The recent events at Hepco, a company in central Iran where police violently suppressed a series of peaceful workers’ protest, are a culmination of the troubled and opaque processes through which Iran privatizes its most profitable companies. Hepco employees began staging protests in 2017, demanding six months of backpay. This time around, on September 16, the workers say they have not been paid for two months, and only received 70% of their pay this spring.

A look back at official documents and news items published over the last decade shows how Hepco was mismanaged by a procession of state-backed private owners, each appearing to strip away at the assets of the once-profitable company. 

The Hepco factory complex is a lynchpin in the economy of the city of Arak. In 1992, at the height of its post-revolutionary activity, it was capable of turning out over 3,000 pieces of heavy construction machinery. Hepco became a limited liability company in the early 2000s, during the presidency of Akbar Hashemi Rafsanjani, whose liberal economic policies started privatizing state-owned businesses in Iran.

The registration document for Hepco Heavy Machinery Production can be found at

In 2003, the company floated nearly 40 percent of its stock on the Tehran Stock Exchange, asking 2,200 IRR per share. Hepco’s most recently reported share price is 909 IRR, down almost 60 percent from its original ask price.

Hepco’s privatization continued in 2006 under the presidency of Mahmoud Ahmadinejad, who was known for his economic cronyism. That year, the state-run Iran Privatization Organization (IPO) sold 70 percent of Hepco shares to Kowsar Wagon, a company owned by Isfahan businessman Ali Asghar Attarian, for 75 billion tomans.

An image of the IPO document about the share transfer can be found on the organization’s website:

Attarian agreed to a 30 percent down payment of the ask price, followed by 18 installments. Pasargad Bank, which financed the entire down payment, still lists the 21 billion toman as an unpaid debt. Notably, it is Hepco–not Attarian personally–who is liable for the debt, according to Tasnim News. 

Of the remaining 54 billion toman, which was to be paid back in 18 installments of 3 billion toman, only one installment was ever paid to the IPO. Despite this poor credit record, Attarian continued to obtain bank loans for Hepco, which were never paid back, according to Tasnim News.

In 2012, Attarian unveiled plans to raze the Hepco factory complex and replace it with a recreational and residential project. Here is an image of the blueprint:

Source: Tasnim News

This erratic scheme finally compelled the state to intervene, according to reports by Mashregh and Tasnim news agencies.

IPO took over the company from Attarian following his resignation as chairman of the board, according to a statement published by IPO last spring. IPO says it approached Khatam al-Anbia and Mostazafan Foundation, but these bonyads refused to bail Hepco out.

Finally, the organization resold Hepco to Assadollah Ahmadpour, the owner of construction equipment producer Hydro Atlas, licensed by the German crane producer Atlas Maschinen GmbH, for only 10 million toman without collateral.

Here is an image of the contract, obtained by Raja News:

By 2018, the debt accumulated by Hepco reached 958 billion toman. Iran’s Central Bank lists Attarian as one of its largest debtors.

A new era

Attarian’s successor, Ahmadpour, appeared to have the same types of fiscal problems as Hepco’s former owner, according to news reports by Tasnim and Mashregh news agencies. It is a startling oversight by IPO.   

When the governor of the city of Arak asked the Islamic Revolutionary Guard Corps, Iran’s ideological military, to vet Ahmadpour, the corps uncovered significant debt to banks and the Social Security Organization. The vetting showed Ahmadpour issued bounced checks amounting to over 50 billion toman. Another issue, claimed the IRGC, was that Ahmadpour is a dual citizen of an unnamed country, raising the risk of capital flight.

A bold allegation by Hepco workers provides a plausible explanation for Hepco’s continuing problems under Ahmadpour leadership. The employees claim that Ahmadpour imports pieces of machinery, repaints them and unveils them as new Hepco products.

A Tasnim News article shows two images:

1. A machine bearing the insignia of parent company Atlas:

2. The same type of machine marketed as a Hepco product at an international expo:

This practice has become standard among Iranian industrialists. According to interviews inside Iran conducted by Doublethink staff in 2017, businessmen find it more profitable, due to international sanctions on the country, to import valuable equipment from abroad and resell it on the domestic market than to assemble or manufacture it locally.

In a statement published last year, IPO cites “unnecessary imports of construction machinery similar to Hepco products” as one of the reasons for the company’s financial problems:

The lists of foreign “partners” published on Hepco’s English-language websites provide some clues to the real origin of Hepco products:

Our database of ownership records shows that Farab, a partner company listed on Hepco’s English website, is a joint venture between Sepah Cooperative Foundation and Astan Qods Razavi, while Mapna is an Astan Qods Razavi company.

On May 21, 2018, IPO announced that Ahmadpour had “resigned” as the main shareholder of Hepco. Later, it became clear that the resignation was an effort to appease workers as they launched a series of strikes, demanding several months of unpaid salaries.

A statement published by IPO last May outlines the complicated status of Hepco following Ahmadpour’s withdrawal:

IPO has now set new conditions for yet another sale of Hepco, according to IPO and Tasnim news. The buyer must settle the company’s one trillion toman debt. Additionally, the buyer must agree to buy Hepco’s privately owned shares for two trillion toman. Meanwhile, the real value of Hepco is somewhere around 300 billion toman, according to Tasnim, 85 percent lower than the ask price.

These events, in addition to last week’s heavy-handed police reaction to ongoing labor protests in Arak, have not prevented Ahmadpour from praising himself for his deft managerial practices. In a self-congratulatory annual board report published this February, board members claim “the company has managed to move forward and maintain its position as a trusted brand in Iran…(despite)…economic instability and recession in the aftermath of the United States pulling out of the nuclear deal.”

A copy of the board report can be found on the financial records registry, Codal:

If Hepco is resold in line with IPO’s current requirements, Ahmadpour would receive two trillion toman for a company he effectively bought for less than a fifth of that amount. Notably, the Hepco board had the company reappraised at 900 million toman, or three times higher than other estimates.

“All subsidiaries have improved their output and services and helped the company improve its financials,” the board report states in an apparent effort to justify the inflated appraisal.

Hepco board members include four of its subsidiaries: FARTAK Machine co (Ltd), Hamgam Heavy Equipment Services Co (PVT), Agriculture, Construction, and Mining Machinery Manufacturing and Engineering Co (PVT) and Hepco Engineering & Part Co (PVT). Hepco’s fifth board member is Hydro Atlas, licensed by the German Atlas GmbH, according to the company’s listing on the Tehran Stock Exchange:


The takeaway: A list of unanswered questions

If Hepco is indeed as profitable as Ahmadpour and the other board members suggest, why are the paychecks it issues to its workers bouncing?

What happened to the 85 billion toman that Iran’s banks provided the company’s owners over the years?

Why did the bonyad-linked Pasargad, considered one of Iran’s top private banks, continuously issue loans to an individual with bad credit?

And last but not least, why did IPO, whose state-ordained role is to ensure companies like Hepco are well-managed by private owners, repeatedly entrust the company to individuals with bad credit?

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