There is a large secret slush fund used by the Azerbaijani ruling elite to pay European politicians, for luxury purchases, money laundering and personal gains of people close to the Baku regime. This is revealed in a journalistic investigation based on bank documents obtained by Danish daily Berlingske and shared with investigative reporters within the frame of their project “Azerbaijani Laundromat”. Bivol is the Bulgarian partner in the project, together with the OCCRP, Le Monde, The Guardian, Suddeutsche Zeitung and other leading European media.

Important politicians in the scheme include German parliamentarian Eduard Lintner, Italian lawmaker Luca Volonte, who is being investigated in Italy for trading influence and money laundering in relation to these payments, Slovenian nationalist, Jelincic Plemeniti and Kalin Mitrev – a Bulgarian representative to the European Bank for Reconstruction and Development (EBRD), and husband of Bulgarian politician and Director-General of UNESCO, Irina Bokova.

The money came from accounts of four paper companies in the Estonian affiliate of Danske Bank. A huge cash flow of EUR 2.5 billion, mainly provided by the State International Bank of Azerbaijan (IBA), the Russian Rosoboronexport and other companies linked to the family of President Ilham Aliyev, has been diverted to these companies.

Journalists working on the project examined in the course of several months over 16,000 transactions of Metastar Invest, Hilux Services, Polux Management and LCM Alliance. The companies are registered in England and Scotland by straw persons but are managed directly from Azerbaijan. Journalists from the Organized Crime and Corruption Project (OCCRP) tracked down the on-paper director of Hilux and Polux, Maharam Ahmadov. He is registered as a refugee from Nagorno-Karabakh and lives in miserable conditions for a man running companies with hundreds of millions in foreign accounts.

 

Payments to and from these companies reveal a complex and opaque financial scheme that is probably just the tip of the iceberg embedded in Baku’s central power. The investigation, called Azerbaijani Laundromat, is one of the most significant cross-border journalistic investigations in recent years. It is, in a sense, a continuation of the Russian Laundromat investigation through which over USD 20 billion has been syphoned from Russia, as the same protagonists can be found there.

THE BULGARIAN CONNECTION

About EUR 800,000 from the Azerbaijani billions has reached Bulgarian companies and individuals. There are 19 transfers to Bulgarian banks, dated from August 2012 to October 2014. Nine of them came from Metastar Invest, followed by Hilux Services with seven transfers and three transfers from the Estonian account of Polux Management.

The best known among the beneficiaries is the Bulgarian EBRD representative Kalin Mitrev, husband of Irina Bokova. He has received eight transfers in Swiss and Bulgarian bank accounts registered under his name for a total of EUR 425,000. The money has been wired to him by three of the four paper companies from the Azerbaijani Laundromat – Polux, Hilux and Metastar.

Furthermore, Mitrev is the Bulgarian connection having received the largest lump sum – EUR 225,000 in his Swiss account from Metastar Invest on February 8, 2013. In his Bulgarian account, he has received one transfer in the amount of EUR 40,000 on February 11, 2014.

 

Metastar Invest’s Office in Baku. Photo: OCCRP

The Laundromat companies have made legitimate payments as well. Bulgarian football player Petar Zlatinov, then playing for Inter Baku, has received one of his salaries from Metastar Invest. Payments in the amount of EUR 60,000 have been made to Kronospan Bulgaria for delivery of fiberboards; to Trakiya Glass in the amount of EUR 100,000 for glass products; EUR 65,000 for canned vegetables to the company Konex-Tiva, two small payments for a total of EUR 3,600 to the company Kaolin and payments for transport services provided by the logistic companies M + M Air Cargo, MS Shipping and Wallenius Wilhelmsen Logistics.

Our attempts to obtain information with whom the contracts for these supplies have been signed were unsuccessful all across. We received detailed responses only from the Bulgarian company Konex-Tiva and the international transport company Wallenius Wilhelmsen Logistics.

Konex-Tiva said Metastar’s payments were in relation to an order for canned vegetables from Ecoterm LLC, based in Baku, Azerbaijan. All paperwork for the bills and customs clearance of exports was in accordance with Bulgarian legal requirements, they specified.

