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AZERBAIJANI GOVERNMENT AWARDED GOLD-FIELD RIGHTS TO PRESIDENT'S FAMILY
By Nushabe Fatullayeva and Khadija Ismayilova
http://azerireport.com/index.php?option=com_content&task=view&id=3597&Ite mid=42
BAKU. May 4, 2012: Novruz Allahverdiyev, 40, lives in a mud house
in the village of Chovdar, a small mining town in the mountainous
region near the border with Armenia. He is one of 800,000 internally
displaced persons from the war with Armenia that battered his native
Nagorno-Karabakh region in the early 1990s.
Allahverdiyev and members of 60 other displaced families found
shelter and a place to farm in the mountains around Chovdar. Like
many in his predicament, Allahverdiyev is patriotic, and the walls
of his poor home are plastered with pages from an aging calendar
featuring portraits of President Ilham Aliyev and his late father,
former President Heydar Aliyev.
Allahverdiyev's family now faces yet another problem. A British mining
company has taken over some of his land and has blocked one of the
two streams his village relies on for water. Allahverdiyev is sure
President Aliyev will help him and his community.
But his faith may be misplaced. What Allahverdiyev doesn't know is
that the president and his family own a stake in the new mine. The
U.K. company is actually a front for the first family.
In two 2007 decrees, the state assigned the right to develop the
Chovdar gold field and five other sites to a company called Azerbaijan
International Mineral Resources Operating Company, Ltd. (AIMROC).
AIMROC -- which controls a 70 percent stake in the mines, while the
Azerbaijan government controls 30 percent -- has been building the
infrastructure for the Chovdar mine and is expected to begin production
this year.
Panamanian Trail
Ilham Aliyev's daughters, Arzu (left) and Leyla, are listed as senior
managers at the Panamanian-registered companies.
But sorting out AIMROC's structure is a daunting task. While Chovdar
locals blame the "ingilis" (English) for their woes, the truth is
quite different. AIMROC is a joint venture of four companies: Londex
Resources, S.A, Willy and Meyris S.A., Fargate Mining Corporation,
and Globex International LLP. All four are shell companies that,
according to Azerbaijani officials, were set up specifically for
this deal. It is unclear if any of them have any mining experience
or other mining projects.
A fifth company -- Mitsui Mineral Development Engineering Co Ltd
(MINDECO), a mining-engineering company owned by Japan's Mitsui Mining
and Smelting Company -- is listed as the official project supervisor,
but has no ownership.
â~@~Kâ~@~KOf the four AIMROC owners, the only U.K.-based company is
Globex International, which has an 11 percent stake, worth about $200
million. But Globex is actually owned by three companies registered in
Panama: Hising Management SA, Lynden Management Group, Inc., and Arblos
Management Corporation. According to Panamanian registration records,
all three firms list President Aliyev's two daughters -- Leyla and Arzu
Aliyeva -- and Swiss businessman Olivier Mestelan as senior managers.
Mestelan has long had close ties to the Aliyev family. He has organized
artistic events with them and, together with Leyla and Arzu, appears
in the records of other Panamanian companies being used as fronts
for businesses in Azerbaijan, including the Azerfon cellular-services
provider. Mestelan declined to be interviewed for this story.
Aliyev's office refused to answer questions about his family's
business interests in the gold fields. Presidential spokesman Azer
Gasimov did not return phone calls and did not respond to questions
submitted in writing.
Opaque Decisions
AIMROC has been controversial from its beginning. The consortium was
formed by a 2006 presidential decree that identified Globex as part
of the consortium. In 2007, AIMROC was awarded 30-year leases on the
mineral fields.
Chovdar alone is a lucrative parcel. According to the Azerbaijani
Environment Ministry, it contains reserves of 44 tons of gold and
164 tons of silver, worth about $2.5 billion at current prices.
The contracts were awarded to AIMROC hastily and over the objections
expressed by many members of parliament during hearings held in June
2007. Lawmakers complained that the consortium's ownership was opaque;
that the contract was awarded in violation of bidding procedures;
that none of the companies had any history of mining; and that the
deal was contrary to Azerbaijan's national interests.
The Environment Ministry's chief geologist, Agamahmud Samedov, told
RFE/RL that the estimates of the other five fields are classified. He
also declined to comment on AIMROC's ownership or its lack of mining
experience.
When asked last month about AIMROC's ownership, Aleskerov said,
"Do you think the Azerbaijani government would contract with someone
unknown, with just anyone from the street?" When asked if the Aliyev
family has any financial interest in the project, Aleskerov said only
"Shame on you!" and hung up.
Professional Proxies
Parsing the rest of AIMROC's structure is more difficult. Londex
Resources and Fargate Mining are registered in Panama, according to
documents obtained from the Panama Registry of Companies.
