Thursday

18th Jan 2018

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.

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  • 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.

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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.

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MEPs have introduced a human rights clause into the export of cyber surveillance technology as part of EU-wide reforms to prevent abuse by autocratic regimes. The Strasbourg plenary will vote on the bill on Wednesday.

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