Iran is to impeach its economy minister over an alleged $2.8bn financial scandal.

Parliament approved on 23 October a decision to begin the impeachment process against Shamsoddin Hossein. The minister must appear before parliament next week to answer questions relating to the scandal.

The impeachment letter says issues include Hossein’s “failure to implement law and [prevent] violation of law … vis-a-vis banks” and “no resistance against the interference of executive officials”.

The legislative body is loyal to supreme leader Ayatollah Ali Khamenei and is also pressing for an investigation into President Mahmoud Ahmadinejad and his allies for their suspected involvement in the scandal.

The financial scandal involves a businessman who allegedly forged letters of credit from Bank Saderat and gave them to seven other banks. Bank Saderat is partially owned by the government. The businessman then used the letters of credit to fund 40 companies while he tried to buy a state-owned steel factory with the president’s support as part of the national privatisation plan.

Managing directors of Iran’s largest bank, Bank Melli and Bank Saderat as well as private banks Saman and Gardeshgari have been dismissed amid political and public pressure on the government.

Khamenei and Ahmadinejad have been embroiled in a power struggle since April. Parliamentary elections are scheduled to take place in March 2012 with the presidential elections due in 2013 (MEED 18:4:11).