The story of the fraud of the Cyrus Company from mobile customers has caused a lot of buzz in news outlets and among ordinary people, to the point that it has even caught the attention of foreign media.

In Iran, the identity and success of some ordinary people is dependent on various structural corruptions. Budget deficits and increasing inflation are the inevitable result of a large economy. In such conditions, some people take advantage of the opportunities provided by such structures to preserve their assets and purchasing power, but they fall victim to fraud and deception. The fundamental question here is why the grounds for fraud and financial exploitation of citizens are so easy and accessible, and why the government has been unable to eliminate such structures? To answer this question and further examine this issue, we sat down with Dr. Vahid Mahmoudi, an economics professor at the University of Tehran, who has conducted extensive research on poverty in Iranian society.

Why is the environment for fraud and financial insecurity still prevalent in our country and why have anti-corruption policies generally been unsuccessful?

If it was not for this, we would be surprised! If we review the index of perception of corruption, we will see that the most corrupt countries in the world are often the least economically free. These countries are mostly poor and less developed.

As mentioned in recent discussions about fraud, this company has used the “Ponzi scheme” to raise people’s money. This method of fraud originated from America and is now being used more and more for financial exploitation. The situation in America in the late 19th and early 20th centuries was not much different from ours, but later they were able to control corruption to a great extent.

When countries are not wealthy, the methods and tools for achieving goals are limited and individuals, due to existing constraints, have a strong motivation to break rules and bypass obstacles in order to reach their goals. With the society becoming wealthier and more options available, it is hopeful that the previous rule-breakers will be restrained and the society will be able to regulate these interactions and institutionalize them properly.

In more developed countries, corruption is still heard of; however, major and blatant cases of corruption rarely occur. In such cases, corrupt individuals must be more subtle and make more effort. Minor daily corruptions are less visible and a certain level of transparency is established.

It is natural in a country under sanctions, whose economy has not seen any growth in the past decade, to be like this. When the options for citizens are becoming fewer and fewer every day and chronic inflation has weakened the moral authority of society, many do not take compliance with the law and a healthy life seriously. In such circumstances, people become more greedy, which is not a strange behavior and may even be the most rational thing to do.

In high inflation and severe uncertainties, it can be seen that the law becomes a technical matter and no one takes it seriously. When we are not sure about our future, it is unlikely that lawfulness will be considered a very attractive option.

In Iran, without continuous economic growth and controlling future uncertainties such as sanctions and political and economic shocks, the fight against corruption will not succeed. In these circumstances, assuming that we are certain of the good intentions of anti-corruption activists, there is not much motivation for individuals to work towards achieving a healthy and corruption-free society.

It should also be remembered that in countries where the government plays a prominent role in the economy, corruption should be expected. The market and competition eliminate the potential for corruption to some extent, and as the saying goes, even if it does not make people more ethical, it at least punishes immorality. However, the widespread involvement of politics in the economy only leads to more corruption.

Sometimes, there are talks about certain officials who blame the people as the main culprit. Who is really to blame for this situation; the people, the government, or fraudulent companies?

Definitely, governments have the main responsibilities of creating order and discipline, defending against enemies, and establishing justice in their respective countries. Therefore, when the grounds for financial insecurity are present in a country, it must be said that the government has not fulfilled one of its main duties. Sometimes, it is heard that some government officials and managers have blamed the people for their responsibilities, which is both ungrateful and considered negligence.

It is true that every individual should research and evaluate the aspects of any economic activity and investment before engaging in it, but the fact that a company with such a large office, staff, and extensive advertising for its activities can suddenly collect people’s money and flee the country, is not related to people’s ignorance or greed, but rather the main fault lies with the government, which is responsible for maintaining order and discipline in the country.

It is stated in the Consumer and Producer Protection Law that any advertisement for unreasonable and exaggerated subjects is prohibited. Now, how can someone offer a prohibited product at a lower price than what is produced in the original company and others not doubt him? The value of this product in the original company is $600. With a profit of $40 million, it comes to 50,000 tomans. The company claimed to sell the product for 20 million tomans. Why has no research and verification been done?