Wallenius has received four transfers from Metastar Invest for a total of about EUR 60,000. The money was transferred in 2012 and 2013 for the transport Chevrolet automobiles. Representatives from the company’s headquarters responded to Bivol’s questions, saying they were starting an internal investigation into the transactions. A few days later, another answer was received, explaining that the Bulgarian branch of Wallenius had been sold a few years ago and the information on its accounts was no longer available. The company’s current accounts have no data about these contracts, and Metastar Invest is not included in the company’s customer database, the Head of the Corporate Communications Department, Anna Larson, wrote.

Football player Petar Zlatinov also answered our questions. He said that he did not know why his salary was transferred to him by Metastar Invest. According to him, all payments under his contract with Inter Baku came from the IBA, which was the owner of the club. The latter is a well-known fact and the nickname of the Inter Baku players is “The Bankers”. Links of the IBA with other companies in the “Laundromat” can be found further in the text.

“Caviar diplomacy” and the price of a pretty word

At the time when money from the Baku slush fund was poured into the accounts of European politicians and high-ranking officials, the Azerbaijani government made mass arrests of journalists and civil rights activists. Our colleague, journalist Khadija Ismayilova, who dared to investigate the first family’s wealth, spent months in detention on trumped-up charges. At the same time, Mehriban Aliyeva, the wife of dictator Ilham, enjoyed special honors by UNESCO, the organization run by Kalin Mitrev’s spouse.

As early as 2010, Bokova bestowed on Aliyeva one of the highest honors of the organization – the Mozart medal. Bokova’s visits with the kleptocrats in Baku and the visits of Aliyeva and other officials to Paris alternated several times a year (see table). Meanwhile, the payments to Bokova’s husband coincide in time with some of the official UNESCO events organized in honor of the Caspian state.

Azerbaijan’s first lady Mehriban Aliyeva (L) and Irina Bokova (C), Director-General of UNESCO, arrive at the Leaders’ Forum session during the 36th session of UNESCO?s General Conference in Paris October 26, 2011. REUTERS/Benoit Tessier

On October 16, 2013, Bokova sent an official letter with “heartfelt congratulations” to President Aliyev for his “resounding victory” in the elections. This victory was also due to the fact that Aliyev imprisoned human rights activists and critics of his regime in the eve of the elections on fabricated charges of illegal drug possession. After the election, the arrests became even more frequent. However, there is not even one word about these political repressions in Bokova’s letter.

A week later, on October 22, Bokova opened a photo exhibit at the UNESCO headquarters in Paris titled “Azerbaijan – Land of Tolerance”. The exhibit was organized by the “Heydar Aliyev Foundation”, chaired by first lady Mehriban Aliyeva – Honorary Ambassador of UNESCO. This cultural event aimed at building a positive image of the Baku regime before Western partners and mitigating criticism of the numerous and increasingly scandalous human rights violations.

On October 25, three days after the opening of the UNESCO exhibit and then days after the official letter to Aliyev, the account in US dollars of the company Polux Management in the Estonian affiliate of Danske Bank received USD 1.9 million from an Azerbaijani account of the company Baktelekom MMC. EUR 500,000 was immediately wired to the euro account of the company. By the evening the money had departed in seven tranches to different parts of Europe.

One of the beneficiaries was Kalin Mitrev who received a tranche of about EUR 20,000 in his Swiss bank account for consulting services.

EUR 61,000 was sent to the well-known German politician Eduard Lintner of the Bavarian CSU party, member of the ruling coalition. Two weeks earlier, he had visited Azerbaijan as head of the German team of presidential election observers.

The vote was marked by a huge gaffe. The smartphone application of the official phones of the Central Electoral Commission members showed final election results even before the opening of the polls. Despite numerous violations, documented by independent observers, Aliyev was reelected with 85% of the vote, a repeat of the election victories of his dictator father in the good old days. However, at that time, Eduard Lintner sang only praises: “The election process was well-organized, at a high-level, and meets standards such as in Germany, for example,” he said. “Our team did not notice any irregularities.”

Lintner admits receiving Laundromat money. He told Suddeutsche Zeitung it was used to fund the Society for the Promotion of German-Azerbaijani Relations (GEFDAB), a Berlin-based organization he founded in 2009.

The President of the Slovenian National Party, Zmago Jelincic Plemeniti, got EUR 25,000 from Metastar on July 30, 2012. Plemeniti acted as an OSCE observer in two Azerbaijani elections: the 2010 parliamentary elections and the 2013 presidential elections. After Aliyev’s victory in 2013, he praised the outcome by saying it confirmed “the approval of the people of Azerbaijan of the great successes achieved and their active support for the policies aimed at the development of the country in all spheres of life”.

