Industrial and Mining Development Bank of Iran (3)

Narrated by Ali Zirak Nejad

Mehdi Amani Yamin
Translated by: Natalie Haghverdian


*How was monitoring and control system in the bank? Was monitoring department robust or there were other reasons?

News would spread around and it was not possible to hide anything. It was a modest and honest environment and we didn’t have much of a monitoring or attendance system. There were no machines to print time cards or register fingerprints. It was a very easy system and there was a guard at the door who would record my entry and exit time and submit it to administration; at the end of the month it was controlled; eventually they would calculate working hours and announce to the management and in case I had delays my boss would ask for an explanation. In case, delays were routine issues then they would deduct the amount from monthly salary; however, there was always respect.

Even late Kheradjou and other managers had sort of an unofficial attendance monitoring system. Every day, fifteen minutes after the official working hour start, all managers and deputies would gather in the conference room to report.

This reporting process would serve different purposes. First was that all managers and deputies would deport on unfolding events during past twenty four hours. Second was that other managers would be informed of such events as developing in the bank. The third purpose was that after fifteen minutes you would know who is on time and who is not. The meeting was brief for outmost twenty minutes. He had a very good recollection of the reports and if one deputy and manager would come up empty to report on anything for two days he would be questioned of the activities going on in his department. These are very delicate managerial issues.

Although transportation facilities were not as elaborate as they are today we had strong supervision on projects and credits were not paid unless progress was monitored. The experts had to personally visit sites and verify construction activities. They would report their assessment and we had periodical reports on project progress. The experts had to travel with safe cars; the bank would purchase top nudge Mercedes Benz fleet then resell them after three or five years. The emphasis on safety of the fleet is another multipurpose technique. An expert was valuable to the bank and was supported. We had the best drivers and we would travel calm and safe on the roads. We didn’t purchase Benz vehicles for the bank after the Revolution; some of the cars, had travelled a million kilometers and their motors were not repaired. Despite the fact that personnel safety was very important to Kheradjou, in private meetings he would always say: when my expert goes to a company I don’t want them to be impressed by the company cars and I want them to travel with cars that they deserve. He would say: If you go out for lunch with factory managers, close the bill yourself; I myself will cover the bill or the bank will reimburse your expenses. These are the monitoring approaches you asked about. Even if the experts would receive gifts it would be announced; although it wasn’t customary at the time to offer gifts, it is now. We were appointed as board members in some companies by the bank. Then we would receive an additional allowance and year-end bonuses. We were not allowed to cash those payments. The checks would be issued under the bank’s name and would be cashed accordingly. We were paid by the bank.


*Were there any challenges after Revolution regarding appointments as board members and relevant allowances….

Let’s not talk about that. Of course there are reasons which I’ll cover if time allows. What I meant to say that we had no other source of income but the salary and bonuses paid by the bank. The allowances paid to appointed board members and relevant bonuses were considered as income for the bank. These measures were to create prestige among bank personnel to dominate the customer not the other way around. In case those allowances were cashed by the board members as personal income then the customer would pay higher to keep them in his debt. However, board membership was a means of control; we had different control approaches; one was appointed membership in boards of industrial units. In large projects we had conditions; one of which was that the financial director of the company had to be approved by the bank. He should have been aware of the credits allocated to the company and spent on construction. As board members we had to be chairman or vice-chairman of the board and all payments had to be made upon approval of the board. These were all control tools both for us and for the company.

I joined the bank during Kheradjou’s tenure. The bank had managers before him and I don’t know what they had done. Mr. Rials Stein was one of them from Netherlands. The bank was established with 40 percent foreign shares and 60 percent domestic shares. During the last years of the bank’s activity the number of foreign shares dropped to 16 or 17 percent.

I believe Kheradjou jointed the bank in 1961 and it was Mr. Rials Stein before him. Bank managers and financial deputies were foreigners as well. Deputy to the General Director and Financial and Treasury Manager was a British named Hart. I haven’t personally met him. When I joined the bank the foreigners were not there and it was only Kheradjou. I can talk about his initiatives. Kheradjou and the bank had an active and crucial role in establishment of the stock market in Iran and there are documents to prove it; the second role was supporting the stock market which was done by bank’s member companies and the shares of the bank were traded in the stock market; there were also the shares of Navard Company[1]. When the stock market was established the only valuable bonds were land reform securities. You know that upon land reforms, the land owners were never paid but received bonds and securities to be cashed within 5 to 10 years. These bonds and securities were traded in the stock market. However, the preliminary source of income and trade were companies established by the bank and the bank itself. These are some of the roles that Industrial Development Bank played. The financing source for bank’s current activities was the loans and facilities as obtained from the World Bank. I believe we had 7 to 8 loans from World Bank and International Development Association and other foreign sources which were guaranteed by the government and allocated merely to import of machinery for factories.


*In Foreign Currency Department of the Bank, you said that the bank had obtained 7 -8 loans from World Bank and other international associations; however there are documents indicating that by 1969 the bank had obtained only three loans from international credit institutions.

No! Before I joined the bank, loans were obtained from USAID. When I joined the bank we received loans 240, 422, 459, 602, 953. I’m sure of the number of the loans but I don’t recall the amount. The last one was USD 100 million but before that the loans were small, 15 to 20 million. I remember that for some loans we would pay 400 thousand Tomans. Sometimes this amount was millions and it depended to the size of the projects. The loans obtained from World Bank were main source of foreign currency income.


*Do you remember anything from the loans obtained from USAID?

I wasn’t working in the bank at the time and I don’t know. When I joined the bank I could only see the documents. 240, 422,459, 602, and 953 loans were obtained later. I was in the bank when we received loan 906 and we could still apply for loans till 1973. The rate offered by World Bank was rational and were six and a half percent. The reimbursement was long term. The experts in the bank would assess the projects and provide World Bank with a summary and upon approval the loan would be allocated. When in 1973, the oil price increased which led to higher per capita income in the country we were no more eligible to apply for loans since those were for developing or underdeveloped countries.


*This happened when Iran was still developing and was not fully developed?

Yes! But there were criteria in World Bank; one of which of which was per capita income and with increased income we couldn’t apply for loans. Hence we would provide our foreign currency income through international banks or bonds. Some international banks would provide long term facilities and some short term facilities which were foreign currency sources. It is interesting that the total amount of facilities provided by international banks under no contractual obligation and merely based on a telefax was a sum of USD 960 million. They would object if we wouldn’t invest it. I was handling such cases and hence I have clear recollection of the amount.


To be continued…


[1] Active in steel production

Number of Visits: 4120


Full Name:

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