Iran arrests 19 people over major bank scam: media

TEHRAN: Iran has arrested 19 people over what major newspapers described as the biggest financial scam in the Islamic state's history a $2.6 billion bank fraud with possible political ramifications, local media reported on Monday.

Prosecutor General Gholamhossein Mohseni-Ejei confirmed to local reporters the arrests had been made in a case that conservative lawmaker Ahmad Tavakkoli said had revealed "terrifying corruption inside the country's banking system".

Some politicians have linked the scam to close allies of President Mahmoud Ahmadinejad ahead of parliamentary elections scheduled for early next year.

Iran media said the scam involved the use of forged documents to receive credit from the major state-owned Bank Saderat to purchase assets.

Economy Minister Shamseddin Hosseini said when details of the case began to emerge last week that the entired banking system had suffered "disruption" from the scam. He said he expected the funds to be returned in full.

A former defence minister and outspoken Ahmadinejad critic, Akbar Torkan, accused the government of involvement.

"Such a big fraud could have been done by one person only. Definitely high-ranking government officials have helped," Torkan was quoted as saying by the website Khabaronline.

Ahmadinejad has rejected the accusations, calling his government "the cleanest" in the country's history and urging the judiciary to arrest those responsible.

Copyright Reuters, 2011