Iranian Oral History Project | Harvard University Center for Middle Eastern Studies
Khodadad Farmanfarmaian
Plan Organization Director
Transcript 16 of 16
Narrator: Dr. Khodadad Farmanfarmaian
Date: January 19, 1983
Place: Cambridge, Massachusetts
Interviewer: Habib Ladjevardi
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Q. Maybe this is a good point to now ask you about your sort of personal knowledge about the general question of corruption in the Iranian government. What was the extent of it as far as you were able to see? How did it actually work and were you yourself ever personally approached, offered a bribe of sorts to make certain decisions?
A. Before I talk about my personal experience, let me simply say this business of corruption is a very complicated thing. First of all, there are all kinds of corruption. The worst, and probably the most prevalent, is the corruption of the mind, that is the man goes against what he knows to be right. This type of corruption was highly prevalent. Now, the man goes against what he knows to be right can result from fear that he will be removed from office, for example -- his love for the job that he's got, the position he's got. It can result from payment of money -- he can be bought to go against what he considers to be right.
Conversely, a person may oppose what he knows to be right in order to obtain some form of benefit by changing his position. This is also a prevalent form of corruption.
Another form is that he may have taken a position without having first the knowledge that what he was doing was wrong and later on when he found out, he wouldn't want publicly to change his position and lower the regard of the society for himself, you know. This is a pride of some sort. He wouldn't want to come out and say, "I was mistaken then, now it should be changed." Very few people have that type of courage.
The most talked-about type of corruption is, of course, where money is involved. Money, or promise of better position, or promise of more power is involved.
As far as the ministers of the cabinet go, the type of corruption that existed -- ministers and the top echelon, that means above ministers even, the top generals and so on -- the type of corruption that existed was first fear of their positions. Fear if that they didn't do certain things that they didn't believe in, they will lose their position, they will be kicked out. The first, most important form was that.
Two, the promise that they will be more powerful and last longer and endure, if they did the wrong things. Very few cases over the last twenty-five, -six years that I have direct experience with any minister being paid directly to do certain things that he did not consider right. This has been rare at the ministerial level. Very few cases of this type that I even heard about in recent years. There may have been more cases than I know, but very few cases that over all these years came to my attention or I found out about or heard about from reliable sources.
Certainly, during Hoveida's period the members of the cabinet I would have considered extremely clean in connection with this last type of corruption, namely, direct monetary bribe. In that sense they were very clean people. But in terms...
Q. By that you mean they were really living on their salaries and on their bonuses that were given to them...
A. Personal means. Salaries, bonuses, that's right. As well as on whatever they owned themselves; and some of them were people of some means in terms of what their father had or their family had or what they had inherited, for example, from their father or parents.
Some of them lived very lowly type of life. Some of the ministers I knew had a very small house. They didn't have very much and they were ministers at the time; and you could see their circumstances. They really were living on their salaries and their bonuses or whatever came to them as a matter of course.
Q. Weren't there a lot of hidden bonuses that they actually received from...
A. The Prime Minister, yes. The Prime Minister had a special fund which was used for this purpose. The Shah wasn't all that directly always involved in giving this type of bonus. The Shah would, for example, give a piece of land from his own personal properties to a group of ministers as a grant, as a bonus, as a gift. This could happen, but the Shah was not regularly involved in these payments, it was the job of the prime minister. A prime minister had secret funds for these purposes, gave bonuses, varied these bonuses according to the need of the individual as he would know. For example, in many cases where the individual suddenly was taken sick and had to go to Europe to be operated on, the prime minister paid for the whole thing. Where the child of the individual -- when the minister or deputy needed urgent medical attention and the prime minister learned about it, he'd pay for the whole thing.
There was irregular assistance as well as sort of regular monthly bonuses that simply were salary supplements that ministers received.
Q. Was that standard for everyone?
A. Yes, yes.
Q. How much was it?
A. I don't remember. The salaries of ministers (well they changed over time), if I'm not mistaken, the salary was thirteen thousand toman -- let's say I'm now talking about '73 -- and the prime minister gave them another seven, ending up total of twenty thousand toman. On the basis of the rate of exchange, say what, three thousand dollars, less than three thousand dollars per month.