Italian politician and former chair of the European People’s Party group in PACE Luca Volonte also received money through the same company and sometimes on the same day as Mitrev and Lintner. The accounts of his Italian-based Novae Terrae Foundation have been padded with a total of EUR 1.89 million, arriving in 19 tranches. The Italian prosecutors investigating these transfers say the money was given to Volonte to avert PACE’s adoption of the Strasser Report, which established drastic violations of human rights.

Christopher Strasser, himself, has made statements that he suspected Azerbaijan in unregulated payments to politicians from the institution, but had no proof. His calls for an investigation within the Council of Europe were heard only in the spring of 2017 when PACE voted to appoint three experts to conduct an internal investigation. The conclusions of their work are expected at the end of 2017.

The slush fund did not pay only politicians. According to bank records, it also bought favorable media coverage.

In 2014 Sager Eckart, a former CNN producer, received nearly USD 2 million in his United Arab Emirates bank account from Hilux Services LP. One of the transfers arrived immediately after Lintner received EUR 41,000 on July 7, 2014. Eckart is listed as a press contact for public relations articles that promote the Azerbaijani government’s views. One of these articles articulates Azerbaijan’s denials in the Luca Volonte case.

The Heydar Aliyev Foundation, (named after the communist tyrant), is well known in Bulgaria, where it donates large sums for the restoration of archaeological sites.

Bulgarian Prime Minister Boyko Borisov accompanies the First Lady of Azerbaijan, Mehriban Alieyva .

Bulgarian Prime Minister Boyko Borisov offers a friendly handshake to Azerbaijani Deputy Prime Minister Elchin Efendiev after receiving an EUR 1.2 million donation.

The goal here is also favorable press coverage and support from Bulgaria in international institutions where Baku is criticized for human rights violations. The Foundation’s money is received in Bulgaria without questions and even with extreme praise by the government that maintains warmest relations with Aliyev’s regime in awaiting Caspian Sea natural gas to flow from Azerbaijan into the future “South Corridor” pipeline. Careful not to irritate Baku, Bulgaria refused political asylum to former political prisoner and journalist from the TV channel “Azladik” (Freedom), Emin Ahmedbekov.

Mitrev – hydropolitical consultant. Like Ahmed Dogan.

From 2012 until 2014, Mitrev received eight payments total, with only one of them wired to a Bulgarian bank account, while the rest went into an account in the Swiss bank Credit Suisse. All payments are referred to as “supervisor services”.

Mitrev, who is a former agent of the Communist secret services with the codename Simeonov, is a long-standing representative of Bulgaria to the EBRD. The government of Prime Minister Boyko Borisov left him at this position by canceling its own decision from November 2014 to withdraw him. This happened at the height of Irina Bokova’s campaign for the post of Secretary-General of the United Nations (UN) when Bulgaria still officially supported her bid.

Mitrev’s work at the EBRD provides an annual salary of nearly EUR 170,000. As an investigation by Bivol into Bokova’s property revealed, this money is not at all excessive since the family has to deal with the upkeep of their four apartments in Paris, London and New York that they have purchased over the past few years.

In a written response to OCCRP reporters’ questions, Mitrev said that the payments were legitimate compensation for consultancy work he had performed from May 2011 to April 2014 for the Baku-based company Avuar-Co LLC. “The company was working with the Ministry of Emergency Situations (MES) of Azerbaijan on a major government programme for the mitigation and prevention of the disastrous floodings in the Kura-Aras river basin,” he wrote.

All sums received under the contract have been declared in Bulgaria, the Bulgarian ERBD representative further said. The contract was terminated after Mitrev returned to his post at the Bank.

 “The programme involved a wide array of activities and required coordination of large number of public and private entities, both from the country and from abroad, as well as multilateral financial institutions and donors,” is how Mitrev describes his work. (See Mitrev’s response)

Mitrev’s consultant fees for a hydrogeological project are remarkably reminiscent of the royalties for the “Tsankov Kamak” hydro project paid to notorious Bulgarian politician, Ahmed Dogan, philosopher by education and Honorary Lifetime Chairman of the Movement for Rights and Freedoms (DPS), the party largely representing the Bulgarian Muslim minority. However, unlike reports submitted by Dogan to the contractor, Minstroy Holding, there is no written trace of Mitrev’s work.

