The Major Corruption in Masjed Soleyman Petrochemical
What is happening in Masjed Soleyman Petrochemical? According to Iran Gate, the petrochemical industry during sanctions, due to its foreign exchange transaction characteristics, is recognized as a suitable area for exploitation by sanction profiteers and economic corruptors. The Masjed Soleyman Petrochemical complex has also become a playground for profiteers under the shadow of sanctions and the failure to revive the JCPOA.
The Masjed Soleyman Petrochemical complex was built in 2019 in the Zilayi area of Masjed Soleyman County, covering an area of 400 hectares. Located 130 kilometers northeast of Ahvaz and 30 kilometers from Masjed Soleyman city, it operates in the production of products such as ammonia and urea. Given the high foreign exchange earnings of the petrochemical industry, the Masjed Soleyman Petrochemical Holding was established and became operational during the twelfth government to reduce the pressure of sanctions on the country’s economy.
The production lines of this complex became operational in May 2021, and the company succeeded in producing urea and ammonia. In other words, the investment made during the twelfth government was handed over ready to Ibrahim Raisi’s government. However, reports from this company indicate serious suspicions regarding the sales contracts of this industrial complex.
A Contract That Was Never Executed
The pressure of sanctions and the inefficiency of the thirteenth government’s policies in foreign trade have led to a decline in sales for producers in various fields, including petrochemicals. The Masjed Soleyman Petrochemical Holding is one of them. However, most companies active in this field, due to their strong background, have so far been able to withstand the pressure of sanctions. But this is not true for the young and new Masjed Soleyman Petrochemical Company.
According to reports available to Iran Gate, the officials of this company, in order to provide the necessary liquidity to continue the holding’s activities, have entered into a contract for the immediate sale of urea. As mentioned, due to the company’s failure to sell its products at the beginning of this year, it entered into a suspicious contract.
During a meeting held by the company’s officials, the sales committee finalized a contract on June 18, 2022, between Masjed Soleyman Petrochemical Company and Pars Saba, a trading company of the National Pension Fund. It should be noted that this meeting was held at the Pars Saba office with the presence of the CEOs of both companies.
In this meeting, where the parties discussed the problems and obstacles of production and sales of petrochemical products, it was decided to conclude a contract between the two entities for the immediate sale of urea produced by Masjed Soleyman Petrochemical Industries.
This happened while the petrochemical company urgently needed liquidity due to the fear of a gas supply cut in the production unit. Ultimately, according to the agreement, Saba International was to immediately purchase 50,000 tons of urea from Masjed Soleyman Petrochemical Company to save the complex from issues such as gas supply cuts. According to the agreement made in this meeting, each ton of urea was to be immediately provided to Pars International for $470 in cash by Masjed Soleyman Petrochemical.
However, according to reports available to Iran Gate, after the aforementioned meeting, the immediate and cash sale and other contract resolutions were halted, and the emergency liquidity supply channel for Masjed Soleyman Petrochemical Company was blocked.
Crisis in Masjed Soleyman Petrochemical
Following the events mentioned earlier, actions were taken against the managers of both companies, particularly the then CEO of Masjed Soleyman Petrochemical. As a result, the CEO was removed from the board of directors, and his powers in product sales were handed over to specific individuals.
This action led to an illegal procedure in product sales. On the other hand, some reports indicate ambiguities in the company’s income and the provision of the necessary liquidity for this complex. According to findings from some informed sources and their comparison with official references and the company’s financial statements, it seems that a portion of the revenue from the company’s sales has been inexplicably removed from the income line.
Five Mysterious Companies
Findings from Iran Gate indicate that a significant portion of this company’s production has been transferred to 5 domestic and foreign companies. According to these reports, Anka Energy received 30,000 tons, Destiny Universal 30,000 tons, Wuhan Engineering Company 50,000 tons, Rayhan Group 30,000 tons, and Ringfield Company 22,000 tons in one day and illegally received their PIs.
