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PRESIDENT ALIYEV'S FAMILY BENEFITS FROM EUROVISION HALL
By Khadija Ismayilova
Radio Free Europe/Radio Liberty
Later this month, the eyes of the world will be focused on a shimmering
glass and steel building newly erected on the shores of the Caspian
Sea to welcome the pop stars and television crews from more than 40
European countries who will broadcast the Eurovision Song Contest
2012 spectacle.
Azerbaijan won hosting rights to the popular extravaganza last
year when the Azerbaijani pop duo of Ell and Nikki sang their way
to victory in Eurovision 2011. The Azerbaijan government responded
proudly with plans for a new $134 million concert showplace called
the Crystal Hall which seats 23,000. Finished only a few weeks ago,
it was a tense race to get the venue ready in time. Its importance
was signaled by the frequent visits made by President Ilham Aliyev
and First Lady Mehriban Aliyeva to the bold geometric structure as
it rose amidst the construction site.
But their interest was not just ceremonial and patriotic. An
investigation by the Organized Crime and Corruption Reporting Project
(OCCRP) and Radio Free Europe/Radio Liberty has discovered that the
first family is personally profiting from the massive construction
project through its hidden ownership in the AZENCO construction
company.
The company contracted for the work has long been identified in all
official announcements as the German company Alpine Bau Deutchland AG.
Yet some of the equipment at the construction site is stamped with
the company name AZENCO . Rolf Herr, a representative of Alpine Bau
in Azerbaijan, described AZENCO as a subcontractor.
He would give no other details of its involvement. The Alpine Bau
press office in Germany did respond to an email by OCCRP.
"We usually don't publish any information regarding our business
contacts with subcontractors. Therefore we unfortunately cannot
answer your questions," said Nicole Weixler, a marketing manager,
in the email.
Trucks from AZENCO during construction of the hall
AZENCO is owned through a series of front companies that mask the
real owners. The official newspaper of the agency for privatization
of state property in Azerbaijan announced in 2010 that Baku-based
Interenerji MMC acquired 97.5 percent of the shares of AZENCO.
According to privatization records from March 2010, ADOR MMC,
another Baku-based company controls 70 percent of the ownership of
Interenerji. That company's registration documents list its legal
address as "7 Samed Vurgun Street". The registered occupants of that
address at the time were Mehriban Aliyeva, Leyla Aliyeva and Arzu
Aliyeva, the wife and daughters of the president respectively.
In 2010, Radio Free Europe/Radio Liberty investigated the privatization
of the State Aviation Company's infrastructure, including Azalbank
(currently Silkwaybank), which also has as a registered shareholder
Arzu Aliyeva, residing at the same address.
Presidential spokesperson Azer Gasimov at the time confirmed that
the shareholder was indeed the president's daughter.
Gasimov did not respond to repeated phone calls and a written inquiry
about the president's family's connection to Azenco and the appearance
of a conflict of interest if Azenco is profiting from state-funded
construction projects.
Eurovision 2012 event coordinator Sietse Bakker said that it was not
the proper organization to answer questions about the First Lady or
the Crystal Hall construction.
Bakker said the city of Baku commissioned the multi-functional indoor
venue before Azerbaijan won Eurovision. "We have no involvement with
the construction of the hall, so you should ask this question to the
responsible authorities."
Record sources do not support Bakker's contention. Presidential order
1620 from July of 2011 to build the concert hall came after the May
Eurovision victory.
"I have not seen written records," Bakker said, "but it doesn't take
much to realize that there is quite a lot of planning going into the
construction of such venue," Bakker said."
The Crystal Hall is the second project to raise conflict of interest
questions about Azenco.
It also helped construct the grandiose US$38 million State Flag Square
near the Crystal Hall, which briefly held the Guinness Book of World
Records title for tallest flagpole in the world.
A few months after it was put up, Azerbaijan's 162-meter flagpole
was surpassed by an even bigger flagpole in Dushanbe in Tajikistan
designed by the same American firm.
