There is a high risk of corruption and political interference when dealing with the judicial system. Executives report that bribes and irregular payments are often exchanged in return for obtaining favorable court decisions (GCR 2015-2016). The Iranian constitution suggests a separation of powers, but in practice, this is not upheld. Iran's anti-corruption drive has increased under the current Rouhani administration, but a powerful system of patronage continues to hinder effective prosecution (BTI 2016). While the judiciary is independent from the executive, the head of state (the supreme leader Ali Khamenei) has absolute power over all government institutions, including the judiciary (BTI 2016). Judgments in politically sensitive cases are often determined by intelligence services, and rich and influential individuals are often spared prosecution or fare well in trials (BTI 2016). Donations to influential persons by those accused of corruption or embezzlement effectively curtail the judiciary's willingness to prosecute (BTI 2016). A popular exception is the case of former vice president Mohammad Reza Rahimi, who was sentenced in 2015 to five years' jail time for undisclosed corruption charges (Al Jazeera, Feb. 2015). It is alleged that the head of the judiciary, Ayatollah Sadeq Larijani, is in possession of 63 personal bank accounts filled with embezzled public funds (The Guardian, Nov 2016a). The police attempted to arrest a Member of Parliament who tried to question Larijani on these allegations (The Guardian, Nov 2016a).

Companies rank the efficiency of the legal framework to settle disputes and challenge government regulations as low (GCR 2016-2017). Iran has acceded to the New York Convention of 1958 but is not a member of the International Centre for the Settlement of Investment Disputes (ICSID).

The Iranian police force carries a high risk of corruption, with systems of patronage and cronyism pervasive in overall law enforcement. The police operates highly inefficiently, and companies are not fully confident in the reliability of Iranian police forces to protect them from crime or to uphold law and order (BTI 2016; GCR 2016-2017). The attorney general is tasked with investigating and punishing abuses by the security forces, but the process is not transparent and there are few reports of action to punish abusers (HRR 2016). Aside from the national police, the Islamic Revolutionary Guard Corps (IRGC) and the Basij militia operate in the country, mostly in times of protest or riots. The IRGC owns a considerable part of the economy and financial systems, and influences the media, making it a powerful institution that's loyal to the supreme leader (Reuters, July 2015).

In 2015, allegations of embezzlement of funds worth GBP 350 million within the police force surfaced, but the supreme leader Khamenei forbade probes into the allegations (Telegraph, June 2015; CDI News, July 2015). Former police chief Ismail Ahmadi Moghadam, who was interrogated and replaced not long after the allegations, commented that he had been forced out of office only after he threatened to expose fellow senior officials (Telegraph, June 2015; CDI News, July 2015).

Companies contend with a high risk of corruption when acquiring licenses, utilities or other public services. Bribes and other irregular payments are at times exchanged in return for obtaining public utilities (GCR 2015-2016), while officials regularly expect bribes for providing routine services or receive bonuses outside of their normal work (HRR 2016). Mismanagement and rampant corruption limits the administration of state services as well as their quality (BTI 2016). Religious affiliation and systems of political patronage rather than technical skills determine hiring and firing (BTI 2016). Moreover, other authorities frequently interfere with the state service administration, further limiting their efficiency (BTI 2016). Government regulations in Iran are often burdensome for companies (GCR 2016-2017). Getting electricity takes around the same time and costs around the same as elsewhere in the region (DB 2017). Starting a business requires eight procedures and takes fifteen days, which is less than the regional average (DB 2017).

In one illustrative example, a member of the powerful Hossaini family was accused of using family connections to obtain a license to run a money exchange shop implicated in money laundering activities (LA Times, July 2016).

The land administration carries high corruption risks in Iran. Property rights are generally protected and basic transactions such as buying and selling real estate are usually not problematic (BTI 2016). However, the process becomes more complicated when it comes to selling large properties or land due to widespread patronage (BTI 2016). Individuals routinely bribe officials in order to obtain permits for illegal construction (HRR 2016). In addition, when companies set-up mid-sized industrial facilities, they commonly obtain financial support through connections and corruption (BTI 2016). Registering property takes just 12 days, which is less than half the regional average (DB 2017).