And sometimes, there'd be a bonus at Norouz, which differed between various ministers according to their seniority, according to their position and so on. In some cases he would give fifty thousand toman, in some cases thirty thousand toman, in some cases seventy, eighty thousand toman and probably some of the highest, most senior ministers would receive a hundred thousand toman. Which again divided over a period of a year would amount to a maximum of another ten thousand toman per month. So the total salary would have become around four thousand dollars a month. But this was maximum. Maximum. One could live in Iran a fairly decent life on the basis of that type of salary.
Q. There were certain services free, weren't there, like a servant or a cook, that sort of thing or not?
A. No. The government had no.... Well, yes, the driver of the minister would drive for the wife of the minister as well, that's true. But the servants who served, let's say, in the ministry to bring you tea...
Q. No, I mean the house.
A. Did not come to the house of the minister, no. If they brought the servants, for example they would give a party one night, they usually paid him for his services from <their> own funds. Maybe some ministers did misuse in this way, shall we say, their positions. That is, they would send their own man in the office to go and help with the affairs and the chores of the household. But generally speaking, we would see, for example, at parties of ministers, one or two people from the office had come to help; but usually at the end of the night they would pay them something or, you know, he would make up for it as if he had hired somebody else from outside.
Q. Didn't ministers have secret funds that they could...
A. Ministers had secret funds they could use as they wished. Now there again, because they were secret, at least the only thing that I can tell you is about my own use of those funds.
Q. How large was this? Are we talking about millions or thousands or ...?
A. No, no, no. In the case of the Plan Organization, if I'm not mistaken, it was about a million and a half tomans.
Q. Per year?
A. Which was the first year, I pushed it and increased it to two million toman.
Q. Per year?
A. Per year. Which was a very small percentage of the total budget, of course. The Ministry of Finance, by law, had the right to set aside, if I'm not mistaken, one or one and a half percent of total revenues collected to be used as sort of encouragement to tax collectors to collect more. And they applied that regulation to the oil revenues as well.
So the Ministry of Finance had a secret fund which reached into hundreds of millions, especially after OPEC. Now that was used for very specific purposes, of which I have very little knowledge, but was at the disposal of the minister. Whereas the ministers, the ministers themselves, outside the Ministry of Finance -- after all, all the revenues were in the hands of the Ministry of Finance -- the ministers themselves, the maximum they would receive was two, two and a half million toman. And secret funds were approved by the parliament.
Q. Could a minister use this for his personal expenses?
A. Now, in the sense that there was no accounting, certainly the minister could have used it. But there's no doubt that one or two people would have known about it. But there was no accounting, it was left purely to the judgment of the minister to do what he wishes with it. In other words, he could have paid his cousin if he wanted to. Very simple.
Now I had heard rumors, as I said it is impossible to know, that certain ministers used these funds for personal purposes. Meaning when we went, let's say, on a mission, the government had standards and regulations regarding how much a minister would receive per diem and for his cost of transport, hotels and so on. Well, certainly, some of the things I had seen would indicate that the ministers were spending far beyond that sort of thing. Some presumably did this from personal funds while they were on missions, others must have used the secret funds.
In my case, the principal use of the secret fund was to supplement the salary of the professional corps in the Plan Organization and the Central Bank whose normal salary scale was below their market value. That was also done by many other ministers as salary supplements over and above the regular salaries. I never personally ever dealt with the secret funds. I left it to my administrative assistant who had my written authority detailing various categories of expenditures in addition to salary supplements which were all receipted. I'll give you some examples of the uses of the secret funds.
A man who had died (a man in the Plan Organization), I remember he had six children, he had borrowed funds to rebuild his house from the bank of the Plan Organization to be repaid by monthly installments from his salary. We sat down and calculated this, his retirement fund was such that it wouldn't even take care of the children and the daily requirement of these children and still pay off the mortgage on the house. It was a very dire case, I remember this distinctly. So, I decided to pay off the mortgage of the bank from the secret funds. But the decision didn't come from me, the knowledge came from my assistant for administration who came and made the proposal. I approved the proposal and he went ahead and paid off.
We would find a first-class man, bring him from private business, force him to sell his share in the business to become, let's say, deputy head of the Plan or assistant head of the Plan, and this man could not conceivably live with seven thousand tomans a month as his maximum possible salary and would not have come to the Plan Organization. So we had to supplement his salary in one way or another, let's say, to (I don't know) a total of twelve thousand toman per month. To give him some additional funds.
