(Bloomberg) — A notorious Iranian gold dealer known as the “Sultan of Coins” was among three men sentenced to death this week in the strongest warning yet to officials and merchants not to exploit the country’s financial troubles as the next round of U.S. sanctions loom.
The verdicts came a day after the central bank was given more powers to intervene in currency markets to help stop a slide in the rial that has gathered pace since the U.S. in August reimposed a ban on the Islamic Republic trading in dollars.
From early November, sanctions on Iran’s exports of crude oil, its main earner of foreign currency, come into force. Though some major purchasers are already buying less, inflows of dollars and euros are expected to decline further as the embargo formally resumes.
Death sentences were handed to 58-year-old Vahid Mazloumi, popularly referred to in Iranian media as the “Sultan of Coins,” Mohammad Esmail Qassemi and Hamid Bagheri-Dermani, the semi-official Tasnim news quoted judicial spokesman Gholamhossein Mohseni-Ejei as saying on Monday. The sentences still need to be ratified and the defendants can appeal, Mohseni-Ejei said a day earlier.
Mindful of growing public anger over the deteriorating economy, the government embarked on a drive to root out corruption and punish speculators it blames for exacerbating the currency crisis. The investigation, led by the judiciary, targets companies and government officials suspected of receiving kickbacks on foreign-import licenses or manipulating the currency market. The judiciary announced last month that at least 120 people, including state employees, had been arrested.
Growing public anger over the deteriorating economy.
As Sanctions Hit, Iran’s on the Verge of Economic Breakdown
Mazloumi, who’s traded gold and foreign currency in Tehran’s Grand Bazaar for three decades, was arrested on July 2 for buying two metric tons of “bahar-e azad” gold coins and then re-selling them at higher rates, Tasnim reported in July, quoting Tehran police chief Hossein Rahimi.
Bahar-e azad coins weigh around 8.13 grams and are a staple investment in Iran. As the rial’s value tanked, gold coins have more than quadrupled in value. The spike has been blamed both on safe-haven-buying and on dealers like Mazloumi accused of hoarding to exploit anxiety over the economy and profit from higher prices.
Deal Exit
Mazloumi has been arrested at least twice before including in 2012 when he was detained for illegally trying to leave Iran from the western city of Marivan, Tasnim reported last month, citing Tehran’s Deputy Prosecutor Morteza Torak. Torak said then that Mazloumi also had “close ties to a senior manager at the Central Bank of Iran,” whom he didn’t name name but said has since been arrested.
Mazloumi also had “close ties to a senior manager at the Central Bank of Iran.”
Earlier this month, Iran’s former central bank governor, Valiollah Seif, who is facing investigation for currency-market abuses, was banned from leaving the country. Seif headed the central bank for five years but faced criticism for failing to stop the collapse of the rial. He was replaced by Abdolnaser Hemmati in July.
The rial started to decline dramatically ahead of President Donald Trump’s announcement in May that the U.S. would withdraw from the 2015 deal to curb Iran’s nuclear enrichment program in return for an easing of international sanctions. A dollar now trades for about 160,000 rials on unlicensed markets, from about 50,000 in February.
Government attempts to stabilize the currency, which have seen it shut down unofficial money changers, have mostly failed or backfired as demand for the greenback has risen. The U.S. currency is prized as a safe haven in times of trouble.
On Saturday, the central bank was given more authority to intervene in currency markets, working directly with commercial lenders and foreign-exchange dealers. The changes also offered incentives for exporters to sell foreign currency acquired through private transactions on an official trading platform in order to improve liquidity.
