Iran Corruptions network: “Sultans” Are Destroying Its Economy, But the Regime Cannot Survive Without Them

By Meir Javedanfar

AI-generated image of Mojtaba Khamenei.

Between 2019 and 2022, an Iranian company importing tea received roughly $3.4 billion in subsidized foreign currency. The scandal was exposed in 2023 and later implicated more than 60 people, including two former ministers. 

But the real story was not tea. It was power. No company could secure billions in state currency without access to ministries, banks, customs officials and political protection. Iran’s “Sultans” do not operate outside the Islamic Republic. They are created by it.

That is Mojtaba Khamenei’s dilemma: the networks bleeding Iran’s economy are also the networks keeping his regime alive. The Ayatollah may need to slay his Sultans. But his throne rests on their shoulders.

From the Shah to Iran’s New Sultans

In 1979, Iranian revolutionaries overthrew the monarchy of Mohammad Reza Shah Pahlavi. They promised to replace royal privilege with social justice and return the country’s wealth to ordinary Iranians. Instead, another form of aristocracy gradually emerged.

Iranians frequently use the title “Sultan” to describe politically connected businessmen who gain disproportionate control over important markets. Iran has produced a “Sultan of Cars,” a “Sultan of Sugar,” a “Sultan of Coins,” a “Sultan of Petrochemicals” and numerous other operators accused of hoarding goods, manipulating prices or exploiting privileged access.

In one notorious case, Vahid Behzadi—dubbed the “Sultan of Cars”—was accused of disrupting Iran’s automobile market, currency smuggling and money laundering. Iran’s judiciary sentenced Behzadi and his wife to death in 2020, although the verdict remained subject to appeal.

The language of “Sultans” is revealing. It reflects the widespread Iranian understanding that entire sectors of the economy have been divided among politically protected operators. Italy’s Mafia has capos who manage enterprises and distribute profits upward. Iran’s regime has its Sultans. But Iran’s Sultans are not merely independent criminals who happen to operate under a weak government. They function inside a political economy  dominated by the Islamic Revolutionary Guard Corps, the supreme leader’s office, religious foundations known as bonyads, and iran corruptions networks of loyal intermediaries.

Iran Corruption Network Is Built Into the Islamic Republic

It would be comforting to believe that Iran’s economy could be rescued by prosecuting a few profiteers. That diagnosis, however, misunderstands how the Islamic Republic governs.

The IRGC is not merely a military organization. Through its Khatam al-Anbiya Construction Headquarters and associated companies, it has become one of Iran’s most powerful economic actors, operating across construction, energy, petrochemicals and infrastructure.

The U.S. Treasury describes Khatam al-Anbiya as an IRGC-controlled conglomerate that undertakes multibillion-dollar projects in the oil, petrochemical and infrastructure sectors. The revenue generated by those projects strengthens the organization that protects the regime at home and advances its military objectives abroad.

Iran’s bonyads are equally important. These ostensibly charitable foundations control vast commercial assets while operating with little meaningful public oversight. Major foundations and supreme leader-controlled conglomerates—including Bonyad Mostazafan, Astan Quds Razavi and the Execution of Imam Khomeini’s Order—control extensive portions of Iran’s economy. These organizations have been accused of enriching senior officials, rewarding loyalists and exploiting property seized from political dissidents and religious minorities.

This is the central point: these economic empires do not merely steal from the Islamic Republic. They help sustain it. They provide money, contracts and employment to politically reliable constituencies. They give the IRGC and other security organizations a direct financial stake in the regime’s continuation. They allow senior officials to reward loyalty without transparent parliamentary oversight. They also help support repression, sanctions evasion and Iran’s regional military networks.

The Sultans are therefore not an accidental corruption of Iran’s revolutionary state. They are among its products.

Iran’s Economy Was in Crisis Before the War

This system was already failing Iran before the latest war. The conflict has made the situation considerably worse. Iran entered the war burdened by chronic inflation, weakened investment, sanctions, unemployment, deteriorating infrastructure and widespread public distrust. War damage and disruption to trade, energy production and industrial activity have added another layer to these longstanding structural problems.

Iran now faces a toxic combination of recession, collapsing purchasing power and rapidly rising prices. Ordinary Iranians will bear the greatest cost. For Iranian families, inflation means reducing purchases of meat, dairy products, medicine and other essentials. It means salaries lose value before they are paid. It means young people facing unemployment while politically connected businesses continue to receive state contracts, subsidized financing and protection from competition.

The regime may blame foreign sanctions and war for Iran’s economic hardship. Both have unquestionably inflicted damage. But they do not explain why the costs are distributed so unevenly—or why regime-connected organizations continue to accumulate wealth and influence while the public becomes poorer.