The principal amount of secret funds went for this purpose and I used it for that purpose. Never for travel expenses, never for personal purpose.
Q. Going back to actual corruption again, where were the examples of this?
A. I have no doubt. I'll tell you. The important examples of it were at the lower administrative levels, in the third level, the fourth level, from the top in administration. The illicit payments would go to the tax inspector, to the members of the committee who made decisions on taxation, for example, to the technician who was going to decide to support or not to support a particular proposal in terms of the technology proposed. Or the man who made an analysis of two or three contracts, to compare them, to send them up and say which one is better than the others. The man who had information regarding other proposals, who would sell that information to competitors, for example. This type of corruption existed fairly widely, in my judgment.
By the way, before I go further, there was also another type of corruption that the men who were official civil servants would be working with private firms, after the government, after office hours. Large numbers of government employees did this with many of the contractors or consultants. They were not, as such, receiving bribes but they were given jobs and salaries; however, they may not have <been> required to keep strict office attendance as in the case of other employees, which is in a way another form of bribe. And this was prevalent to a great extent, also. In many cases, some honest and needy employees did actually work during their free hours for the private-sector firms to supplement their official salary.
Q. It seems if corruption was only at this level, it would have been fairly easily to try to at least contain it, with the strong Savak that we had, that could have...
A. No, no, the major... I'll tell you. The major source of corruption was elsewhere -- not directly among members of the cabinet or, let's say, undersecretaries. But among those who were in the periphery of the cabinet, the government and the Court. These people were not members of the government, but had influence and connection through one channel or another with the Shah, the Queen, the Prime Minister, the ministers, the commander-in-chief of the air force, the commander-in-chief of the army, the head of the oil company, etc. These were the real corrupt and corrupting elements within our society, of which there were many. These were the influence peddlers, project "pushers," these were the "dealers" or "brokers" or representatives under contract who collected their percentages on projects -- very often much larger than they would report for tax purposes or for general public information. They were required to do so by law -- the contractors were required to report any payment of fees and percentages unrelated to cost of the services. But they would not report that. And then they would distribute this among their friends and contacts and keep their sources of power one way or another. This aspect is not as publicized, though far more important than the cases of individual officials who may have received bribes to push projects through various official channels.
These non-officials were the ones who very often bought the lower echelons in the government to give them the necessary information, to push for their project from the bottom so it will go up in the right way automatically to be approved when it reached the top. And at the same time, from the top they would make sure that there will be no opposition and there will be approval of their favorite projects.
In the later years, especially after OPEC, the extent of corruption in terms of money, in my judgment, reached the level of billions of dollars. Before the oil revenue flood from OPEC, it probably was in the neighborhood of a hundred million dollars. The big money was in this particular circle of corrupt persons.
Q. What was the motivation of these important individuals in supporting this system, if they weren't getting kickbacks? I mean one has to assume that these people were passing it on to the officials you mentioned. Otherwise, why would they need these people? I meant what function did they perform for them?
A. I cannot say that there were no kickbacks. I suspect there was. But I cannot prove or document it. Another important motivation of the top officials who handed out favors to these people was power. Weakness and fear of losing their respective official position was another motivation. The powerful non-officials could very easily, if they had to, remove a director, an undersecretary and a minister from his post.
Q. No, I meant why did the patrons of these corrupt individuals lend support to these people?
A. When it comes to patrons, if you talk about the Shah....
Q. ???
A. Let's say the Shah and let's say the Shah and the people that I mentioned. I'm not suggesting that there were no kickbacks. I'm only saying that if there were such kickbacks, it was, for obvious reasons, in a way that could not be documented and proved so that I can make a sustainable case against them. I cannot, I never saw, I couldn't prove whether or not the Shah received money from some of these dealers who may have, on one deal alone, made a hundred million dollars, for example, would they turn about and deposit seventy-five million dollars to a special account of the Shah. If they did, first of all, don't forget most of these payments were made abroad, they didn't even directly enter the flow of banking or monetary transactions in Iran, in the country as such. And as you know, the Swiss banking authorities do not divulge such information.