The Kura and Aras rivers flooded in 2010, destroying or damaging some 20,000 homes. The government would spend more than USD 590 million to rebuild and to stop future flooding. But local residents and NGOs said that the project was deeply corrupt, non-transparent, and ineffective.

Avuar-Co, which was established five months after the floods occurred, won only four ministry tenders worth just USD 478,000, not much more than the amount Mitrev was paid, according to OCCRP research. In addition, all four tenders were described as being for the acquisition of equipment, including a mobile kitchen – not for consulting.

There is a considerable number of scientific publications and official documents of the UN and the Council of Europe concerning the hydropolitics and hydrostrategy in the Kura-Aras basin (for example here), but neither the name of Mitrev nor that of Avuar-Co can be found in them. A major international conference under the title “Global and Regional Hydropolitical Problems in the Context of International Cooperation and Security” was organized in Baku in 2015. This is an exact match with the subject of Mitrev’s and Avuar-Co’s task, but there is no sign of their contribution to this conference.

Responding to journalist inquiries from Berlingske and other media from the project whether she knew about payments to her husband and whether they were related to UNESCO’s policy towards Azerbaijan, Irina Bokova wrote: “I am not privy to the details of my husband’s consulting business and equally, your questions about my opinion on Azerbaijan and its leadership are wholly misplaced.  As a Director General of a UN agency, my duty is to develop sound working relations with all members of the organisation in conformity with the policies, set by member States. Azerbaijan is not an exception in this respect,”

“I most vehemently deny any wrongdoing and will consider defamatory any publication of these totally unfounded conjectures on your part,” she added (See Bokova’s response.)

But if Bokova does not know where the money for Mitrev’s consulting business came from, she certainly knows where they have invested their family income. The family’s real estate costs amount to USD 4.7 million, exceeding by USD 1 million their earnings in the past ten years.

The revelation that Mitrev has received solid sums as a consultant at the time when he did not work at the EBRD completes the financial picture. But even that EUR 425,000 he received for supervisor services is not enough. There is an unexplained origin of nearly half a million dollars.

Blunder: False emails in support of Mitrev’s explanation

Kalin Mitrev also stated that he had never heard of the companies Metastar, Hilux and Polux that had wired the money to him, and did not know why this money came from their accounts, but referred reporters to an e-mail address he said belonged to Avuar-Co –[email protected] . The OCCRP sent questions and received an answer signed by Agaselim Seidov, who introduced himself as director of Avuar-Co. He explained that these companies had debts to his company which was partly settled with payments to Mitrev for his services. (See Avuar-Co’s response)

In a separate email, he confirmed what Kalin Mitrev said about his consultancy contract.

“We are grateful to him for sharing his experience with managing large projects and cooperating with international donors, particularly during our work on the Kura River Program. The payments you inquire about were made by Avuar for his work in accordance with our contract,” Agasalim Seidov writes.

Subsequently, OCCRP correspondents tracked down Seidov’s Facebook profile, contacted him and arranged a call via the Facebook voice service. He immediately confirmed that he was the company’s director, but sounded very different than the eloquent, English-speaking businessman who had signed the emails. He said he has no knowledge of the flood project and that he had not written the e-mail to OCCRP.

Luxury goods, medical services and education fees

Baku’s slush fund was also used to acquire luxury goods in Paris, the world fashion capital, according to research by Le Monde partners. Purchases only from Christian Dior and Baby Dior amount to EUR 400,000 and the goods have been delivered to Azerbaijan. There were also purchases of tableware for tens of thousands of dollars, and other luxury brand items.

Several medical bills were paid by Metastar to John Hopkins Medicine, one of the best US hospitals, for Azerbaijan’s First Deputy Prime Minister Yaqub Eyyubov. His son Emin Eyyubov, who is the Ambassador of Azerbaijan to the European Union, used Metastar to buy medication from the company Northern Pharmacy.

One of the transfers to Bulgaria for nearly USD 7,000 was sent on July 18, 2013, and was marked as a “university tuition fee”. The recipient is the company LTI LTD. The only company with such name in Bulgaria is owned by a British citizen and seems to have no activity. The law firm that served LTI said they had no communication with its owner and director for years.

What are the paymasters? USD 1.4 billion from a paper company!

The money poured into the Azerbaijani Laundromat comes from different sources. Some of it came from secret companies based in the United Kingdom and New Zealand, another part is related to the “Russian Laundromat” investigated by the OCCRP. Both schemes have similar modus operandi and share part of the identified beneficiaries.