The National Inspection Organization reportedly found that government officials including senior municipal officials, City Council members, Members of Parliament, and police officers were involved in mishandling public land and properties worth USD 702 million (The Guardian, Nov. 2016b). The letter details schemes including the sale of land to officials for extraordinary discounts and other types of favorable agreements (The Guardian, Nov. 2016b).

The tax administration is a high-risk sector. Companies report that bribes and irregular payments are widespread in meetings with tax officials (GCR 2015-2016). Due to its oil-wealth, Iran is not very dependent on taxation; around forty percent of its economy is exempt from taxes; including the many bodies linked to the IRGC as well as the enterprise-like religious foundations (bonyads) (BTI 2016). The tax system is outdated and therefore ineffective (BTI 2016). It takes business executives on average 344 days to prepare, file and pay taxes,; an average that is considerably higher than elsewhere in the region (DB 2017).

There is a very high risk of corruption in Iran's customs administration. The border administration lacks transparency, procedures are perceived to be burdensome, and irregular payments in relation to imports and exports frequently occur (GETR 2016; GCR 2016-2017). The underground economy grew when sanctions were in place, and foreign brands were frequently smuggled to Iran, often passing through official customs checkpoints (Quartz, Apr. 2015; Roads and Kingdoms, 2014). When goods such as cigarettes are imported to Iran from Oman across the Strait of Hormuz into Bandar Abbas, Omani officials levy about USD 5 in export duties per package and Iranian officials demand bribes of USD 60 to allow the cargo to be unloaded (Roads and Kingdoms, 2014). Allegations exist that the IRGC plays a significant role in smuggling both weapons and illicit substances using its control over ports, airports and roads (HRR 2016*;* IBT, Mar. 2017). Other parts of the IRGC have reportedly engaged in smuggling other products including pharmaceuticals, narcotics, and raw materials (HRR 2016).

Trading across borders is more difficult than elsewhere in the Middle East and North Africa as complying with the border requirements and relevant documents is costly and time consuming (DB 2017). The government made exporting and importing easier by expanding the services offered by the national single window (DB 2017).

Iran's procurement sector carries a very high risk of corruption. Business executives report that bribery is widespread in the process of awarding contracts and licences (GCR 2015-2016). Favoritism is often shown to well-connected firms and individuals (GCR 2016-2017). The IRGC in particular enjoys access to lucrative government contracts that are not subject to tender (BTI 2016). Much of the IRGC's business is done through front companies that are not formally owned by the IRGC but by individuals and firms linked to it (Reuters, July 2015). The positive effects of the nuclear deal (Joint Comprehensive Plan of Action) have also mainly fallen on state firms and the IRGC (Forbes, Feb. 2017). Public funds are often diverted, and embezzlement is a widespread (GCR 2016-2017; BTI 2016).

Under the Rouhani administration, cases of embezzlement carried out by figures of the previous regime are continuously disclosed but without the perpetrators being named (BTI 2016). Even though it is rarely prosecuted, embezzlement constitutes a serious offense in Iran as it involves breaking the Islamic banking law (International Business Times, May 2014a). An exception is the case of former Head of the Social Security Organization (SSO), Saeed Mortazavi. He was charged with selling stakes in 137 companies owned by SSO below market price, with a transactional value of over USD 4 billion (HRR 2016). Other charges include giving gift cards to government officials and members of parliament (HRR 2016).

Companies exporting to Iran in defiance of remaining US sanctions risk high fines. Between 2010 and 2016, Chinese telecommunications equipment maker ZTE illicitly shipped approximately USD 32 million worth of equipment to Iran using an elaborate scheme designed to mask its involvement. In March 2017, ZTE pled guilty and settled the case for USD 892 million; the largest fine ever imposed in an import and export related case in the US (Bloomberg, Mar. 2017). Investors are advised to exert caution when bidding on public tenders in Iran and are recommended to use a specialized procurement due diligence tool.

