The Azerbaijani Laundromat

The Azerbaijani Laundromat is a complex money-laundering operation and slush fund that handled $2.9 billion over a two-year period through four shell companies registered in the UK.

The scheme was uncovered through a joint investigation by Berlingske (Denmark), OCCRP, The Guardian (UK), Süddeutsche Zeitung (Germany), Le Monde (France), Tages-Anzeiger and Tribune de Genève (Switzerland), De Tijd (Belgium), Novaya Gazeta (Russia), Dossier (Austria), Atlatszo.hu(Hungary), Delo (Slovenia), RISE Project (Romania), Bivol (Bulgaria), Aripaev (Estonia), Czech Center for Investigative Journalism (Czech Republic), and Barron’s (US).

This project is part of the Global Anti-Corruption Consortium, a collaboration started by OCCRP and Transparency International.

From 2012 to 2014, even as the Azerbaijani government arrested activists and journalists wholesale, members of the country’s ruling elite were using a secret slush fund to pay off European politicians, buy luxury goods, launder money, and otherwise benefit themselves.

Banking records revealing some 2.5 billion euro (US$ 2.9 billion) in transactions were leaked to the Danish newspaper Berlingske, which shared them with OCCRP. The two outlets then organized a collaborative investigation to track down where the money went.

The result is the Azerbaijani Laundromat — so called because the vast sums that passed through it were laundered through a series of shell companies to disguise their origin. The project reveals the many uses to which the country’s kleptocratic ruling clique puts some of its billions.

Among other things, the money bought silence. During this period, the Azerbaijani government threw more than 90 human rights activists, opposition politicians, and journalists (such as OCCRP journalist Khadija Ismayilova) into prison on politically motivated charges. The human rights crackdown was roundly condemned by international human rights groups.

Meanwhile, at least three European politicians, a journalist who wrote stories friendly to the regime, and businessmen who praised the government were among the recipients of Azerbaijani Laundromat money. In some cases, these prominent individuals were able to mobilize important international organizations, such as UNESCO and the Parliamentary Assembly of the Council of Europe, to score PR victories for the regime.

Nor do major Western financial institutions escape responsibility. The banking records in the leak — over 16,000 transactions in all — reveal that the core of the Azerbaijani Laundromat was formed by four shell companies registered in the United Kingdom. The country’s lax regulations allowed these companies to file registration paperwork that listed proxy or non-existent shareholders and disguise their true origins.

Moreover, the records show that Danske Bank, a major European financial institution, turned a blind eye to transactions that should have raised red flags. The bank’s Estonian branch handled the accounts of all four Azerbaijani Laundromat companies, allowing the billions to pass through it without investigating their propriety.

Danske Bank Credit: Äripäev / Andras Kralla

A majority of the payments went to other secretive shell companies similarly registered in the UK, indicating that the full extent of the scheme may be much larger than is currently known. Large amounts also went to companies in the UAE and Turkey. (Some of the transactions involve companies in the Russian Laundromat, a vast money laundering scheme previously exposed by OCCRP.)

The subsequent flow of much of these funds is unknown. But the records reveal that millions of dollars ended up in the accounts of companies and individuals across the world, including luxury car dealerships, football clubs, high-end travel agencies, and hospitals. Many of these recipients would not have understood the problematic nature of the transfers, and cannot be accused of doing anything improper. But their involvement reveals the many uses to which the scheme’s operators put their money.

The recipients also included prominent Azerbaijanis with government positions or connections. These include the family of Yaqub Eyyubov, Azerbaijan’s first deputy prime minister, who is one of the country’s most powerful politicians.

They also include Ali Nagiyev, a man responsible for battling corruption in Azerbaijan. As it turns out, he and his family were major users of the system.

Azeri Corruption Fighter’s Hidden Empire

Another $138 million likely went to AvroMed, a major drug company co-founded by Javashir Feyziyev, a member of the Azerbaijani parliament who specializes in building relationships with EU politicians. (The recipient’s actual ownership is hidden, but its records match what is known about the pharmaceutical giant.)

But where did all this money come from? Its precise origin is unclear — again, hidden behind a series of secretive shell companies — but there is ample evidence of its connection to the family of President Ilham Aliyev.

Almost half of the $2.9 billion came from an account held in the International Bank of Azerbaijan (IBA) by a mysterious shell company linked to the Aliyevs. The second and third biggest contributors were two offshore companies with direct connections to a regime insider. Some of the money came directly from various government ministries. Mysteriously, another portion came from Rosoboronexport, a state-owned Russian arms exporter. It is clear that the full extent of the Azerbaijani Laundromat will be explored for years to come.