How the IRGC and Iran’s Sultans Fuel Inflation

Iran’s monopolies and patronage networks worsen inflation in several ways. First, politically protected firms can charge inflated prices because they face little genuine competition. The automobile industry is a prominent example. Iranian consumers routinely pay high prices for vehicles criticized for poor quality and inadequate safety. Yet the largest manufacturers and their associated networks remain protected by import restrictions, tariffs and political connections.

Second, regime-linked intermediaries control substantial parts of Iran’s foreign trade, including sanctions-evading oil sales. These networks often operate through front companies, offshore accounts, covert shipping arrangements and opaque foreign-exchange transactions. Iranian oil revenue therefore does not necessarily pass transparently into the state budget. Some of it can be absorbed by middlemen, military institutions, foundations and elite networks before it reaches the public treasury.

Third, the IRGC, bonyads and other powerful organizations use their political influence to obtain state contracts, favorable exchange rates, subsidized credit and large budget allocations. When government revenue fails to cover spending, the state turns to the banking system and expands the money supply. More currency then chases a limited supply of goods, weakening the rial and pushing prices still higher.

Iranian economists have long compared inflation to cancer. But that metaphor should not suggest that corruption is a foreign growth attacking an otherwise healthy body. In Iran, the tumor has been integrated into the state’s vital organs.

Why Mojtaba Khamenei Cannot Simply Fight Corruption

In theory, Mojtaba Khamenei could attack these networks. He could break monopolies, force regime-linked businesses to publish their accounts, end no-bid contracts, recover missing oil revenue and subject the bonyads to taxation and parliamentary scrutiny.

He could limit the IRGC’s commercial activities, reform the banking sector and permit genuine private-sector competition. But such measures would not merely inconvenience a group of corrupt businessmen. They would threaten the material interests of the IRGC, the bonyads, clerical foundations, sanctions-evasion networks and influential families on which the supreme leader depends.

Iran’s security institutions are loyal not only because of ideology. They are bound to the system through salaries, contracts, companies, foundations, import licenses, smuggling routes and privileged access to national wealth.

This is why anti-corruption campaigns in Iran so often become selective purges. Individual Sultans may be arrested, publicly humiliated or even sentenced to death, but the machinery that produced them remains intact. The regime slays a Sultan without abolishing the Sultanate.

The 2017 Iran Protests Show the Danger

The regime also understands that economic grievances can rapidly become political. In December 2017, protests began in Mashhad amid anger over rising prices, unemployment, failed financial institutions and deteriorating living conditions. Some Iranian politicians and analysts suspected that hardline opponents of President Hassan Rouhani had initially encouraged demonstrations to weaken his government.

If that was the intention, the strategy quickly escaped their control. The protests spread from Mashhad to more than 100 cities and towns within days. Demonstrators moved beyond complaints about prices and corruption and began denouncing the Islamic Republic itself. At least 20 people were reported killed, while an Iranian parliamentarian said approximately 3,700 people had been arrested.

The unrest delivered two warnings. The first was that regime factions could mobilize economic anger against one another. The second was that once ordinary Iranians entered the streets, their anger would not remain confined to one president, ministry or economic grievance. Protests that began over prices became protests against the Islamic Republic. Iran has since witnessed the same pattern repeatedly. Economic desperation opens the door, but political fury soon walks through it.

Iran’s Economic Crisis Is a Crisis of the Regime

Mojtaba Khamenei may conclude that he must act against Iran’s Sultans to prevent another explosion. But dismantling the networks that dominate the economy would mean attacking the financial foundations of the Islamic Republic itself.

This is where the central distinction matters: economic reform should not be confused with political redemption. Even a serious campaign against corruption would not absolve the Islamic Republic of decades of repression, hostage-taking, regional destabilization or the diversion of Iranian wealth toward ideological and military projects.

Nor is genuine reform likely while the same institutions controlling large portions of the economy also control the guns, prisons, courts and intelligence agencies. Iran’s crisis is not that a fundamentally healthy state has been captured by a handful of corrupt Sultans. The crisis is that the Sultans, the Guards, the bonyads and the supreme leader’s office have become an interdependent system.

Mojtaba Khamenei’s Impossible Choice

The Islamic Republic is trapped between two forms of instability. If Mojtaba Khamenei leaves the Sultans untouched, monopolies, diverted revenue and uncontrolled spending will deepen inflation, unemployment and public anger. After years of repression, sanctions and war, another economic shock could trigger protests directed against the regime itself.

But if he genuinely dismantles those networks, he will weaken the institutions that protect his rule. To rescue Iran’s economy, Mojtaba Khamenei would have to destroy much of the political economy sustaining the Islamic Republic.

To preserve that political economy, he must allow it to continue destroying Iran. The Ayatollah may need to slay his Sultans. The problem is that without them, his throne may not survive.

Dr. Meir Javedanfar is an Iranian-Israeli lecturer, author, and commentator. He teaches various Iran-related courses at Reichman University in Herzliya, Israel. His X handle @Meirja.