Two -thirds of the cost of the square in Baku came from the Reserve
Fund of the head of state by presidential decrees 532 ( Oct. 26, 2009)
and 1052 (Aug. 3, 2010). The other third came directly from the 2011
state budget in accordance with a decree of the Cabinet of Ministers
260 S (Aug. 25 2011).
A spokesman for the Cabinet, Akif Ali, refused to respond to questions
about how Azenco came to be chosen as a partner in the project.
Azenco has been employed on numerous state-funded projects less showy
but no less profitable than the Baku work. State Procurement Agency
records show that in 2010 alone the company was awarded contracts
worth US$79 million. The company also recently gained control of
Sumgayit Technology Park, a former State funded enterprise started
by Azerenerji, the government owned energy production company.
Azer Mehtiyev, director of the Center for Assistance to Economic
Initiatives, a politically independent think tank, said Azenco was
a clear example of a scheme to misappropriate some of the country's
big oil money.
"With the big oil money flowing into the budget, a parallel process of
monopolization of spheres of economy, re-division of state property ...
(made) way for the misappropriation of revenues," Mehtiyev said.
"Big infrastructure projects financed by oil revenues are mainly
distributed to companies which belong to high-ranking officials. The
government keeps the information about owners of the companies secret.
The state contracts are assigned to companies established in offshore
zones with unknown owners making the public control over the process
impossible," he said.
According to Mehtiyev, it is especially difficult to get information
about the business interests of the president's family.
Azerbaijan adopted an Anti-Corruption Law in 2004 that obliges
officials to declare the income and property holdings of themselves
and their relatives.
In August 2005 (order number278), the president ordered the Cabinet
of Ministers to prepare a special form on which officials would give
that information within two months. But the forms were never drafted
and officials never provided the information. It is not clear if
the president or the first lady, who is also a member of parliament,
have submitted declarations in the past decade.
The Presidential administration and the Central Election Commission
will not respond to questions about their property. A written inquiry
sent to the First lady's web page was not answered.
In January 2011 President Aliyev declared that the government would
take serious measures against corrupt officials.
The 2012 Eurovision event will have one other tie to the first family
besides the new showcase auditorium. Between acts, the singer chosen
to entertain the crowd just happens to be the President's son-in-law
(OCCRP).
By Khadija Ismayilova
Radio Free Europe/Radio Liberty
Later this month, the eyes of the world will be focused on a shimmering
glass and steel building newly erected on the shores of the Caspian
Sea to welcome the pop stars and television crews from more than 40
European countries who will broadcast the Eurovision Song Contest
2012 spectacle.
Azerbaijan won hosting rights to the popular extravaganza last
year when the Azerbaijani pop duo of Ell and Nikki sang their way
to victory in Eurovision 2011. The Azerbaijan government responded
proudly with plans for a new $134 million concert showplace called
the Crystal Hall which seats 23,000. Finished only a few weeks ago,
it was a tense race to get the venue ready in time. Its importance
was signaled by the frequent visits made by President Ilham Aliyev
and First Lady Mehriban Aliyeva to the bold geometric structure as
it rose amidst the construction site.
But their interest was not just ceremonial and patriotic. An
investigation by the Organized Crime and Corruption Reporting Project
(OCCRP) and Radio Free Europe/Radio Liberty has discovered that the
first family is personally profiting from the massive construction
project through its hidden ownership in the AZENCO construction
company.
The company contracted for the work has long been identified in all
official announcements as the German company Alpine Bau Deutchland AG.
Yet some of the equipment at the construction site is stamped with
the company name AZENCO . Rolf Herr, a representative of Alpine Bau
in Azerbaijan, described AZENCO as a subcontractor.
He would give no other details of its involvement. The Alpine Bau
press office in Germany did respond to an email by OCCRP.
"We usually don't publish any information regarding our business
contacts with subcontractors. Therefore we unfortunately cannot
answer your questions," said Nicole Weixler, a marketing manager,
in the email.
Trucks from AZENCO during construction of the hall
AZENCO is owned through a series of front companies that mask the
real owners. The official newspaper of the agency for privatization
of state property in Azerbaijan announced in 2010 that Baku-based
Interenerji MMC acquired 97.5 percent of the shares of AZENCO.