Corruption risks in the natural resources sector remain high. Iran's natural resource potential is underutilized due to government mismanagement and prevalent corruption in the sector (BTI 2016). Iran is estimated to hold around 22 percent of global oil reserves, and the industry accounts for a major share of the country's revenue. As it is Iran's most lucrative sector, it is either controlled by the state or by those with close ties to the state (BTI 2016). Reporting practices in Iran are insufficiently transparent in terms of natural resource governance (NRGI). After sanctions on Iran were lifted, the oil minister urged foreign investors seeking to enter the energy market to deal directly with the ministry rather than use third parties (New York Times, March 2016). It is alleged that such middlemen were commonly used to sidestep oil sanctions. However, it is unlikely that this network will be dismantled completely in the near future, considering the middlemen are sitting on USD billions that the Iranian government hopes to reclaim, and also due to continuing sanctions imposed upon Iran by the United States, which makes conducting regular financial transactions difficult (New York Times, March 2016).

In a widely publicized case, billionaire and business tycoon Babak Zanjani has been sentenced to death for embezzling USD 2.7 billion for oil he sold on behalf of the Iranian oil ministry (BBC, Mar. 2016). The case is controversial as Zanjan's defense is arguing that he helped Iran circumvent sanctions by selling oil abroad with the knowledge and backing of government officials (Reuters, Mar. 2016). Even the president criticized the handling of the case, questioning who enabled Zanjani to carry out such deals (Reuters, Mar. 2016). His death sentence was confirmed by Iran's Supreme Court in December of 2016, but in the near-future, his execution seems unlikely in light of the fact that President Rouhani has stated that it will be hard for the Iranian government to recover the lost assets without Zanjani's aid (Reuters, Dec. 2016). A man accused of being an accomplice of Zanjani was arrested in January 2017 (Al Arabiya, Jan. 2017).

In another case, Safdar Hossaini, chairman of Iran's sovereign wealth fund, resigned along with his colleagues, after it was revealed that he earned over USD 23,000 a month, dozens of times more than the lowest-paid government workers (LA Times, July 2016). The fund is intended to reserve surplus revenues from oil and petrochemicl production for development and economic emergencies (LA Times, July 2016).

Iran's laws provide for various penalties for corruption, but in practice, the law is not applied and cases of corruption remain unprosecuted (HRR 2016). Iran's anti-corruption legal framework is diffuse and spread across a number of laws, including the Act on Public and Revolutionary Courts' Rules of Procedures in Criminal Matters and the Aggravating the Punishment for Perpetrators of Bribery, Embezzlement and Fraud Act. Key provisions criminalizing corruption can also be found in the Islamic Penal Code (IPC). Additionally, there are special anti-corruption by-laws, directives, enactments and guidelines (UNODC, Mar. 2014). Anti-corruption provisions for public officials include active and passive bribery, trading in influence, money laundering, embezzlement and abuse of functions (UNODC, Mar. 2014). For such offenses, both natural and legal persons can have administrative, civil and criminal liability (UNODC, Mar. 2014). In grave cases of corruption, referred to as 'corruption on earth', the death penalty may be applied (HRR 2016). Private sector bribery is primarily addressed under other criminal provisions (such as the illicit acquisition of assets); embezzlement in the private sector is also criminalized (UNODC, Mar. 2014). Government officials including cabinet ministers, members of IRGC and others are required to submit personal financial statements to the government annually (HRR 2016). However, it is unclear to what extent these rules are enforced or whether these statements are publicly available (HRR 2016).

Iran has ratified the United Nations Convention against Corruption (UNCAC).