Let's take the case of the immediate members of the Shah's family, for example, Princess Ashraf, the sister of the Shah. Whether or not she would have received a kickback as a result of her support of a project, this project, and that project, this is something which as I said I cannot prove. The general consensus, as you know fully well, was that she dispensed many favors to her close friends, that she was instrumental in the final granting of important contracts to firms and individuals of her choosing. She was well known for her patronage to her friends. Now did she receive kickbacks, how much and how? One can only speculate but not prove. Sometimes, the kickbacks took the form of presents that they made in the most formal fashion of very expensive things, that was understood to be possible within the latitude our society allowed -- presents instead of outright cash or money.
But I don't have evidence. After all, I was in the Central Bank of Iran, I would have seen the major banking transactions. You know, the revolutionaries were such fools to think that these kickbacks were transferred by Central Bank of Iran and so on. Impossible, you know. Everything that was transferable from an account was in payment for services or goods purchased according to the terms of a contract for which the bank either opened a letter of credit or paid an account abroad through formal transfer and debited the account of the government. It was the contractor who received that money and paid off the dealer or his contact abroad, probably in special numbered accounts in Switzerland. That may have taken place and probably did take place, but I cannot prove it, I do not know about any direct case of bribery which was brought to my attention with supporting documents.
You asked me a question about myself. Let me say one case distinctly I remember. I had just come to the Plan Organization. One of the biggest problems was we insisted on international tender and the ministers all wanted quit-tender. Again, the ministers just didn't want to go through all this problem of putting the projects to national or to international tender and select the lowest bidder, because it was a cumbersome procedure and would take time. They wanted quit tender because it was quicker and the ministers had developed an argument to justify their preference by saying, "Look, we will carry out the project on the basis of previous cost of the same project," or "we will get prices anyway and give you comparisons." We didn't believe in this, we believed in hard national and international tender to find the lowest bidder. We also believed that quit-tender was a great source of corruption.
This pressure mounted tremendously with the momentum for development and when I came to Plan Organization, the situation was such that there was a revolt among the ministers regarding this. So my final decision was, I said, "Ministers are responsible to the parliament, to the Shah. If a minister writes and accepts full responsibility for each case of quit-tender, provided that in a formal letter he states that he deems his action in giving quit-claim is in the interest of the country and that the total cost of the project will be held to a level acceptable to the Plan Organization, the the tendering procedure will be waived and the minister can on his <own> decide on quit-tender." That is, we would have given our right of quit-tender to the minister and then the minister would have proceeded under his own responsibility and signature to do it.
Q. I think you mentioned this in a previous tape.
A. I did? Then, one person came to me and asked me, she said -- she was representing this big contractor -- she said, "I'll pay you five hundred thousand toman right now..."
Q. Just like that?
A. "...and ten million toman by Esfand (this is summer, end of summer) if you only will not oppose a request for quit-tender which will come to the Plan Organization." I laughed at her.
Q. Where was this request made, in your office or at a party?
A. No, no, at my home. We knew her. She happened to just walk in. She was a friend in that sense, she was in fact one of our neighbors. Very well-known person, I don't want to mention the name. She's alive and I would protect her. Her husband was very famous, who died recently, and I would protect her.
Anyway, I laughed at her and said, "Look, there's a process involved here. It is the minister who has the right to request waiver for quit-claim and once he accepts full responsibility in writing, he can proceed with quit-tender." She said, "Oh, the minister has already agreed and has written." I said then, "Look, it doesn't even come before me and it will go to the minister, and the minister will make that decision. Why would you want to pay me?" I laughed her off, of course, and I sent her off with the money.
Some few months later, I learned that the minister had indeed sent in a request for quit-tender and the minister in this particular case was personally a very honest and clean man. He had that reputation. At least I never doubted him, doubted his integrity, his circumstances, his conditions. The conditions under which he lived were very limited indeed. But the project went through.
Q. What conclusion do we draw from this? You were offered a price to do this and he hadn't been?
A. No, I think that his men under him, without a doubt, had received a considerable amount to put to the minister the argument for quit-tender, to put to the minister the project as such. That's the whole point.
