Iran’s supreme leader built a real estate empire on seized property

Iran’s supreme leader built a real estate empire on seized property

By Tim Fernholz @timfernholz 6 hours ago

When we found out that Iran had secretly owned a Manhattan skyscraper for decades, we knew the country’s rulers had a talent for moving money, but a new Reuters investigation has revealed a $95 billion corporate empire controlled by Iran’s supreme leader, Ayatollah Ali Khamenei. At least some of that revenue comes from the confiscation of property from religious minorities and other presumed enemies of the state, Reuters reports, and the organization, known in Farsi as Setad Ejraiye Farmane Hazrate, provides Iran’s supreme leader with significant economic clout and independence from the elected government. Iran’s parliament even declared that it would be prohibited from exercising any oversight over the Khamenei’s business interests in 2008.Setad reported $52 billion in real estate investments in 2008. Today, that would make it larger than major real estate firms like the US’s Simon Property Group and comparable to Blackstone, which bills itself as the largest private real estate fund in the world with $69 billion in assets under management.

Setad was originally set up by the first supreme leader after the 1979 revolution in Iran, which overthrew a Western-backed autocracy in favor of an Islamic government. It’s public mission was intended manage properties abandoned or seized during the revolution for charitable aims and then shut down when the assets were disposed of.

Under Khamenei, who came to power in 1989, Setad has grown into a massive conglomerate. According to the US Treasury Department, which has sanctioned its holdings, Setad controls 37 companies directly, including one worth $40 billion, and maintains stakes in dozens of public and private companies. It also has a charitable trust with additional holdings, akin to the one that ended up controlling that New York skyscraper seized from the former Shah of Iran. While it’s impossible to know for sure exactly where the profit goes, Reuters reports the company has been re-investing the money to grow the firm, paying for the Ayatollah’s 500-person executive staff, and providing some charitable benefits.

Most disturbing, however, is the continued practice of seizing property belonging to members of the Baha’i, a minority religious group, and others accused of acting against the regime. According to Iranians interviewed by Reuters, Setad obtains court orders allowing them to seize properties and send agents to dump occupants and possessions alike onto the streets. Even when Setad’s targets have managed to successfully fight back through Iran’s legal system, it involves paying significant sums of money—often 20% of the property value—to well-connected insiders.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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