The recent attention on the Middle East war has revived memories of my time working there as a young chartered accountant. One in particular stands out—a business experience that offered a revealing glimpse into the forces that can drive regime change.
It was 1978, and the transition from one repressive regime to another was already brewing—though we did not recognize it at the time. Oblivious to the impending violence and upheaval just months away, the American engineering and construction company I was working for—Brown and Root, then a Halliburton subsidiary—decided to acquire one of the larger travel agencies in Tehran.
The purpose was twofold. Under the terms of a contract to construct a harbour for the Imperial Iranian Navy on the Chabahar Peninsula, near the Strait of Hormuz, we were required to invest in Iranian small businesses. At the same time, the high cost of flying personnel in and out of Iran prompted someone at the Houston head office to suggest that acquiring a Tehran travel agency might serve both purposes—a two-birds-with-one-stone strategy.
Having just spent two years in Toronto specializing in business and share valuations with one of the major international accounting firms, I was asked to meet with the agency’s manager and provide an opinion on a suitable acquisition price. As I had been trained to do, I prepared a detailed questionnaire covering ownership, operations, earnings patterns, and other key aspects of the business.
The agency—whose name I can no longer recall—occupied the street level of an impressive multi-storey building. No expense had been spared on its rather overstated interior opulence. The manager, Mr. Yusufzai, ushered me into his office, where we exchanged pleasantries and sipped tea served in small glasses with lumps of sugar and without milk, in keeping with local custom. His name has stayed with me over the years, perhaps because he took care to explain that it meant “son of Joseph,” a prophet in Islam.
Once the formalities were out of the way, we began working through my list of questions. With Mr. Yusufzai’s full cooperation, everything proceeded routinely—until we reached what is typically one of the more innocuous questions, and one that almost invariably draws a simple “no”: “Has there been a recent offer for the business, and if so, how much?” The idea is that such information can help inform an overall assessment of value. This time, however, the response was anything but routine. His demeanour changed. Leaning forward, he answered in a hushed tone: “Yes.” He went on to explain that a consortium of five individuals had made a “substantial” cash offer for the business. The owner, however—who was related to the Shah, either a sibling or an in-law, I cannot recall which—had declined it.
The reason, he explained, had nothing to do with the price. What he said spoke volumes about a condition within Iranian society under the Shah that helped fuel the coming revolution. The owner, he told me, given his connection to the palace, could not be seen negotiating the sale of his business with “commoners”—individuals deemed to lack the requisite social standing. They were outside the elite circle and, in that context, effectively invisible.
In retrospect, the owner might have been wiser to swallow his pride and accept the offer from the “commoners.” Only a few months later, in January 1979, while we were still considering the purchase, the Shah was deposed. Members of the widely despised elite circle who managed to flee the country lost their businesses, their status, and their wealth. Many who did not escape, lost their lives.
I, along with everyone else at Brown and Root, was evacuated in January, just before the Shah fled. I have no idea what became of the travel agency, Mr. Yusufzai, or its owner. In the latter case, exile or worse seems likely. As for the consortium of “commoners,” perhaps they eventually acquired the agency after all—at a far more reasonable price, or even for nothing.
In the end, the insight I gained from that business valuation exercise had little to do with business. It was a lesson in how not being “connected at the palace” can, over time, contribute—like brutal political oppression, disparity of wealth, and imposed religious fervour—to conditions unbearable enough for the population to bring about regime change.
