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Azerbaijani President's Daughters Tied To Fast-Rising Telecoms Firm

Azerbaijani President Ilham Aliyev's daughters, Arzu and Leyla, at Park Bulvar in Baku in June 2010.
Azerbaijani President Ilham Aliyev's daughters, Arzu and Leyla, at Park Bulvar in Baku in June 2010.
By Khadija Ismayilova
BAKU -- Azerfon, a Baku-based telecoms company that operates under the brand Nar, is one of the success stories of the new Azerbaijani economy. Founded in March 2007, the company already boasts nearly 1.7 million subscribers and covers 80 percent of the country's territory. Azerfon is Azerbaijan's only provider of 3G services.

In April, the Caspian-European Integration Business Club (whose honorary chairman is Azerbaijani President Ilham Aliyev) named Azerfon "mobile operator of the year." The honor was presented to Azerfon board chairman Cuneyt Turktan by Azerbaijani Minister of Communications and Information Technologies Ali Abbasov.

But the company's ownership structure has been clouded in mystery since its creation. Now, RFE/RL's Azerbaijani Service has conducted an investigation linking Azerfon's main shareholders to the daughters of President Aliyev.

Aliyev's family has been tied to numerous suspicious business dealings in the past. His family controls a company called SW Holding that has privatized many lucrative elements of the state-owned AZAL airline. The "Washington Post" reported in March 2010 that Aliyev's three children are the registered owners of some $75 million worth of real estate in Dubai. First lady Mehriban Aliyeva and her two daughters are believed to control several of the country's largest banks.

When the Communications Ministry announced the formation of Azerfon late in 2006, it said the company was owned by the German firm Siemens AG and a couple of British firms. The ministry has repeated the same information several times in the ensuing years.

But Siemens AG spokeswoman Monika Bruecklmeier-Langendorf told RFE/RL that her company has never owned any shares in Azerfon or any other mobile operator in Azerbaijan.

Likewise, the Finland-based Nokia Siemens Networks (NSN) denied owning a stake in Azerfon. "NSN has never owned shares of Azerfon. NSN is leading provider of solutions and services to the communications industry, and our policy is not to own shares of our customers," NSN spokeswoman Anna Lehtiranta said.

When RFE/RL informed the Communications Ministry of the information from Siemens, a ministry spokesperson simply repeated that Siemens is an Azerfon shareholder.

Mum's The Word

Azerfon's press office refused to provide information about its shareholders to RFE/RL. It also declined to provide information about its total revenues or the amount of taxes it pays, except to assert that it pays its taxes in a timely fashion.

However, according to documents obtained by RFE/RL from the Azerbaijani Tax Ministry (registration number 1105-T13-3906), Azerfon is owned by three Panama-registered companies, one company registered in the Caribbean tax haven of Nevis Island, and the state-owned Aztelekom. The latter owns 10 percent of Azerfon, while the Nevis Island firm Cellex Communications SA owns 18 percent. The three Panama-registered firms, each of which owns 24 percent of Azerfon, are Hughson Management, Inc.; Gladwin Management Inc.; and Grinnell Management Inc.

Azerbaijani President Ilham Aliyev
Vasif Movsumov, chairman of the Baku-based Anticorruption Foundation, says such a lack of transparency raises questions.

"If two government agencies give contradictory information about a company's ownership, and the company itself is not transparent on this issue, there is a high probability of corruption in its practices," Movsumov said.

International anticorruption campaigners have long noted that the use of offshore shell companies in tax havens is a common tactic for hiding the identity of a company's owners and covering illegal activities such as corruption and money laundering.

Trans-Atlantic Trail

The Panama State Registry provides basic information about the three companies registered there that are purportedly among Azerfon's owners. According to their records, Leyla Aliyeva, President Aliyev's 25-year-old eldest daughter, is registered as the president of Gladwin and Grinnell. In both cases, Arzu Aliyeva, Ilham Aliyev's 22-year-old second daughter, is registered as company treasurer.

In the case of Hughson, the roles are reversed, with Arzu listed as president and Leyla as treasurer.

All three companies list start-up capital of $10,000.

All three Panama-based firms also list Olivier Mestelan, a Swiss businessman who reportedly has close ties to the Aliyev family, as treasurer. "Baku" magazine, which is published in Moscow by Leyla Aliyeva, profiled Mestelan as an art collector and patron. He owns the Kicik QalArt gallery in Baku and is founder of the Art ex East Foundation. According to the "Baku" profile, he is a lawyer by training who owns a home in Azerbaijan that he visits several times a year. RFE/RL was told at the Kicik QalArt gallery that Mestelan would not comment on the businesses he owns.

