Azerbaijan's first family strikes
gold under cover By Nushabe
Fatullayeva and Khadija Ismayilova
BAKU -
Novruz Allahverdiyev, 40, lives in a mud house in
the village of Chovdar, a small mining town in the
mountainous region near the border with Armenia.
He is one of 800,000 internally displaced persons
from the war with Armenia that battered his native
Nagorno-Karabakh region in the early 1990s.
Allahverdiyev and members of 60 other
displaced families found shelter and a place to
farm in the mountains around Chovdar. Like many in
his predicament, Allahverdiyev is patriotic, and
the walls of his poor home are plastered with
pages from an aging calendar featuring portraits
of President Ilham Aliyev and his late father,
former president Heydar Aliyev.
Allahverdiyev's family now faces yet
another problem. A British
mining company has taken
over some of his land and has blocked one of the
two streams his village relies on for water.
Allahverdiyev is sure President Aliyev will help
him and his community.
But his faith may
be misplaced. What Allahverdiyev doesn't know is
that the president and his family own a stake in
the new mine. The UK company is actually a front
for the first family.
In two 2007 decrees,
the state assigned the right to develop the
Chovdar gold field and five other sites to a
company called Azerbaijan International Mineral
Resources Operating Company, Ltd. (AIMROC). AIMROC
- which controls a 70% stake in the mines, while
the Azerbaijan government controls 30% - has been
building the infrastructure for the Chovdar mine
and is expected to begin production this year.
Panamanian Trail But sorting out
AIMROC's structure is a daunting task. While
Chovdar locals blame the "ingilis" (English) for
their woes, the truth is quite different. AIMROC
is a joint venture of four companies: Londex
Resources SA, Willy and Meyris SA, Fargate Mining
Corporation, and Globex International LLP. All
four are shell companies that, according to
Azerbaijani officials, were set up specifically
for this deal. It is unclear if any of them have
any mining experience or other mining projects.
A fifth company - Mitsui Mineral
Development Engineering Co Ltd (MINDECO), a
mining-engineering company owned by Japan's Mitsui
Mining and Smelting Co - is listed as the official
project supervisor, but has no ownership.
Of the four AIMROC owners, the only
UK-based company is Globex International, which
has an 11% stake, worth about US$200 million. But
Globex is actually owned by three companies
registered in Panama: Hising Management SA, Lynden
Management Group, Inc, and Arblos Management
Corporation. According to Panamanian registration
records, all three firms list President Aliyev's
two daughters - Leyla and Arzu Aliyeva - and Swiss
businessman Olivier Mestelan as senior managers.
Ilham Aliyev's daughters, Arzu (left) and
Leyla, are listed as senior managers at the
Panamanian-registered companies.
Mestelan has long had close ties
to the Aliyev family. He has organized artistic
events with them and, together with Leyla and
Arzu, appears in the records of other Panamanian
companies being used as fronts for businesses in
Azerbaijan, including the Azerfon
cellular-services provider. Mestelan declined to
be interviewed for this story.
Aliyev's
office refused to answer questions about his
family's business interests in the gold fields.
Presidential spokesman Azer Gasimov did not return
phone calls and did not respond to questions
submitted in writing.
Opaque
decisions AIMROC has been controversial
from its beginning. The consortium was formed by a
2006 presidential decree that identified Globex as
part of the consortium. In 2007, AIMROC was
awarded 30-year leases on the mineral fields.
Chovdar alone is a lucrative parcel.
According to the Azerbaijani Environment Ministry,
it contains reserves of 44 tonnes of gold and 164
tonnes of silver, worth about $2.5 billion at
current prices. The contracts were awarded to
AIMROC hastily and over the objections expressed
by many members of parliament during hearings held
in June 2007. Lawmakers complained that the
consortium's ownership was opaque; that the
contract was awarded in violation of bidding
procedures; that none of the companies had any
history of mining; and that the deal was contrary
to Azerbaijan's national interests.
During the hearings, deputy Valeh
Aleskerov, chairman of the parliamentary Natural
Resources Committee, defended the deal. He said
the creation of offshore companies was "a common
practice around the world" and that no tender was
issued because of the uncertainty about how much
mineral wealth there was. Instead, he said, the
government held talks directly with potential
investors.
The Environment Ministry's
chief geologist, Agamahmud Samedov, told RFE/RL
that the estimates of the other five fields are
classified. He also declined to comment on
AIMROC's ownership or its lack of mining
experience.
When asked last month about
AIMROC's ownership, Aleskerov said, "Do you think
the Azerbaijani government would contract with
someone unknown, with just anyone from the
street?" When asked if the Aliyev family has any
financial interest in the project, Aleskerov said
only "Shame on you!" and hung up.
Professional proxies Parsing the
rest of AIMROC's structure is more difficult.
Londex Resources and Fargate Mining are registered
in Panama, according to documents obtained from
the Panama Registry of Companies.
The
documents indicate that the companies are
interrelated through a complicated chain of
company directorships. All three are or were at
one time owned by two companies registered at the
same address on the tiny Caribbean island of
Nevis: Casal Management and Tagiva Management.
Casal and Tagiva act or acted as the
director for at least 20 companies in the United
Kingdom, the United States, and Panama. It is
likely that the companies are professional proxies
used to hide actual ownership.
According
to a document of the Tax Registry of Azerbaijan,
Willy and Meyris SA (listed in some documents as
Will & Meyris SA) is represented by a Czech
geologist, Mirko Vanecek, the executive editor of
"The Journal of Geosciences" in Prague.
'The president is a good
person' Meanwhile, back in Chovdar, locals
are looking forward to a rumored visit by
President Aliyev to mark the opening of an ore
refinery the consortium has built.
"We
have heard that president will come to the opening
ceremony of this factory," villager Paneh Huseynov
says. "Please tell our president to come and visit
us. Tell him we support his policies. We will not
be allowed to approach him. Please, we ask him to
come and ask about our living conditions. Then
he'll see how we live and how we suffer."
Novruz
Allahverdiyev is sure the president will help him.
Villagers had no idea that the
president's family owns part of the mine operator.
"How can the president be benefiting from this
production? ... All of the companies here are
foreign. Englishmen are running the business
here," says one local who refuses to give his
name.
Teacher Nureddin Ramazanov lost some
land to AIMROC. With a salary of just $130 per
month, Ramazanov says his family is starving.
"The company destroyed our road," he says.
"Geologists took our land. They paid us only 2,000
manats [$2,500] per hectare. ... Now I don't know
how we'll survive."
Meanwhile, Karabakh
exile Allahverdiyev says he is hoping to get a job
at the mine. Locals say mining jobs pay the
equivalent of $12 a day. So far, the mining site
has hired very few locals.
Despite
grinding poverty and the problems with the mine,
most locals remain firm in their faith in Aliyev,
whose omnipresent portrait gazes out over the
people of Chovdar from the walls of shops and
schools.
"The president knows nothing
about this," says teacher Ramazanov. "Local
officials say the president ordered that our land
be taken, but I don't believe it. He is a good
person."
This report was produced by
the Organized Crime and Corruption Reporting
Project (OCCRP) in cooperation with RFE/RL's
Azerbaijani Service. OCCRP project coordinator
Paul Cristian Radu contributed from Bucharest, and
RFE/RL correspondent Robert Coalson contributed
from Prague
Copyright (c) 2012, RFE/RL
Inc. Reprinted with the permission of Radio Free
Europe/Radio Liberty, 1201 Connecticut Ave NW,
Washington DC 20036
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