The Core Companies

The core companies that power the Azerbaijani Laundromat – through which more than €2.5 billion (US$ 2.9 billion) passed in just two years – are Polux Management LP, Hilux Services LP, Metastar Invest LLP, and LCM Alliance LLP.

They are part of a larger constellation of companies set up by unscrupulous agents to launder and steal large amounts of money. Reporters for OCCRP previously exposed the Russian Laundromat, a fraudulent scheme that moved more than $20 billion out of the Russian Federation, and other, smaller, money laundromats operating in Ukraine.

Two Sets of Documents

Reporters for OCCRP, the Danish newspaper Berlingske, and their partners found two separate sets of documents for each of the four British companies that make up the core of the Azerbaijani Laundromat: Paperwork they filed with the Companies House, where British company registration records are kept; and the filings they made when they opened accounts at Danske Bank in Tallinn, Estonia.

The two sets tell different stories but have one main thing in common: The beneficial owners and directors listed in both cases are not real.

When registering with the United Kingdom’s Companies House, each of the four companies lists a British address. On the other hand, their records at Danske Bank list addresses in Baku, the capital of Azerbaijan.

Hilux Services LP and Polux Management LP were both registered in Glasgow, Scotland on West George Street but in different apartments. Their Azerbaijan addresses are listed at 115 S. Vurgun St. in Baku.

Both companies show the same shareholders in the UK records, and their bank accounts were both opened by the same Azerbaijani man, Maharram Ahmadov.

Both transferred more than $1.7 billion from accounts allegedly handled by Ahmadov. But Ahmadov is unlikely to be the real person in charge – reporters found that he is a working class driver living in a modest home in the outskirts of Baku.

Maharram Ahmadov is the owner of companies that sent millions around the world. In reality, he is a modest driver who lives on the outskirts of Baku, Azerbaijan’s capital. Credit: OCCRP

Reporters for OCCRP talked with Ahmadov, 51, who admitted being involved with the companies as a director, but said he knew nothing about the financial transactions conducted in his name.

He said he was a driver for a bank in Baku and that people in that bank had made him a director. He added that his documents were held at the bank.

Working for the Aliyevs

The banking and registration documents of the two other core Azerbaijani Laundromat companies, LCM Alliance LLP and Metastar Invest LLP, tell a similar story.

The LCM Alliance LLP bank documents list two individuals – Emil Aliyev as a director and Zamina Zamanova as signatory for the bank account. Reporters could not identify Emil Aliyev based on information provided.

But Zamina Zamanova, a public relations manager in the Baku-based SR Group Co., was surprised to learn from an OCCRP reporter that the bank documents show her as signatory. Although her LinkedIn page showed that Zamanova was an assistant director of Kapital Bank (owned by the family of Azerbaijan’s President Ilham Aliyev) between 2011 and 2014, she said it was not her official job.

“I was just helping in Kapital Bank supporting in documentation. Kind of an office manager. Bring this, take that, fill the paper, write this.”

Zamanova made an appointment with reporters for a more in-depth interview, but did not show up. She did not respond to additional requests for information.

Meeting of President Ilham Aliyev with President Vladimir Putin, source: Wikipedia

According to the UK companies registry, LCM Alliance was dissolved in September 2015. When an OCCRP reporter called the company’s Azerbaijani number, which was listed in its banking records, a person answering the office phone said that the company had been moved abroad, that it no longer operates, and that its former premises have been rented to a tourism company. However, when the reporter later called incognito seeking documentation for a purchase made in 2013, an employee located the relevant details and said they could make additional transfers if needed.

Metastar, too, appears to have been dissolved in January 2016 – at least according to the UK records. But the Metastar office is still operating at its Azadliq Avenue address, although there are no signs on the doors and cameras monitor traffic inside and out. The leaked documents show Elvin Shirinov as a director and beneficiary of Metastar, while employees of the company say he is the boss only on paper.

Shirinov himself answered the phone at the office and was identified as a Metastar clerk by a businessman who has made transfers with the company in the past. Shirinov denied any affiliation to the company as soon as an OCCRP reporter identified herself as a journalist.

When OCCRP reporter went to the premises to submit an official information request, company employees locked the internal doors of the office.

A businessman who asked to remain anonymous told OCCRP he used to make small transfers through Metastar for buying goods from abroad. He explained that the company he worked for was interested in hiding the real scope of its business to “stay low profile” and to “avoid [having to pay] huge bribes to the government officials.”

He said Metastar didn’t request any documents for his company and that he was able to transfer payments without identifying his business.

When opening their bank accounts at Danske Bank, the four Azerbaijani Laundromat companies filed information about the origin of their money and their beneficial owners.

By OCCRP

 

 

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