TEHRAN, Feb 18 (Reuters) - Thirty-two people suspected of involvement in a multi-billion dollar banking fraud with alleged links to the government of Iranian president, Mahmoud Ahmadinejad, have gone on trial in Tehran, the Iranian state news agency reported.
The record embezzlement case revolves around the alleged use of forged documents by Iranian businessman Amir Mansour Khosravi to secure loans to buy state-owned companies under the government's privatisation scheme.
The businessman is accused of securing around 2.6 billion dollars from a number of Iranian banks.
President Ahmadinejad has rejected accusations from his hardline rivals that Khosravi had links to the head of his presidential office, Esfandiar Rahim Mashaie.
The defendants and their lawyers appeared at one of Tehran's revolutionary courts on Saturday which was open to the press, IRNA reported. The report did not name any of the accused but they are believed to include Amir Mansour Khosravi and Mahmoud Reza Khavari, the former head of Bank Melli, who fled to Canada after the fraud was uncovered last year.
"The activities of Amir Mansour's development company is an example of an organised band that has undermined the economic security of the society," said Tehran prosecutor general, Abbas Jafari Dolatabadi, reading out the 200-page indictment.
The most serious charges relate to being "corrupt on earth" by disrupting the economy through collusion, propagating fraud within banking system, securing wealth by illicit methods, swindling, and using counterfeit documents.
If found guilty, the defendants could be sentenced to death.
The trial is likely to compound the power struggle between President Ahmadinejad and the Supreme Leader, Ali Khamenei, which emerged in public last year.
After a spat over the sacking of the intelligence minister, conservatives loyal to Ayatollah Khamenei launched a sustained campaign to intimidate the president by arresting close advisers and accusing him of challenging the Supreme Leader's authority.
They accuse Rahim Mashaie of spreading a "deviant current" in the presidency by trying to dilute the Islamic character of Iran and undermine the role of the clergy.
According to its website, the Amir Mansour Investment Company owns 20 companies across Iran, ranging from steel to food production.
The government took possession of the company's assets, worth more than $4 billion, in September. (Reporting by Hashem Kalantari and Marcus George, editing by Rosalind Russell)