The former head of Iran's largest state-owned bank, who forged letters of credit (L/Cs) to buy a string of companies in the largest embezzlement scandal the Islamic republic has ever seen, has been given a 20-year prison sentence.

But Mahmoud Khavari is unlikely to serve any time in jail since he fled when his crimes were revealed in 2011 to Canada where he now has citizenship.

Along with his prison sentence, the former head of Bank Melli was given a US$6 million fine in absentia by an Iranian court.

L/C fraud

Tehran's Revolutionary Court heard that investigators discovered a privately held group, Amir Mansour Aria Development that had bought 40 companies, including a major steel mill.

It purchased the companies with forged L/Cs obtained from major banks whose managers had been bribed. The group embezzled an estimated US$2.6 billion.

Death sentence

The group was run by Mahafarid Amir Khosravi, a businessman who was hanged in 2014 for his part in the scandal, which involved widespread bribery and money laundering.

His brother, Mehrgan Amir Khosravi, is a fugitive and on Interpol's most wanted list.

Bank involvement

At further 20 people or more have been arrested in Iran, including the former head of state-owned Bank Saderat, Said Kiani-Rezazadeh, who was also sentenced to death but is thought to still be in prison.

Mahmoud Khavari obtained Canadian citizenship in 2005, and Canada does not have an extradition agreement with Iran.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.