Q. Does that mean that he never knew about this?
A. Let me tell you. My own experience in the Plan Organization -- two things I'll cite for you. One, during my tenure of office, I sent ten people to the administrative supreme court, to the Divan-e Kayfar, that is where the high government officers, or the government officers would be tried for misdeeds -- whatever kind of misdeeds. I had an inspector who would examine cases as cases would come to me through properly signed letters. I investigated every one of them, for your information, sent it to this man, I trusted this man, this man was fair, although he wasn't very popular in the Plan Organization. He investigated, brought the cases to me and gave me the evidence in great details before I would sign a complaint to the Divan-e Kayfar. I sent ten people and nobody even heard about them, this sort of anti-corruption system within the Plan Organization itself worked to some extent. There were several cases when accusation came, it couldn't be proved. What I did, I changed the position of the man from where he was to a job which was unimportant and without the type of responsibility that could lead to financial gain..
Development, of let's say, Chah-Bahar base. These are huge projects. It wasn't a question of only nuclear power generation units, as such, but the number of nuclear plants. If I am not mistaken, they had in mind something like twelve units. This of course after the oil money started to flow in.
Q. Again, these are categories of items which the planners had no or very little sympathy for?
A. Certainly, we didn't have sympathy. Even to the planners to the end we never had sympathy for establishing so many units. Look, at best the planners would have agreed or acquiesced to having one nuclear power plant to allow for development of skills within Iran and slowly, slowly to use nuclear power as sort of a supplementary source of electric generation. But, certainly not eight of them, that were negotiated and being discussed. Two of them already being built, to be finished by '78, four others were negotiated for Isfahan and for Khouzestan. Two in Khouzestan, two in Isfahan, two in Boushehr. But the Shah was continuing, he wanted six or eight to follow that.
Q. What were some other projects?
A. Other projects were, as I said, the building of tanks, actual building of tanks in Iran, the purchase of equipment such as submarines. I was told at a point that they were planning to buy twenty submarines, ocean-going submarines.
Q. This was in the Fifth Plan?
A. This was after I was out, of course. I'm talking about 1975, '76 and none of these were in the document of the Plan. These were just being added as they went along.
Q. ?????
A. I'm talking about the Fifth Plan.
Q. What were the projects in there that were there basically because the Shah wanted them, not because the planners wanted them?
A. Chah-Bahar base was certainly one of them. Chah-Bahar was certainly one, as I said, nuclear power stations were one, agro-business in the way that we were proceeding was one. We fought this, we fought this. Six-lane highway connecting Tehran to Bousher. Electrification, electrification of railways -- that he pressed so hard for -- was another one. The Tehran transit system, metro was another one. These projects...I beg your pardon?
Q. The Shahastan-e Pahlavi, the northern Tehran, was that in the plan?
A. The development of that area, much again.... I argued, I remember, for that area Abbas-Abad, which was named Shahastan-e. I was saying that, "Your Majesty, this is the last chance of Tehran to have an open park space and it should be developed into a park, this 600 hectares of land." And I went to the Queen and asked for her support. I said, "Madam, Your Majesty, we can make this a great park for Tehran." I went to the Prime Minister, I went to Asfia, I went to everybody trying to convince them. And they were all sympathetic, but they had got the idea that here they should build a brand new city, modern city of fifty-, sixty-story buildings and that the land should be allocated for that purpose of housing for the army officers, etc. The project for making the area into a park never really even got off the ground, because of the interest that there was in that type of physical development.
There were many, many projects of this sort. For example, another project that I remember (which continued during the Fifth Plan also) was the national microwave system, which I'm not saying was unimportant but in terms of priorities -- and I'm not saying that we were so dead set against it at the beginning of it, the way it was proposed, we were dead set against it -- but on a limited basis we would agree with it; and on the question of timing it, that is the question of annual allocation, we would have agreed with slow development of this throughout the country, but the Shah wanted it within two to three years. He wanted the whole country to be covered under a microwave system within two, three years -- something that should have normally taken ten, fifteen years, perhaps -- so from every village we could directly dial San Francisco.
Q. What was the point of this? How much was ????
A. He principally argued for this in terms of his military requirements, at least as he told me. As I remember my earliest meetings with the Shah was in this connection, in connection with the microwave systems throughout the country. And I told him, my report was this, "You cannot get this in the short time that you have already believe that you can get it or the contractors are telling you they will produce for you -- impossible. And the amount of money," that was at the time $120 million, I said, "would reach, probably, about $360-$400 million dollars." As it were, it was more than that. And as it were, it took until '76, '77 to be completed -- longer, much longer than the Shah wanted it. This type of problem, there was a big hurry, big hurry to complete certain projects and that would have meant that obviously other projects would be delayed as a result.