Likewise, the presidential administration refused to provide information relating to the Aliyev family's business holdings. According to an Azerbaijani law adopted in 2005, senior government officials, including the president, are required to provide asset declarations about themselves and their immediate families. President Aliyev has never made such an asset statement public and the Azerbaijan Central Election Commission rejected RFE/RL's request for copies of his statements.

Perceived Irregularities

There are other unanswered questions about Azerfon. Rovshan Agayev, director of the Center for Assistance to Economic Initiatives, claimed that Azerfon entered the Azerbaijani market in violation of a 2001 law requiring a license tender.

"In order to obtain the legal rights to operate in the country, communications companies need to demonstrate their technical and investment eligibility by participating in tenders," Agayev told RFE/RL. "None of the Azerbaijani mobile-phone operators has ever participated in such a tender. When Bakcell entered the market in 1995 and Azercell in 1997, the state procurement law had not yet been adopted. However, in 2006, when Azerfon appeared on the market, such procedures were already mandatory."

Agayev says the Communications Ministry violated the law by approving Azerfon without a tender.

In addition, the manner in which Azerfon acquired its current monopoly on 3G services raises questions. Competitor Azercell -- which has more than twice as many subscribers as Azerfon -- has applied for a 3G license repeatedly in recent years and been repeatedly rejected by the Communications Ministry. Azerfon was granted the license without a tender.
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by: Thomas from: Toronto
June 27, 2011 19:02
Government of Azerbaijan = Aliyev family enterprise.

Ahhh...corruption...endless source of income...why work hard when an entire country is at your service?

....Tunisia, Egypt, Lybia....Azerbaijan (without question mark).

by: Ara G from: DC
June 27, 2011 19:45
The fruits never not fall far from the tree...

by: Def from: DC
June 27, 2011 20:36
Too much complicated in this story. Seems that women in Azerbaijan are not allowed to run a business?
In Response

by: Turgai
June 30, 2011 11:20
Women who do not belong to or are not connected with a certain power clique, no.

by: Jorjo from: Florida
June 27, 2011 23:44
Heydar Aliev, the father of Ilham and the former ruler of Azerbaijan - before and after the dissolution of the USSR - has been rumored to repeatedly remind to his staff after Leonid Brezhnev occasional visits to Baku that Aliev clan has ruled Azerbaijan for 500 years and will rule it for another 500. So far the history proves him right:)

by: Will from: England
June 28, 2011 13:22
What is unusual about a start-up mobile phone company being owned only by a small number of individuals? Digicel in the Caribbean is privately owned by an Irish entrepreneur and Vodafone Essar in India is 30% owned by the Ruia family. The history of mobile companies has been one of individuals starting from a small base and growing a successful business, and this is just what has happened here. There has been no state-owned company taken over - it is a start up that has become successful. Have the other mobile phone companies in the region been investigated or only this one? Another case of biased reporting maybe?!
In Response

by: Thomas from: Toronto
June 28, 2011 17:31
You are missing a monumental point here, which is the essence of this article in the first place. Every major enterprise in Azerbaijan, in this particular case the mobile phone operation, is controlled by the Aliyev clan. They have turned the governing of this country into a business enterprise for their own personal wealth.

I didn't think this obvious practice by the owner of Azerbaijan needed further explanation.

by: John from: NYC
June 28, 2011 18:13
The Aliyev clan controls all aspects of Azerbaijan economy. As a result Azerbaijan is one of the most corrupt countries in the world. It's a shame that US and EU continue to do business with this mafia.
In Response

by: Felipe Muñoz from: Santiago, Chile
June 29, 2011 16:33
They will continue to do ''business'' with this ''government'' by only one reason -and easy- : Oil... as happens with Kazakhstan, Turkmenistan, and so on.

by: Saint Armen from: Los Angeles
June 29, 2011 07:02
The Aliyev clan is control by a Donkey looking idiot, so is Azerbaijan... I Hope one day that idiot Donkey can be over thrown by the freedom loving azeris, And on that day they will realize that NK will never be as part of Azerbajain again. Long live the freedom lovers

by: Zamig from: Prague-Czech Republic
June 29, 2011 13:46
To establish democracy and territorial integrity impossible to do with this corrupt government.

Only the democratic elected government can liberate occupied territory of Azerbaijan and create the democratic civil society.
In Response

by: Felipe Muñoz from: Santiago, Chile
June 29, 2011 16:43
''To establish democracy and territorial integrity impossible to do with this corrupt government.''... Hmm i dont think so. This current military spending is just thanks to Aliyev, and his perssonal involvement and desire to resolve the NK conflict in his full side. A democracy during a war could face the risk of government instability as result of any failure during the war against Karabakh (as seen in the initial phase of the Karabakh War in 1992); and Aliyev knows this very well.