The documents indicate that the companies are interrelated through a
complicated chain of company directorships. All three are or were at
one time owned by two companies registered at the same address on the
tiny Caribbean island of Nevis: Casal Management and Tagiva Management.
Casal and Tagiva act or acted as the director for at least 20 companies
in the United Kingdom, the United States, and Panama. It is likely that
the companies are professional proxies used to hide actual ownership.
According to a document of the Tax Registry of Azerbaijan, Willy
and Meyris S.A. (listed in some documents as Will & Meyris S.A.) is
represented by a Czech geologist, Mirko Vanecek, the executive editor
of "The Journal of Geosciences" in Prague.
'The President Is A Good Person'
Meanwhile, back in Chovdar, locals are looking forward to a rumored
visit by President Aliyev to mark the opening of an ore refinery the
consortium has built.
"We have heard that president will come to the opening ceremony of this
factory," villager Paneh Huseynov says. "Please tell our president
to come and visit us. Tell him we support his policies. We will not
be allowed to approach him. Please, we ask him to come and ask about
our living conditions. Then he'll see how we live and how we suffer."
Villagers had no idea that the president's family owns part of
the mine operator. "How can the president be benefiting from this
production? ... All of the companies here are foreign. Englishmen
are running the business here," says one local who refuses to give
his name.
Teacher Nureddin Ramazanov lost some land to AIMROC. With a salary
of just $130 per month, Ramazanov says his family is starving.
"The company destroyed our road," he says. "Geologists took our land.
They paid us only 2,000 manats [$2,500] per hectare.... Now I don't
know how we'll survive."
Meanwhile, Karabakh exile Allahverdiyev says he is hoping to get a job
at the mine. Locals say mining jobs pay the equivalent of $12 a day.
So far, the mining site has hired very few locals.
Despite grinding poverty and the problems with the mine, most locals
remain firm in their faith in Aliyev, whose omnipresent portrait gazes
out over the people of Chovdar from the walls of shops and schools.
"The president knows nothing about this," says teacher Ramazanov.
"Local officials say the president ordered that our land be taken,
but I don't believe it. He is a good person."
Graphic: Azerbaijani President Ilham Aliyev's family stake in the
gold fields
* This report was first published by the RFE/RL. This report was
produced by the Organized Crime and Corruption Reporting Project
(OCCRP) in cooperation with RFE/RL's Azerbaijani Service. OCCRP
project coordinator Paul Cristian Radu contributed from Bucharest,
and RFE/RL correspondent Robert Coalson contributed from Prague
By Nushabe Fatullayeva and Khadija Ismayilova
http://azerireport.com/index.php?option=com_content&task=view&id=3597&Ite mid=42
BAKU. May 4, 2012: Novruz Allahverdiyev, 40, lives in a mud house
in the village of Chovdar, a small mining town in the mountainous
region near the border with Armenia. He is one of 800,000 internally
displaced persons from the war with Armenia that battered his native
Nagorno-Karabakh region in the early 1990s.
Allahverdiyev and members of 60 other displaced families found
shelter and a place to farm in the mountains around Chovdar. Like
many in his predicament, Allahverdiyev is patriotic, and the walls
of his poor home are plastered with pages from an aging calendar
featuring portraits of President Ilham Aliyev and his late father,
former President Heydar Aliyev.
Allahverdiyev's family now faces yet another problem. A British mining
company has taken over some of his land and has blocked one of the
two streams his village relies on for water. Allahverdiyev is sure
President Aliyev will help him and his community.
But his faith may be misplaced. What Allahverdiyev doesn't know is
that the president and his family own a stake in the new mine. The
U.K. company is actually a front for the first family.
In two 2007 decrees, the state assigned the right to develop the
Chovdar gold field and five other sites to a company called Azerbaijan
International Mineral Resources Operating Company, Ltd. (AIMROC).
AIMROC -- which controls a 70 percent stake in the mines, while the
Azerbaijan government controls 30 percent -- has been building the
infrastructure for the Chovdar mine and is expected to begin production
this year.
Panamanian Trail
Ilham Aliyev's daughters, Arzu (left) and Leyla, are listed as senior
managers at the Panamanian-registered companies.
But sorting out AIMROC's structure is a daunting task. While Chovdar
locals blame the "ingilis" (English) for their woes, the truth is
quite different. AIMROC is a joint venture of four companies: Londex
Resources, S.A, Willy and Meyris S.A., Fargate Mining Corporation,
and Globex International LLP. All four are shell companies that,
according to Azerbaijani officials, were set up specifically for
this deal. It is unclear if any of them have any mining experience
or other mining projects.
A fifth company -- Mitsui Mineral Development Engineering Co Ltd
(MINDECO), a mining-engineering company owned by Japan's Mitsui Mining
and Smelting Company -- is listed as the official project supervisor,
but has no ownership.