If he had spread this over time, some of these projects would have, we would have had a better balance as between those consumer goods type of industries and these big white elephants that the Shah was deeply interested in as a symbol of the great civilization, as a symbol of modernization, as a symbol of Iran becoming the fifth industrial nation of the world, you know. These were some of the problems.
But that, certainly, in terms of the projects close to our hearts, there were a large number which were in the Fifth Plan that the Shah would agree with, and we had no difficulty putting into the Fifth Plan.
Q. Can you think of projects that he didn't agree with initially and that you fought for and you convinced him to allow to be put in?
A. Well, as I said, I mentioned earlier, the two that I remember distinctly was on the allocation for both agro-business and agricultural corporations. The agricultural corporations, the taking of the land away from the owners, small owners of the land, in return for a piece of paper like stock certificates, as if they were shareholders in a corporation, and they would then at the end of the year distribute the profit from the sale of the production among them, just like a corporation paying dividends. Or sell the products and distribute the money among the owners.
These things, from our experience during the Fourth Plan, had turned out to be no more than another government enterprise and the small landowners as government workers. These people, these farmers who were supposed to farm on their own had become government employees. And even when they were not producing enough or selling enough, the government was subsidizing these agricultural corporations. So we were dead set against them and we fought the minister, who was Mr. Valiyan, on this issue. We were, we were quite successful in controlling the expansion of this activity. But still in the Fifth Plan, you find some allocations for them. It wasn't that we totally succeeded but we prevented the allocation from being much larger.
In many cases, you know, this is what would get mixed up, the lines were not all that clear. We would argue against larger allocations and prevent larger allocations. Many times the Shah would side with us. Unless it dealt with projects that were, you know, the absolutes in terms of his own domain, which is principally in the army and certain other things such as (as I said) nuclear power development and so on.
Then of course there were the pet projects of certain ministers who were close to the Shah and so forth, on which we went through the same process at a lower level -- fighting them, preventing them. And they had, of course, recourse to the Shah and the Shah very often didn't want to disappoint them, I guess, and would give them his support. But that type of support was not like for those other projects. We would there again succeed sometimes in eliminating some of those projects which were very close to the heart of some ministers -- such as an opera house in Khordestan, close to the heart of the minister of culture, Mr. Pahlbod, who happened to be also the brother-in-law of the Shah, and there was a particular difficulty. But we would oppose, we had no difficulty. The technocracy could oppose and would oppose.
Q. What others, aside from the Shah, had an input in the planning stage?
A. Well, there were some people who were not necessarily either related or specially connected with the Shah, who were powerful individuals who would press their point, such as Rouhani. Rouhani on this damn business of agro-business would really press his point and fight right through and, you know, he would use every means at the disposal of a minister to do it. Certain others were milder, of course, and they would not press as much or they didn't have that type of personality, like Vahidi, in connection with the electricity and so on.
You know, when Iran had the blackouts and poor Vahidi was used as a scapegoat, I went to the ministry of justice where he was being tried by that special committee for trial of ministers. I said, "I've come here on my own." I went, I wasn't asked to go. I said, "I've come here to give you, to serve as a witness on the side of Vahidi." Because Vahidi did ask, did say when we were preparing the Plan, and on the preparation of annual budgets, did in fact say we would run into shortage of electricity by the time we did.
It was amazing. We knew he was right and we would run into shortage of electricity, but we didn't have the funds to allocate to him. He wanted, on the basis of the way the country was going, let's say, thirty percent annual increase in his budget for provision of generators and stand-by capacity. We gave him sixteen, fifteen percent increase. I went and witnessed.
Q. But this is precisely where a system of autocratic rule is supposed to be at its best.
A. And it wasn't. It wasn't, again, because the autocrat was so enamored by other projects and really did not have the patience and the time to go into such details, as I'm saying to you, to understand, to accept. And the position of the minister and the relationship of the minister to him was not such that automatically he would embrace the minister's point and accept the minister's point, you see.
Q. I see.
A. These are the problems. The nature of the actors, also, was very important. How they influenced the Shah was very important. It wasn't that it all was one-sided flow, it was, you know, a sort of a give and take between them and the relationship of the individuals and the Shah. Even in the case of the army this was true. Even in the case of the army, some of the commanders, for example, the commander of the air force, would always receive much greater favors than the commander of the army. The Shah was not all that impressed by the army as he was with the air force, because he wanted a first-rate modern air force and he knew this was technologically important. But more than that, the commander of the air force was his brother-in-law again.