Meanwhile, each of these companies, which will be detailed later, purchased Masjed Soleyman Petrochemical products at $50 to $60 below market price. This is one of several suspicious instances that occurred in the absence of a sales committee and due to the illegal sales process and PI issuance.
Naturally, each of these five companies, due to the high profit margin from this contract, should have quickly proceeded to deposit the funds. But where is the problem? However, several important questions arise in this regard. The first point is why the execution of the legal resolutions of the sales committee stopped on June 18, 2022. On the other hand, the reason for not holding an official sales committee meeting is unclear to anyone.
As previously mentioned, the issuance of PIs at different and significantly below market prices has not been mentioned in any report. But this action not only led to corruption within the complex but also affected the country’s urea market due to the large volume of contracts with the five mentioned companies. In other words, due to the below-market price offering of urea by specific individuals in Masjed Soleyman Petrochemical, the market rate was also broken.
There are many beneficiaries of this event, including foreign buyers and some domestic brokers. Foreign applicants naturally succeed in obtaining underpriced raw materials needed by them through this action. Brokers, due to paying lower costs, have gained much higher profit margins. On the other hand, it should not be forgotten that Masjed Soleyman Petrochemical Company, due to its urgent need for liquidity, was forced to sell its products urgently. But this level of discount has resulted in a large portion of the production costs not returning to the company’s account. In other words, the opportunity cost for Masjed Soleyman Petrochemical Company is another matter that should be considered.
Mireid Shushtari and His Role in This Case
First of all, it should be noted that according to the resolutions of the Masjed Soleyman Petrochemical sales committee, no intermediary can be present in all stages of product sales. But according to existing evidence, brokers and intermediaries have had an active and prominent presence in dealings with the five mentioned companies. However, Mireid Shushtari’s trace is clearly evident in all illegal urea sales stages over the past two months.
Meanwhile, the issuance of different PIs with varying prices in just one working day raises the question of what role the mentioned individual played in concluding sales contracts. This is while, according to the sales committee’s regulations, issuing a PI without coordination with the board of directors and below market price is not possible.
As previously mentioned, Iran’s urea market has suffered severe damage. Based on the PIs issued by Mireid Shushtari and despite the significant price increase of urea in global markets, the country’s petrochemical industry has been severely damaged. As such, the corruption case in Masjed Soleyman Petrochemical Company is not limited to this industrial complex but has national dimensions and is a clear example of disruption in the country’s economic system.
According to informed sources and the comparison of sales prices by Mireid Shushtari with the Codal system and global markets, a damage equivalent to $50 per ton of urea has been inflicted on Masjed Soleyman Petrochemical Company. This is while, due to the Ukraine war, most commodity prices have been rising, but Iran’s urea market is in severe recession.
On the other hand, shareholders of other petrochemical companies were wondering why, despite the global price surge of urea, their shares were facing losses. Now it becomes clear that part of this loss is the responsibility of the officials who concluded the aforementioned contracts, with Mireid Shushtari being one of these individuals. Iran Gate’s calculations indicate a direct loss and opportunity cost of $8,196,000 for Masjed Soleyman Petrochemical Company in just five cases of illegal urea sales contracts by Mireid Shushtari.
In other words, it can be said that in just five cases of illegal transactions over the past two months, more than $8 million in damage has been inflicted on the country’s petrochemical industry. This loss, according to informed sources, has partly gone into the pockets of brokers and sanction profiteers and should be legally pursued. Now, if the extent of the damage to the overall urea market in Iran and the companies producing this petrochemical product is calculated, we will certainly reach much larger numbers that are beyond imagination.
This report has been exclusively prepared and organized by Iran Gate. Such content in Iran Gate is classified as a special case. You can view other cases such as ‘Behind the Investigation of Mobarakeh Steel’ and ‘Decoding Steel Gate: The Corruption Case of Mobarakeh Steel Isfahan’.
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