Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎190r] (379/644)

about 86 in mid-December 1935 to 100 at the end of February and at the beginning
of March the Government had no choice but to introduce stringent regulations
for the control of foreign exchange. The rate of exchange was arbitrarily fixed
at 80 by the Shah after the Minister of Finance had selected 85, the Imperial
Bank of Iran gave the Government a credit of £300,000 at a low rate of interest
to provide a fund for the support of the exchange, and it was understood that a
policy of economy was to be pursued by the drastic suppression of a number of
schemes of economic development. As the year wore on, however, it became
apparent that most of the good resolutions in regard to economy were being
forgotten and that despite the system of control the foreign exchange situation
was becoming steadily more critical. The Government began in the autumn to
diaw on its credit from the Imperial Bank of Iran, while by the end of the year
semi-Government trading companies were understood to be in receipt of credits
from that bank amounting to approximately £500,000. At the same time it
became known that the balance of payments arising out of the Irano-German
Clearing Agreement had become badly upset, an estimate from a good source being
that at the cncl of the year the sum owing to Germany was as much as 20 million
marks. 1 he Government were, moreover, seizing on every possible expedient to
obtain foreign exchange, and the year closed with foreign contractors badly
frightened by the sudden regulation of the Government that banks might only
give them overdrafts if these were covered by deposits in Iran of gold, foreign
currency or negotiable securities.
244. It is happier to turn from these difficulties to the arrival home of the
\ aliahd from his school in Switzerland. He had been away for five years and was
16 years old when he arrived back at the beginning of May. He proved to be
a well-grown, good-looking boy, and when the Diplomatic Corps were presented
to him at a special reception soon after his return, he discharged his part with
grace and courtesy. During the rest of the year little was seen of him; he lived
quietly at the Palace and took part in but few public functions, though he accom
panied his father on his tour to Tabriz, Kermanshah and Hamadan in the autumn
and went with him in November to Mazanderan and Gilan. At the end of the
year he was pursuing his studies at the Military Academy under the French
Military Mission, finding his relaxation in riding and football.
245. Mention must now be made of the scandal in the Ministry of Com
munications. On the 19th January the Prime Minister announced to the Majlis
that M. Ali Mansour had proved himself negligent in the performance of his
duties and was therefore relieved of his appointment as Minister of Hoads and
Communications. At about the same time it became known that a number of
officials in the Ministry as well as certain Iranians in the employ of foreign
contracting firms, such as Kampsax and the Netherlands Harbour Works
Company, had been arrested on charges of peculation and bribery. Later
M. Mansour was himself arrested, as was his predecessor, M. Reza Afshar, who
was alleged to have accepted a bribe of £400 from Issa Kooros, the agent of
Imperial Chemical Industries (Limited) and other British firms, in connexion
with a contract for the purchase of explosives. A special sub-commission of the
Ministry of Justice which was appointed to make an enquiry into the whole
question, produced in March a report which contained a formidable series of
accusations against some fifteen persons besides the two ex-Ministers, and with
the summer came a series of spectacular trials. The first was that of M. Afshar,
who was found guilty of accepting a bribe from Kooros and was sentenced to
six months’ imprisonment, to a fine equal to double the amount of the bribe and
to the deprivation of the right to serve as a Government servant. M. Mansour’s
turn came next. He was accused of accepting two bribes, totalling 250,000 rials
(£3,125), and of having caused a loss to the Government by placing an order for a
dredger with one foreign company when another had submitted an appreciably
lower tender. He put up a spirited defence, pointing out that he had had control
of the expenditure of enormous sums and could have taken, had he wished, far
larger sums than those mentioned in his indictment, and that in general he had
had the tremendous task of building up an efficient department out of
unpromising material and had done the best he could. To the general surprise
he was acquitted, the court ruling that there was insufficient evidence on all three
accounts. In so far as any expression of opinion is possible in Iran, his acquittal
appeared to be popular, more than one person saying that he probably had