But in this case, the man was good and knew his business, by the way, just between us. He knew what he was doing, he would select the right people, and he was a very systematic type of individual and he was a very courageous type of individual. He would come and tell me, "Look, if we, you don't want to give me the airports, go tell him (meaning the Shah), go tell him not to buy the F-14s and 18s. But he has ordered the F-18's, seventy of them are coming. Where shall I fly them, from the top of my roof?"
Q. Did that mean that he agreed with buying all these F-18's?
A. No, no. He was systematic in this sense. No, no, not at all. He would say, "Now, look, once we have ordered the F-18's, along with the F-18's go all these airports, for example, where we have to fly them from or all these facilities that are required. You have got to give me the facilities or cancel the order." He said, "That you can do, but you go to the Shah and tell him to cancel the order." I would not fight that. Not that he didn't believe that he should have them, but he said, "Let's be logical, let's be rational." He was quite rational.
Well, the commander of the army would come and beg and argue and say, "Now look, we have got to give a little bit of clothes, our barracks are not that good," you know, this type of argument that didn't impress the Shah, it was much easier to dismiss. So the relationship of individuals, even within the army, mattered. The relationship between the Shah and the individuals.
Q. How about the Queen and the other members of the royal family? Did they have important ?????
A. Sure they did, sure they did, in terms of cultural development. And cultural development in a sense was at the end highly exaggerated. Culture meant, as I said, certain type of expenditures that, in the judgment of the bureaucrats and technocrats, had no priority whatsoever. The Queen, after all, was a queen and the Shah would sort of not interfere with the domain of the Queen; and the Queen pressed her point and very often she got her way. But we could appeal again to the Queen and it was much easier with the Queen than it was with the Shah -- appeal to the Queen and argue against projects, argue against providing as much funds. At the end our input was that, again, we allocated less for these type of projects, which had no real priorities in terms of production of goods and services and improving the real standard of living of the peoples throughout the country. The Prime Minister...
Q. Did he have much of a role in this planning, formulation phase of planning?
A. Yes. When we felt that there was sort of a stone wall, when we were stonewalled, we would go to the Prime Minister and beg him to help. I did this many times, "Please help." And then he had the ear of the Shah, he would discuss certain things. He would call me and say, "Now look, all right. On this, I think the Shah will agree to allocate less," or "not do this project," or "delay this project for a couple of years." This type of input the Prime Minister had.
Q. But he himself...
A. But the Prime Minister played a very clever role, you know. I don't remember him having ever a pet project, never. He was very clever that way. The prime minister was very clever that way. He never associated himself with a pet project, that I remember, directly. He may have had something in his heart, which meant he would just wait for somebody else to press it and he will just let him have the day. But directly, I never remembered the Prime Minister telling me, "Look, you've got to do this for me." Never.
I remember the projects that the Prime Minister would encourage me not to support. Not to support. But certainly not projects that he pressed for.
Q. Were there any reports of contractors, whether Iranian or foreign, who tried to push certain projects through the Plan.
A. Yes, yes. On the microwave, I mentioned it was Northrup, the famous case of Northrup. And they must have had a great deal of power, reached the Shah, Alam particularly, who also had an input in this whole business. Alam had his own pet projects, one of them being this microwave. The development of Chabhar, but there of course they had the Shah on their side anyway.
Q. Was this Northrup again? Chabhar?
A. No, no. It was Kashfi as the Iranian contractor and I don't remember the American contractor, English-American contractor if I'm not mistaken.
Q. How would these people work? Would they come and have an appointment with you in your office to push their project...
A. Sure, sure.
Q. Or would they go the minister or all these ways, or how would they do it?
A. Well, I don't remember that in my case, except for Northrup, that the foreign contractor would come and press me. One day, I remember in the case of Northrup, I simply got up and walked out. Walked out of the meeting and simply said to them that, "I have nothing to do with you from now on." I wrote a letter to Mr. Alam saying the Plan Organization would not do this; and I transferred the whole project to the minister of Court and he chaired the meetings and he did it himself.