According to privatization records from March 2010, ADOR MMC,
another Baku-based company controls 70 percent of the ownership of
Interenerji. That company's registration documents list its legal
address as "7 Samed Vurgun Street". The registered occupants of that
address at the time were Mehriban Aliyeva, Leyla Aliyeva and Arzu
Aliyeva, the wife and daughters of the president respectively.
In 2010, Radio Free Europe/Radio Liberty investigated the privatization
of the State Aviation Company's infrastructure, including Azalbank
(currently Silkwaybank), which also has as a registered shareholder
Arzu Aliyeva, residing at the same address.
Presidential spokesperson Azer Gasimov at the time confirmed that
the shareholder was indeed the president's daughter.
Gasimov did not respond to repeated phone calls and a written inquiry
about the president's family's connection to Azenco and the appearance
of a conflict of interest if Azenco is profiting from state-funded
construction projects.
Eurovision 2012 event coordinator Sietse Bakker said that it was not
the proper organization to answer questions about the First Lady or
the Crystal Hall construction.
Bakker said the city of Baku commissioned the multi-functional indoor
venue before Azerbaijan won Eurovision. "We have no involvement with
the construction of the hall, so you should ask this question to the
responsible authorities."
Record sources do not support Bakker's contention. Presidential order
1620 from July of 2011 to build the concert hall came after the May
Eurovision victory.
"I have not seen written records," Bakker said, "but it doesn't take
much to realize that there is quite a lot of planning going into the
construction of such venue," Bakker said."
The Crystal Hall is the second project to raise conflict of interest
questions about Azenco.
It also helped construct the grandiose US$38 million State Flag Square
near the Crystal Hall, which briefly held the Guinness Book of World
Records title for tallest flagpole in the world.
A few months after it was put up, Azerbaijan's 162-meter flagpole
was surpassed by an even bigger flagpole in Dushanbe in Tajikistan
designed by the same American firm.
Two -thirds of the cost of the square in Baku came from the Reserve
Fund of the head of state by presidential decrees 532 ( Oct. 26, 2009)
and 1052 (Aug. 3, 2010). The other third came directly from the 2011
state budget in accordance with a decree of the Cabinet of Ministers
260 S (Aug. 25 2011).
A spokesman for the Cabinet, Akif Ali, refused to respond to questions
about how Azenco came to be chosen as a partner in the project.
Azenco has been employed on numerous state-funded projects less showy
but no less profitable than the Baku work. State Procurement Agency
records show that in 2010 alone the company was awarded contracts
worth US$79 million. The company also recently gained control of
Sumgayit Technology Park, a former State funded enterprise started
by Azerenerji, the government owned energy production company.
Azer Mehtiyev, director of the Center for Assistance to Economic
Initiatives, a politically independent think tank, said Azenco was
a clear example of a scheme to misappropriate some of the country's
big oil money.
"With the big oil money flowing into the budget, a parallel process of
monopolization of spheres of economy, re-division of state property ...
(made) way for the misappropriation of revenues," Mehtiyev said.
"Big infrastructure projects financed by oil revenues are mainly
distributed to companies which belong to high-ranking officials. The
government keeps the information about owners of the companies secret.
The state contracts are assigned to companies established in offshore
zones with unknown owners making the public control over the process
impossible," he said.
According to Mehtiyev, it is especially difficult to get information
about the business interests of the president's family.
Azerbaijan adopted an Anti-Corruption Law in 2004 that obliges
officials to declare the income and property holdings of themselves
and their relatives.
In August 2005 (order number278), the president ordered the Cabinet
of Ministers to prepare a special form on which officials would give
that information within two months. But the forms were never drafted
and officials never provided the information. It is not clear if
the president or the first lady, who is also a member of parliament,
have submitted declarations in the past decade.
The Presidential administration and the Central Election Commission
will not respond to questions about their property. A written inquiry
sent to the First lady's web page was not answered.
In January 2011 President Aliyev declared that the government would
take serious measures against corrupt officials.
The 2012 Eurovision event will have one other tie to the first family
besides the new showcase auditorium. Between acts, the singer chosen
to entertain the crowd just happens to be the President's son-in-law
(OCCRP).