Iran's judiciary said Tuesday it had commuted a death sentence handed down against a billionaire business tycoon convicted of pocketing $2.8 billion while circumventing US-led sanctions for the oil ministry.

Following an appeal for clemency, Babak Zanjani, 50, was sentenced instead to 20 years behind bars, judiciary spokesman Asghar Jahangir told reporters.

"With the approval of the head of the judiciary, (Gholam-Hossein Mohseni-Ejei) and the agreement of the (supreme) leader (Ayatollah Ali Khamenei), his death sentence was overturned and was commuted to 20 years of imprisonment," Jahangir said.

The judiciary chief had taken into consideration "his cooperation during his time in prison" and his return of properties held abroad, Jahangir added.

Zanjani had been found guilty of the capital offence of "corruption on earth" after a lengthy public trial in 2016, a rarity in Iran where high-profile cases are normally held behind closed doors.

Zanjani denied any wrongdoing throughout the trial, insisting that the only reason the missing funds had not been paid to the oil ministry was that sanctions had prevented a planned transfer from taking place.

In media interviews since, he has said repeatedly that he was tasked by the administration of then president Mahmoud Ahmadinejad with evading restrictions on Iran's access to the international banking system to repatriate hard currency receipts in return for commission.

Ahmadinejad's successor Hassan Rouhani repeatedly accused his predecessor's 2005-13 administration of corruption, triggering a series of prosecutions over alleged illegal commission payments.

Zanjani is one of the most high-profile Iranian business figures targeted with asset freezes and travel restrictions by the European Union and the United States for their role in helping their government to evade sanctions.