It also depended on the nature of the minister, whether or not he was a type who would receive these contractors. I was very wary of receiving these people. Oh, I was civil enough, to be sure, I would... Somebody would come in and may put the case to me very politely and say, "We're interested in this and that. Do we have a chance or not?" I'd say, "I do not know. You go see such-and-such who is in charge," or "I'll study this and let you know." But never like the microwave where thirty people came to my office and simply the reason I walked out was the man was telling me that His Majesty has decided this and you cannot change it. The man told me, this foreigner is telling me this and I walked out of the office. To think that a foreigner would be telling me that.
Q. How about the ambassadors. Were they involved in these kinds of discussions?
A. I guess, I don't again remember the American ambassador making a presentation to me. I don't remember the British ambassador making a presentation, strong representation to me about that project or this project, at least not during my term of office, that the ambassador directly coming to me and asking me for a project. But they did this through the Foreign Office, they did this through the Shah. They went through channels properly. And of course, even if they did this through the Foreign Office, that meant the Prime Minister also, because the Prime Minister would receive the feedback from the Foreign Office. I didn't receive it. The Shah may have told about the project, go ahead and do it, without indicating to me that the ambassador has come to him. But I have no doubt that, the way things were, that ambassadors would make representation through the Foreign Office or to the Shah or to the Prime Minister as they would consider a channel to be proper. Not directly, at least during my experience in the Plan Organization, no ambassador ever came to me and pressed me for anything?
Q. Now, if we go to the implementation stage, you discussed earlier, you mentioned earlier that the implementation of projects or, you put it this way, that the Plan was read by only a few people, maybe at most a hundred. And the variance that existed between what was implemented and what was down on paper as the Plan.
A. Now as we prepared the annual budget, at the time of preparation of the annual budget, a whole constellation of new forces came to bear on the new budget. It was a very weak argument to say that the Plan doesn't allow for it, nobody would listen to this. The best we could do, and that's before OPEC, was to use the ultimate control which was the amount of funds available in the budget. There we had a form of overall control, overall control. I mean we'd say, "Look, there's no money." That overall control allowed a certain discipline that enabled us to cut requests to fit, more or less, into the overall Plan allocations.
However, the composition of allocations within the National Budget, in spite of the fact that the budget was in the hand of the planners, and exerted as much pressure as they could, the total of the five annual budgets would show great deviation from the intent of the Plan and from the words of the Plan -- in terms of the goals that we set up, in terms of the strategies that we set up. So, through the instrument of the budget -- which was a function that involved the whole cabinet every year, and the Shah every year, and the parliament every year -- they had found a way to get around the goals and the strategies of the Plan. Not always by intent, very often by miscalculation, misprojection, overages that were created,you know -- don't forget, these projects that we would have estimated to be of such amount would often end up having a hundred percent, a hundred-fifty percent overages, you know.
Such things as demurrage payments, suddenly two billions dollars. Where would it come from? It would come from the Plan allocations.
Q. The payments?
A. Demurrage for the delay of ships that were waiting in line in the Persian Gulf to come to port, was once estimated to cost about two billion dollars worth in '75 and '76. Now, that sort of money had to come from somewhere, obviously.
So it wasn't all that they used the annual budget, as a means to break the Plan because they disagreed with the Plan. No. Also, because there were miscalculations, misprojections. New projects, of course, that had come to their mind, sometimes even projects that we would have now attached more priority to after the Plan document had been approved -- even the planners themselves would have attached more priority to. So, it was a complex of things in that way that came to change, to separate the implementation from the Plan Document itself. But this is true in other countries who plan also.
You know, the Plan Document is not sort of, is not supposed to be unchangeable. The Plan is to be reviewed every year with regard to things that were unpredictable at the time the Plan was written. With regard to new information that is at hand, with regard to new needs that become apparent, you know. Or new revenues that may be coming forth or revenues that were not coming forth, both ways -- falling revenues or increasing revenues.
So Plans do have to be reviewed, I'm not saying that. But very often we found that really there was a callous disregard for the Plan. Nobody really worried what was in the Plan, let's put it that way, except the planners, except the people in the Plan Organization.
Copyright © 2003 by the President and Fellows of Harvard College (Harvard University)
Dr. Habib Ladjevardi
Iranian Oral History Project
Center for Middle Eastern Studies
Harvard University
1430 Massachusetts Avenue
Cambridge, MA 02138
ladjevar@fas.harvard.edu
617.495.4232 (tel)