More than a dozen people have been arrested following the discovery of a new suspected letter of credit (L/C) fraud case in Iran.

The head of Iran's State Inspectorate Organisation has said that 14 people have been arrested in this case, in which banks may have been defrauded of around EUR 100 million.

Collateral shortfall

This latest alleged fraud, uncovered in the southern province of Hormozgan, involves corruption within the banking system.

Investigators say EUR 100 million had been lent to a private company by a state bank, which failed to ensure that the necessary collateral was posted.

Case connections

According to some reports, this new case of suspected fraud involves the former head of Bank Melli, Mahmoud Khavari.

He is among the alleged perpetrators in Iran's massive US$2.8 billion L/C fraud case.

Political influence

That case centres on the Amir Mansour Arya Group, which is accused of using its influence over bank and government officials to obtain credit lines and forged L/Cs.

Dozens of people, including senior bank officials, one of Iran's top businessmen and leading politicians are already being investigated for their roles in the suspected frauds (DC World News, 11 October 2011 and 26 October 2011).

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