The Ministry of Communications is very strict about the entry of a mobile phone. Even if you are a traveler and have a phone, you must register it. Entering each phone number comes with its own troubles. So how can thousands of phones be sold without anyone noticing their illegality? In places where it doesn’t concern many people, all organizations and institutions get involved. In this matter that was related to many people, why didn’t they do anything about it?

The mentioned incident is clearly related to the Ministry of Economy and Finance, the Central Bank, the Ministry of Communications, and the National Inspection Organization. The main responsibility lies with the Ministry of Justice and its affiliates. How can such actions go unnoticed and this amount of fraud take place?

This topic shows that there is a powerful and behind-the-scenes system that drives its work. The issue of Babak Zanjani, Chai Dabsh, and Kourosh Company cannot be attributed to one person. The advancement of these issues is based on a powerful system that eliminates all forms of supervision. Therefore, my belief is that the main culprit in this matter is the government and its institutions. By government, I mean all three branches.

Usually, in cases like this, a very large amount of money is transferred through the country’s banking system. Now the fundamental question is, what portion of these corruptions is related to banking operations in Iran?

In a healthy economy, the banking system plays the role of blood flow for an individual’s body; if the blood becomes corrupted, all parts of the body will fail. If a country’s economy needs reforms, the first places that will experience the sharp blades of economic surgeons are its banking system. Any legal action you want to take in this country requires a license, otherwise you will face strict consequences. For example, if you want to transfer one billion tomans in a bank, you must provide documents to the bank officials explaining the reason for this transfer. It is strange for such a large amount to enter an account without being questioned.

In general, a large amount of money has been deposited into this account from multiple transactions. The first step in fighting money laundering is for the bank to report this account to higher authorities and for them to investigate why such large amounts have been deposited into this company’s account. The 2 trillion tomans that have been reported in the media is not a small amount. Before the owner of this company fled, the source of entry and exit of this amount should have been questioned.

As an ordinary person, you cannot easily have the financial transaction that Cyrus Company has. The story behind these frauds is not simple. As I mentioned before, there are multiple factors behind these issues.

Unfortunately, our banking system does not have a defendable record; neither in recent events nor in the story of unauthorized financial and credit institutions. The performance of the banking system has been very poor. For example, we have recently heard in the news that the financial and credit institution “Mellat” has received permission from the central bank to change its structure to a bank. This is the same institution that operated under the name “Askeriye” in Mashhad and the protests against its performance began from this very institution. Our people do not have good memories of these institutions. The Rouhani government resorted to the National Development Fund to pay off the people’s debts and of course, the people themselves paid double the cost due to the 45% inflation.

As a final word, what should be done to dry up the root of this type of fraud?

It seems that solving these problems requires serious determination from the government and ruling powers of the country as a whole to definitively address these economic issues. The solution to these problems also requires deep and structural changes that must take place in the economy.

It is not true that we only know the phenomenon of Ponzi schemes in Iran and say that these types of frauds only happen in our country. That is not the issue. What has caused disappointment and anger among people is the increase in the number of these types of frauds. The smaller, more transparent, and more competitive the economy is, the less network corruption and fraud will occur.

These companies and such issues are the result of instability in commercial laws, the proliferation of non-tariff barriers in an economy, and lack of transparency in commercial laws, informational rent and lack of transparency in the country. All of these factors have worked hand in hand to harm a large group of people and benefit a minority, allowing them to pocket large sums of money.

Inflation and declining economic growth are the result of corruption and financial insecurity in the country. As long as these obstacles remain in the way of sustainable economic growth and controlling inflation, we cannot expect a healthy economic environment. These require serious determination from decision-makers and leaders in the country.

Thank you for the opportunity you have given us in the Khatt-e-Solh magazine.