Following an investigation dubbed “The Azerbaijani Laundromat,” a team of journalists led by The Guardian, Le Monde, Denmark’s Berlingske and the Organized Crime and Corruption Reporting Project (OCCRP), among others, revealed that Azerbaijani leaders made use of a $2.9 billion fund to launder money, purchase luxury goods and lobby European officials between 2012 and 2014.
Documents leaked to the aforementioned media outlets show that Azerbaijani officials dug into this coffer to bribe journalists and politicians in an effort to improve their country’s image internationally and pay for a myriad of luxury goods, as well as medical and educational expenses, both in the UK and the rest of Europe.
A Danish bank and several UK companies were caught in the middle of this quagmire as they served as conduits for the Azerbaijani funds.
The funds moved from various sources in Russia and Azerbaijan to four UK limited partnership companies with payments being processed and handed out by Danish financial giant Danske’s branch in Estonia.
At this time, the investigation hasn’t yet determined the origin of these funds.
However, signs point to several Azerbaijani and Russian businesses.
According to The Guardian’s Luke Harding, Caelainn Barr and Dina Nagapetyants, “the Russian government paid $29.4m into the Laundromat via its main weapons company, Rosoboronexport,” while Azerbaijani firm Baktelekom MMC, a “doppelganger entity” whose “function is unclear” and has ties to Azerbaijan’s President Ilham Aliyev added “more than $1.4bn” to the fund.
Overall, the Guardian reports that “more than 16,000 covert payments from 2012 to 2014” were made by Azerbaijan using this system.
Scottish Limited Partnerships (SLPs) & Money Laundering
Interestingly enough, two of the UK companies set up were Scottish limited partnerships (SLPs), structures that were originally established more than a century ago to support the agricultural sector.
According to The Guardian, the SLPs involved—Hilux Services LP and Polux Management LP—“benefited from loose national disclosure laws that allowed firms to hide the identity of their owners while enjoying the benefits of being a UK-registered company.”
Duncan Hames, director of policy at Transparency International, commented on how SLPs can be used for such nefarious purposes.
“At the moment the combination of corporate partners, minimum filing requirements, and separate legal personality make the Scottish limited partnership particularly attractive to those looking to use it as one of the layers in a money-laundering scheme,” Hames said.
Despite new anti-money laundering regulations in the UK calling for SLPs to reveal their persons of significant control, The Guardian reports that “a review of the disclosures filed after the deadline shows the vast majority of partnerships have not yet disclosed who controls the company, while more than half the partnerships who have filed statements stated that they did not know who controlled the company or were taking steps to find out.”
Following these revelations, UK politicians called for the government to enforce stricter rules to prevent the use of SLPs for money laundering and other criminal activities.
Labour's Jackie Baillie said, ““Previously these structures have been used in billion pound bank scams in Moldova and now we see them used in a multi-billion pound money-laundering scheme in Azerbaijan.”
“Scotland has a reputation around the world for financial propriety and we cannot allow that to be tarnished by becoming a magnet for money-laundering. The UK government must urgently tighten the regulations around these companies, and if necessary, abolish them altogether,” she added.
European Politicians and Lobbyists Named in Azerbaijani Laundromat Report
Several European politicians were singled out as having benefited from these Azerbaijani funds.
Both former German MP Eduard Lintner and Italian politician Luca Volontè received money from Azerbaijan as part of this country’s campaign several years ago to improve its image as an authoritarian state in the eyes of Europe.
Lintner, for example, set up the Society for the Promotion of German-Azerbaijani Relations in Berlin, which received close to 1 million Euros in funds, some of it following his visit to Baku to monitor the 2013 presidential election.
Lobbyists were also caught in the crossfire.
As signaled by EU Observer, “Eckart Sager, a former producer at the CNN broadcaster who is now president of FactBased Communications, a London-based PR firm, got €2 million,” while “Jovdat Guliyev, a member of the London-based lobbyist group, the Anglo-Azerbaijani Society, got €435,000.”
The Azerbaijani government struck back at these claims, denying any wrongdoing.
Presidential aide Ali Hasanov called the allegations “scandalous,” blaming the US, British intelligence and the Armenian diaspora for setting up this attack.
Hasanov added that the investigation was ““biased, groundless and provocative.”
A press statement by Azerbaijan’s President Ilham Aliyev claimed, “Neither the president, nor members of his family have any relation to the charges contained in the report by the Organized Crime and Corruption Reporting Project."
Instead, “the dirty deeds of George Soros need to be investigated,” it added.