The Azerbaijani Laundromat is a complex money-laundering operation and slush fund that handled $2.9 billion over a two-year period through four shell companies registered in the UK.
The scheme was uncovered through a joint investigation by Berlingske (Denmark), OCCRP, The Guardian (UK), Süddeutsche Zeitung (Germany), Le Monde (France), Tages-Anzeiger and Tribune de Genève (Switzerland), De Tijd (Belgium), Novaya Gazeta (Russia), Dossier (Austria), Atlatszo.hu (Hungary), Delo (Slovenia), RISE Project (Romania), Bivol (Bulgaria), Aripaev (Estonia), Czech Center for Investigative Journalism (Czech Republic), and Barron's (US).
This project is part of the Global Anti-Corruption Consortium, a collaboration started by OCCRP and Transparency International.
From 2012 to 2014, even as the Azerbaijani government arrested activists and journalists wholesale, members of the country’s ruling elite were using a secret slush fund to pay off European politicians, buy luxury goods, launder money, and otherwise benefit themselves.
Banking records revealing some 2.5 billion euro (US$ 2.9 billion) in transactions were leaked to the Danish newspaper Berlingske, which shared them with OCCRP. The two outlets then organized a collaborative investigation to track down where the money went.
The result is the Azerbaijani Laundromat — so called because the vast sums that passed through it were laundered through a series of shell companies to disguise their origin. The project reveals the many uses to which the country’s kleptocratic ruling clique puts some of its billions.
Among other things, the money bought silence. During this period, the Azerbaijani government threw more than 90 human rights activists, opposition politicians, and journalists (such as OCCRP journalist Khadija Ismayilova) into prison on politically motivated charges. The human rights crackdown was roundly condemned by international human rights groups.
Meanwhile, at least three European politicians, a journalist who wrote stories friendly to the regime, and businessmen who praised the government were among the recipients of Azerbaijani Laundromat money. In some cases, these prominent individuals were able to mobilize important international organizations, such as UNESCO and the Parliamentary Assembly of the Council of Europe, to score PR victories for the regime.
Nor do major Western financial institutions escape responsibility. The banking records in the leak — over 16,000 transactions in all — reveal that the core of the Azerbaijani Laundromat was formed by four shell companies registered in the United Kingdom. The country’s lax regulations allowed these companies to file registration paperwork that listed proxy or non-existent shareholders and disguise their true origins.
Moreover, the records show that Danske Bank, a major European financial institution, turned a blind eye to transactions that should have raised red flags. The bank’s Estonian branch handled the accounts of all four Azerbaijani Laundromat companies, allowing the billions to pass through it without investigating their propriety.
A majority of the payments went to other secretive shell companies similarly registered in the UK, indicating that the full extent of the scheme may be much larger than is currently known. Large amounts also went to companies in the UAE and Turkey. (Some of the transactions involve companies in the Russian Laundromat, a vast money laundering scheme previously exposed by OCCRP.)
The subsequent flow of much of these funds is unknown. But the records reveal that millions of dollars ended up in the accounts of companies and individuals across the world, including luxury car dealerships, football clubs, high-end travel agencies, and hospitals. Many of these recipients would not have understood the problematic nature of the transfers, and cannot be accused of doing anything improper. But their involvement reveals the many uses to which the scheme’s operators put their money.
The recipients also included prominent Azerbaijanis with government positions or connections. These include the family of Yaqub Eyyubov, Azerbaijan’s first deputy prime minister, who is one of the country’s most powerful politicians.
They also include Ali Nagiyev, a man responsible for battling corruption in Azerbaijan. As it turns out, he and his family were major users of the system.
Another $138 million likely went to AvroMed, a major drug company co-founded by Javashir Feyziyev, a member of the Azerbaijani parliament who specializes in building relationships with EU politicians. (The recipient's actual ownership is hidden, but its records match what is known about the pharmaceutical giant.)
But where did all this money come from? Its precise origin is unclear — again, hidden behind a series of secretive shell companies — but there is ample evidence of its connection to the family of President Ilham Aliyev.
Almost half of the $2.9 billion came from an account held in the International Bank of Azerbaijan (IBA) by a mysterious shell company linked to the Aliyevs. The second and third biggest contributors were two offshore companies with direct connections to a regime insider. Some of the money came directly from various government ministries. Mysteriously, another portion came from Rosoboronexport, a state-owned Russian arms exporter. It is clear that the full extent of the Azerbaijani Laundromat will be explored for years to come.
OCCRP PROJECT (all stories)
