chapter  5
Conglomerates in Iran: The political economy of Islamic Foundations
Pages 24

In the aftermath of the Iranian Islamic Revolution in 1979 the newly established Islamic state confiscated the assets of the 51 largest Iranian industrialists and their families, who were accused of having profited from ‘illegitimate ties’ with the regime of the Shah, as well as the property of the Shah family. These assets are now mainly under the control of para-governmental semipublic Foundations, bonyads. Originally, these Foundations were established as charities for the poor. In reality, however, they are operating as paragovernmental organisations, and they play a significant role in the economic and political scene of the Islamic Republic of Iran (IRI). The Islamic Foundations are estimated to account for 35 per cent of Iran’s total gross national product (GNP), controlling over 40 per cent of the non-oil sector of the Iranian economy. All Foundations claim that they are welfare-oriented, non-profit groups. For example, they are supposed to use the profits from their enterprises for the poor, for the provision of inexpensive housing, health care and other social services. In reality they make great profits and financially support members of the Iranian Islamic political elite (from now to be referred to as the political elite). These tax-exempt organisations mainly focus on business, production and banking, but also political propaganda, social services and art. As Islamic charities, they are tax-exempt, receive favourable exchange rates, and have a monopoly on import/export and all major industries.