed that protesters set fire to many IRGC banks and credit firms across the country. A week ago, Iran’s Central Bank stopped issuing permits for new private banks or commercial lenders.
The report in the Kuwaiti paper, however, adds a foreign dimension to the crisis of the credit institutions in Iran. The report claims that individuals and firms from other Middle Eastern countries have also invested billions of dollars in Iranian investment schemes or credit firms for the promise of unsually high returns. All of them are at risk of losing their money now, it points out. The report also sheds new lights into the broader informal financial transaction system in the Middle East that helps state and non-state companies, such as IRGC firms, evade sanctions, launder money, and make profits.
By Ahmad Majidyar | Fellow and Director of IranObserved Project – The Middle East Institute | Jan 30, 2018