â~@~Kâ~@~KOf the four AIMROC owners, the only U.K.-based company is
Globex International, which has an 11 percent stake, worth about $200
million. But Globex is actually owned by three companies registered in
Panama: Hising Management SA, Lynden Management Group, Inc., and Arblos
Management Corporation. According to Panamanian registration records,
all three firms list President Aliyev's two daughters -- Leyla and Arzu
Aliyeva -- and Swiss businessman Olivier Mestelan as senior managers.
Mestelan has long had close ties to the Aliyev family. He has organized
artistic events with them and, together with Leyla and Arzu, appears
in the records of other Panamanian companies being used as fronts
for businesses in Azerbaijan, including the Azerfon cellular-services
provider. Mestelan declined to be interviewed for this story.
Aliyev's office refused to answer questions about his family's
business interests in the gold fields. Presidential spokesman Azer
Gasimov did not return phone calls and did not respond to questions
submitted in writing.
Opaque Decisions
AIMROC has been controversial from its beginning. The consortium was
formed by a 2006 presidential decree that identified Globex as part
of the consortium. In 2007, AIMROC was awarded 30-year leases on the
mineral fields.
Chovdar alone is a lucrative parcel. According to the Azerbaijani
Environment Ministry, it contains reserves of 44 tons of gold and
164 tons of silver, worth about $2.5 billion at current prices.
The contracts were awarded to AIMROC hastily and over the objections
expressed by many members of parliament during hearings held in June
2007. Lawmakers complained that the consortium's ownership was opaque;
that the contract was awarded in violation of bidding procedures;
that none of the companies had any history of mining; and that the
deal was contrary to Azerbaijan's national interests.
The Environment Ministry's chief geologist, Agamahmud Samedov, told
RFE/RL that the estimates of the other five fields are classified. He
also declined to comment on AIMROC's ownership or its lack of mining
experience.
When asked last month about AIMROC's ownership, Aleskerov said,
"Do you think the Azerbaijani government would contract with someone
unknown, with just anyone from the street?" When asked if the Aliyev
family has any financial interest in the project, Aleskerov said only
"Shame on you!" and hung up.
Professional Proxies
Parsing the rest of AIMROC's structure is more difficult. Londex
Resources and Fargate Mining are registered in Panama, according to
documents obtained from the Panama Registry of Companies.
The documents indicate that the companies are interrelated through a
complicated chain of company directorships. All three are or were at
one time owned by two companies registered at the same address on the
tiny Caribbean island of Nevis: Casal Management and Tagiva Management.
Casal and Tagiva act or acted as the director for at least 20 companies
in the United Kingdom, the United States, and Panama. It is likely that
the companies are professional proxies used to hide actual ownership.
According to a document of the Tax Registry of Azerbaijan, Willy
and Meyris S.A. (listed in some documents as Will & Meyris S.A.) is
represented by a Czech geologist, Mirko Vanecek, the executive editor
of "The Journal of Geosciences" in Prague.
'The President Is A Good Person'
Meanwhile, back in Chovdar, locals are looking forward to a rumored
visit by President Aliyev to mark the opening of an ore refinery the
consortium has built.
"We have heard that president will come to the opening ceremony of this
factory," villager Paneh Huseynov says. "Please tell our president
to come and visit us. Tell him we support his policies. We will not
be allowed to approach him. Please, we ask him to come and ask about
our living conditions. Then he'll see how we live and how we suffer."
Villagers had no idea that the president's family owns part of
the mine operator. "How can the president be benefiting from this
production? ... All of the companies here are foreign. Englishmen
are running the business here," says one local who refuses to give
his name.
Teacher Nureddin Ramazanov lost some land to AIMROC. With a salary
of just $130 per month, Ramazanov says his family is starving.
"The company destroyed our road," he says. "Geologists took our land.
They paid us only 2,000 manats [$2,500] per hectare.... Now I don't
know how we'll survive."
Meanwhile, Karabakh exile Allahverdiyev says he is hoping to get a job
at the mine. Locals say mining jobs pay the equivalent of $12 a day.
So far, the mining site has hired very few locals.
Despite grinding poverty and the problems with the mine, most locals
remain firm in their faith in Aliyev, whose omnipresent portrait gazes
out over the people of Chovdar from the walls of shops and schools.
"The president knows nothing about this," says teacher Ramazanov.
"Local officials say the president ordered that our land be taken,
but I don't believe it. He is a good person."
Graphic: Azerbaijani President Ilham Aliyev's family stake in the
gold fields
* This report was first published by the RFE/RL. This report was
produced by the Organized Crime and Corruption Reporting Project
(OCCRP) in cooperation with RFE/RL's Azerbaijani Service. OCCRP
project coordinator Paul Cristian Radu contributed from Bucharest,
and RFE/RL correspondent Robert Coalson contributed from Prague