Saturday

7th Dec 2019

Danish bank shamed in Azerbaijan corruption scheme

  • Danish lender admitted wrongdoing and vowed to improve protocols (Photo: Jorge Láscar)

Leaked documents have caused red faces at a Danish bank and for UK regulators who failed to stop a €2.4 billion Azerbaijan corruption scheme.

The papers showed that Danske Bank, Denmark's largest lender, helped to funnel most of the money out of Azerbaijan via four of its branches in Estonia into the EU and the Middle East between 2012 and 2014.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

  • Baku - payments to German and Italian politicians coincided with human rights crackdown (Photo: Sonke Henning)

They also showed that four shell companies registered in the UK - Faberlex, Hilux Services, Metastar Invest, and Polux Management - were behind the majority of the 16,000 suspicious bank transactions involved.

The sloppiness of the British regulators was on show in the case of Faberlex, Hilux, and Polux.

All three firms were nominally owned by Maharram Ahmadov, a 51-year old Azerbaijani driver who lived in a humble house in the Gushchuluq neighborhood of Baku.

Some of the money was used to pay influential people in European institutions, including the Council of Europe, a human rights watchdog in Strasbourg, France, and in the European Bank for Reconstruction and Development (EBRD), as well as for EU lobbyists, the leaked bank documents said.

These included Eduard Lintner, a former German MP from the centre-right CSU party, who was a member of the Council's parliamentary assembly (Pace), and Luca Volonte, an Italian MP from the centre-right UDC party, who was also a Pace member.

Lintner received $1.1 million from the scheme and Volonte got €2 million, the leaked bank records showed.

Both men defended Azerbaijan over its sham elections in 2013 and over its crackdown on human rights activists in the same period, which saw more than 90 activists and journalists jailed on political motives.

Kalin Mitrev, a Bulgarian board member of the EBRD, got at least €425,000.

All three men have denied wrongdoing, but the Volonte case was already subject to a separate investigation by Italian prosecutors.

Eckart Sager, a former producer at the CNN broadcaster who is now president of FactBased Communications, a London-based PR firm, got €2 million. Jovdat Guliyev, a member of the London-based lobbyist group, the Anglo-Azerbaijani Society, got €435,000.

Danish newspaper Berlingske first obtained the leaked papers and then shared them with the OCCRP, a club of eastern European investigative reporters.

Leading newspapers in Austria, Estonia, France, Germany, Hungary, Romania, Russia, Slovenia, and the UK also took part in the investigation.

Danske Bank told The Guardian, a British paper, that its due dilligence procedures in Estonia had been below par.

"We will not accept Danske being exploited for money laundering or other criminal purposes. We will do everything to prevent it from happening again," it said in a statement.

It said it had "tightened procedures and controls" and "terminated relationships" with some clients in reaction to the leak.

Other payments went to members of Azerbaijan's regime, such as deputy prime minister Yaqub Eyyubov and his son Emin Eyyubov, who was a former EU ambassador, as well as to president Ilham Aliyev's press secretary Azer Gasimov.

Some of the money was spent on private school fees in the UK, for instance at Bellerbys, ICS, and Queen Ethelburga's Collegiate, on investments in British soccer teams, designer dresses, flowers, luxury cars, real estate, and legal fees.

More than half the funds originated from an account at the International Bank of Azerbaijan - a Baku-based lender linked to the ruling clan that went bust earlier this year.

The account was owned by Baktelekom, a so-called doppelganger firm, which has the same name, except for one letter, as Baktelecom, Azerbaijan's telecoms giant, but which is not related to the state company.

Other funds came from the country's ministry of emergency situations, ministry of defence, and its intelligence service, the Special State Protection Service, as well as from Rosoboronexport, a Russian arms firm.

Investigation

Illicit Russian billions pose threat to EU democracy

It cost €11 million to help Le Pen campaign in elections, but it cost the Russian mafia less than €100,000 to hire a former UK attorney general to lobby against EU sanctions.

Cyprus in spotlight on Russia money laundering

Cyprus’ failure to go after Russian mafia money in its banks indicates it's paying no more than “lip service” to international money laundering laws, a Dutch MP has said.

News in Brief

  1. Greece denies access to fair asylum process, report says
  2. Report: Self-regulation of social media 'not working'
  3. Turkey: Greek expulsion of Libyan envoy 'outrageous'
  4. Merkel coalition may survive, says new SPD co-leader
  5. Von der Leyen Ethiopia visit a 'political statement'
  6. Over 5,500 scientists ask EU to protect freshwater life
  7. Iran defies EU and UN on ballistic missiles
  8. Committee of the Regions: bigger budget for Green Deal

Stalling on VAT reform costing billions, says Commission

German media outlet Correctiv, along with other newsrooms, have revealed how criminals annually cheat EU states out of billions in VAT fraud. The EU Commission says solutions exist - but member states refuse to budge on tax unanimity.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Russia makes big promises to Arctic peoples on expansion
  2. UK election plus EU summit in focus This WEEK
  3. Migrants paying to get detained in Libyan centres
  4. Searching for solidarity in EU asylum policy
  5. Will Michel lead on lobbying transparency at Council?
  6. Blood from stone: What did British PR firm do for Malta?
  7. EU Commission defends Eurobarometer methodology
  8. Timmermans warns on cost of inaction on climate

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us