Iran's media environment is one of the world's most repressive (FotP 2016). Freedom of expression is guaranteed in the constitution (HRR 2016), but is severely limited both online and offline (FitW 2016). Under President Rouhani the situation has improved slightly, but censorship remains widespread (FotP 2016). Media outlets are often instructed what to report on and outlets that publish critical content regularly face closure (FitW 2016; FotP 2016). Government officials regularly intimidate journalists into self-censorship (HRR 2016). Access to information is limited and not well-protected by law (FotP 2016; FitW 2016). Six media outlets were blocked and/or punished in September 2016 for reporting on corruption in Tehran's property developments (HRR 2016). In connection to this case, one journalist, Yashar Soltani was arrested and charged with 'publishing a confidential report' (HRR 2016). Iran's press freedom status is classified as 'not free' (FotP 2016).

Freedoms of assembly and association are also strongly limited, both by law and in practice (HRW 2016). Many people were or still are imprisoned for their affiliation with opposition parties, labor unions and student or other activist groups (HRW 2016). Non-governmental organizations working on non-politically sensitive issues such as poverty or the environment can operate with a large degree of freedom, while those active in the area of human rights are often suppressed (FitW 2016). Activists are routinely arrested without formal charges and sometimes without access to legal counsel (FitW 2016).

• World Bank: Doing Business 2017
• International Business Times: "Iranian Revolutionary Guard in USD 12 billion Smuggling Operation to Fund Terror Says Opposition", 10 March 2017.
• Bloomberg: "ZTE to Pay Up to USD 1.2 Billion to Settle Iran-Sanctions Case", 8 March 2017.
• Forbes: "Iran Irony: IRGC And State Firms Are Benefiting From JCPOA", 16 February 2017.
• Al Arabiya: "Iran Arrests Corruption Fugitive, Alireza Monfared, After International Manhunt", 16 January 2017.
• World Economic Forum: Global Competitiveness Report 2015-2016.
• Bertelsmann Foundation: Bertelsmann Transformation Index 2016.
• US Department of State: Human Rights Practice Report - Iran 2016.
• Freedom House: Freedom in the World 2016.
• Freedom House: Freedom of the Press 2016.
• Human Rights Watch: World Report 2016.
• Mining-Technology: "Mining Iran: Endless Opportunity, Corruption, and the Trump Question", 14 December 2016.
• Reuters: "Iran Says May Spare Condemned Tycoon if He Pays Back Debt.", 11 December 2016.
• The Guardian: "Iranian Judicial Authorities Attempt Arrest of MP", 28 November 2016a.
• The Guardian: "Silencing of Journalist Draws Huge Backlash from Iranian Public", 4 November 2016b.
• LA Times: "One Year After Iran Nuclear Deal, President Rouhani Feels Heat of Corruption Allegations", 13 July 2016.
• New York Times: "Sanctions Eased, Iran Sends Black Market a Strategic Warning.", 19 March 2016.
• Reuters: "Iran tycoon's death sentence feeds perception of high-level corruption", 17 March 2016.
• BBC: "Iran billionaire Babak Zanjani sentenced to death", 6 March 2016.
• Transparency International: Government Defense Anti-Corruption Index 2015.
• Reuters: "Iran nuclear deal set to make hardline Revolutionary Guards richer", 6 July 2015.
• Center for a Democratic Iran (CDI) News: "Iran's Khamenei forbids probe into major corruption case in police force", 7 July 2015.
• Telegraph: "Money can buy you anything in Iran, says ex-police chief", 15 June 2015.
• Quartz: "If sanctions are lifted, here's what trade between Iran and the US could look like", 24 April 2015.
• Al Jazeera: "Iran jails former vice president over corruption", 15 February 2015.
• United Nations Office on Drugs and Crimes: Conference of the State parties to the United Nations Convention against Corruption, 20 March 2014.
• International Business Times: "The Iranian Billionaire Involved in the 2011 Embezzlement Scandal was Executed Saturday, Here's Why", 24 May 2014a.
• International Business Times: "Iranian Businessman Executed Over $2.6bn Bank Fraud", 24 May 2014b.
• Roads and Kingdoms: "How Iran smuggles its smokes", 2014.