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EurasiaNet.org, NY
May 5 2012
Azerbaijani Government Awarded Gold-Field Rights To President's Family
May 5, 2012 - 1:10pm, by Nushabe Fatullayeva and Khadija Ismayilova, Azerbaijan
A EurasiaNet Partner Post from: RFE/RL
BAKU -- 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
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.
??Of 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.
??During the hearings, deputy Valeh Aleskerov, chairman of the
parliamentary Natural Resources Committee, defended the deal. He said
the creation of offshore companies was "a common practice around the
world" and that no tender was issued because of the uncertainty about
how much mineral wealth there was. Instead, he said, the government
held talks directly with potential investors.
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."
Editor's note: 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
http://www.eurasianet.org/node/65363
May 5 2012
Azerbaijani Government Awarded Gold-Field Rights To President's Family
May 5, 2012 - 1:10pm, by Nushabe Fatullayeva and Khadija Ismayilova, Azerbaijan
A EurasiaNet Partner Post from: RFE/RL
BAKU -- 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
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.
??Of 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.
??During the hearings, deputy Valeh Aleskerov, chairman of the
parliamentary Natural Resources Committee, defended the deal. He said
the creation of offshore companies was "a common practice around the
world" and that no tender was issued because of the uncertainty about
how much mineral wealth there was. Instead, he said, the government
held talks directly with potential investors.
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."
Editor's note: 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
http://www.eurasianet.org/node/65363