And in a democracy, i dont think that All azerbaijanis will be agree to fight in the mountainous Karabakh. After all, the most interested people in fighting in Karabakh is exactly the people that had to leave places like Agdam by the cause of the war. I dont think that a person in Baku (with all the good living there) will like to sacrifice their comfort fighting the karabakh-armenians. People of big cities are usually more exposed to desert from battlefield.

So in brief, a ''territorial integrity and liberation of Karabakh'' is more likely under Aliyev rule, than inside a Democracy. At least, that's my oppinion.
In Response

by: Zamig from: Prague/Czech republic
June 29, 2011 17:49
My dear armenian comrade by nickname "Felipe Muñoz from: Santiago, Chile", co called "war against Karabakh" - never existed. It was occupation of Armenian Armed Forces by support Russia and Iran against Azerbaijan.

The Supreme Council of the Armenian SSR passed a resolution "on reunification of the Armenian SSR and NKAR"; thus in violence of all basic norms and principles of international law, Armenia officially declared its claim against the territorial integrity of the neighboring state.

Please, look at the UN Security Council Resolutions (822, 853, 874, 884).
Don't worry, Nagorny Karabakh region and other 7 occupied districts all time were part of Azerbaijan and will stay de jure and de facto part of the Republic of Azerbaijan.

....and please don't use this page for disgusting political propaganda...

by: Azer from: Azerbaiajn
June 29, 2011 19:45
I'm shocked when I see people from Toronto or some other distant (very distant) place commenting on Azerbaijani issues,
Aren't you guys have your own problems ?
Everybody knows that Aliyev family controls the country it is not a secret, Mr. Sherlock Holmes, it is normal for a contry which was attacked and has 20% of its land under occupation + neigboring countries wants to see Azerbaiajn as a ruind country including Russia and Iran, so we acctually need Dictator who can stear country out of this mess, you guys don't like kings and dictators stop supporting them, or better idea go pick on a country your own size such as China Russia. BTW next time US President meets with Saudi King, remember why you elected him.
Also Canada is pacifist country why you care about Azerbaijan ?
In Response

by: Zamig from: Prague-Czech Republic
June 30, 2011 08:58
They are not from Canada, USA or Chile, because, mostly these people have no notion about their own history, map, political situation or geography. Commenting people are from neighbor country (from Armenia) by different (nick)names and they are very happy I see :)

In Response

by: Seidkazi
June 30, 2011 11:23
Azerbaijan can only be strong as part of the Caliphate.
http://www.khilafah.com/index.php/multimedia/books/10607-book-emerging-world-order-the-islamic-khilafah-state

by: Sara Huseynova from: Baki
June 30, 2011 11:40
Counting somebody’s money is silly! Only silly people can count somebody’s money. However, it become as an habit in Azerbaijan to count the money of the people surrounding the President. But money made by oppositions, people from NFA, nobody counts. Villas and super cars of people in opposition, by their brand and size are very competitive with the villas of government officials – oligarchs, who were brought to the power by NFA and now receiving the dividends from them. Why nobody writes about the shopping malls, shops and tourist facilities of NFA representatives who taken over the people’s money and now play by pretending to be opposition.

These people are responsible for the occupation of Lachin, Shusha, Kelbejer and other regions by Armenians, which were given away without any resistance. Let’s investigate the money of I. Gamidov, I. Gambar, E. Mamedov, N. Panahov, F. Mustafayev and others, who were transformed to the actual political oligarchs, by concurring all seat in the opposition. Therefore the people do not like them. Let’s the journalists to investigate these matters, then we can say that journalists are objective. It is very important, in order to show to the people, how they were cheated and who owns the money.

Again, all newspapers show the pictures of the beautiful daughters of the president of Azerbaijan. As in earlier time, journalists with the soviet mentality trying to show to the people, that they can not do the business in this country. This kind of journalists attitude makes us think that American democracy, with its voice being “LIBERTY” trying to return the old soviet thought: if you are rich, means that you are the enemy of the people.

But it should be visa versa. Rich man is the person who creates and develops the economy by using its own funds. Nobody in the West, asks Ford or Rockveller, where they got the money from and why they are in full control of some branches of the economy.

In regards to the point that the president’s daughters are having their own business in the country is not bad. To invest the money to the country’s infrastructure, only shows the stability of the country’s business sphere. We need to appreciate these kind of actions. Each business project is the new vacancies, creation of new infrastructures, development of economy and the major thing is the turnover of the Azerbaijan money.

We do live in capitalist country and must understand that this era divides the people for rich and poor. Nobody allows the poor people to watch the rich’s money. This kind of attitude is considered to be unmoral in all capitalist countries. We can only be glad to see that poor person becoming rich. It does not mean that he must share his money with you. These kind of people are considered to be silly in the western world. Of course, to discuss the current matter, where they got the money from is very silly.

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