The Russian government poured more than EUR 28 million into the Laundromat through the Rosoboronexport arms company, which supplies weapons around the world. The money is linked to a company controlled by the family of Aliyev. Part of the money for Russian weapons has ended in a bank account in Hungary belonging to the First Deputy Prime Minister of Azerbaijan Yaqub Eyyubov (the same whose medical treatment was paid for with Metastar’s money).

The Azerbaijan State through the Ministry of Emergency Situations, the Ministry of Defense, and its national security services has also padded the accounts of the secret companies.

However, the largest contribution belongs to a Baku-based small private company Baktelekom MMC (which does not have anything to do with the State-owned telecom company Baktelecom). It poured EUR 1.4 billion into the Laundromat. The association of Baktelekom with the first family was documented earlier by the OCCRP. A strange tax amnesty of USD 17.4 million, from which the company benefited in early 2017, was also discovered.

Baktelekom MMC was founded by Rasim Asadov, son of the first Minister of Interior of independent Azerbaijan. In other companies, Asadov is a business partner with a cousin of Mehriban Aliyeva.

Bank documents reveal that Baktelekom MMC’s money was used for secret payments to lobbyists working to polish the image of Aliyev’s regime before the European Union and other international institutions.

It is not entirely clear where the money comes from because the company has no activity. Baktelekom has used a single account for all of its transfers and it is located in the IBA.

Interviews with the beneficiaries of the Azerbaijani Laundromat make it is clear that the the money they received as pay for goods and services came from the IBA. For example, Bulgarian footballer Peter Zlatinov could not explain why he eventually received a transfer from paper company Metastar, but was adamant that he had received his salaries from a bank that also owned the football club “Inter” Baku. Italian architect Mario Palmonella, who designed the “7 Hills Residencies”, also claims that this was a project of the Bank. The IBA further appears in documents submitted by Hilux Services LP for the opening of the Danske Bank account in Estonia. There, the Bank is listed as the main source of the company’s funds.

If all this is true, it means that deposits of thousands of customers of the Bank have actually been used to feed the Laundromat.

The IBA is the largest commercial bank in Azerbaijan with over 750,000 customers and has a critical role in the country’s economic relations with the rest of the world. In recent times, however, it has experienced considerable difficulties and has begun bankruptcy procedures in courts in the United States and the United Kingdom.

Chronology of payments, property acquisitions and events related to UNESCO in Azerbaijan

 

HILUX SERVICES LP MITREV KALIN 11.10.2012 EUR -20 000,00
HILUX SERVICES LP MITREV KALIN 07.02.2013 EUR -20 000,00
METASTAR INVEST LLP MITREV KALIN 08.02.2013 EUR -225 000,00
METASTAR INVEST LLP MITREV KALIN 05.04.2013 EUR -20 000,00
METASTAR INVEST LLP MITREV KALIN 25.10.2013 EUR -20 000,00
METASTAR INVEST LLP MITREV KALIN 18.12.2013 EUR -40 000,00
POLUX MANAGEMENT LP MITREV KALIN 27.01.2014 EUR -40 000,00
HILUX SERVICES LP MITREV KALIN 11.02.2014 EUR -40 000,00
Mitrev in the EBRD 2004-2010
from 2014 – currently
Mitrev and Bokova’s apartments
Paris 27.05.2011 EUR 1,000,000.00 Mortgage
New-York 11.06.2012 USD 1,189,000.00 No mortgage
New York 04.03.2014 USD 1,225,000.00 No mortgage
London 08.04.2014 GBP 925,000.00 No mortgage
Bokova’s visits to Baku
Source : http://www.mfa.gov.az/en/content/556 July 28-31, 2010
 May 29-31, 2013
 May 16-18, 2015
Mehriban Aliyeva in UNESCO
Source : http://www.mfa.gov.az/en/content/556  2010: Bestowed on a gold Mozart medal by Bokova
 April 28, 2010
 December 14, 2010
 April 19, 2011
 September 12, 2011
 October 26, 2011
 July 18, 2013
 October 22, 2013
 June 2, 2014
 September 15 – 18 2014
Agreements signed with UNESCO
Source : http://www.mfa.gov.az/en/content/556  October 27, 2011
 July 18, 2013
 January 24, 2014

 

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