AZERBAIJANI OFFICIAL ENJOYS SIZABLE INCOMES: WIKILEAKS
Tert.am
03.12.10
Wikileaks continues the publication of scandalous materials.
It has recently leaked a cable which is the second in a series that
profiles the most powerful families in Azerbaijan, both in terms
of economic and political power. This issue features Minister of
Emergency Situations Kamaladdin Heydarov and his family. Heydarov
was previously Chairman of the State Customs Committee, and his
hand-picked successor now operates that agency, one of the most
corrupt operations in Azerbaijan. The Heydarov family, which controls
a business empire in Azerbaijan ranging from fruit juice production
to real estate development, is the second most powerful commercial
family in Azerbaijan, after the Pashayev family (into which President
Aliyev married).
Man striving for power
Kamaladdin Heydarov is the most powerful member of this family,
and some observers have said he might be even more powerful than
the President himself. His father, Fattah Heydarov, is a Member of
Parliament from the mountainous Qabala district, which serves as a home
base for the family outside Baku. Fattah was Secretary of the Ordubad
(and later Julfa) District Party Committee during Soviet times, and
served as Minister of the Welfare Service of Nakhchivan from 1976 to
1978 and later as Nakhchivan’s Minister of Culture from 1983 to 1995.
Kamaladdin Heydarov was Chairman of the State Customs Committee for
nine years, and since 2006 has been head of the para-military Ministry
of Emergency Situations (MES), which acts as a super-Federal Emergency
Management Agency, Fire Marshall, health and safety inspector, and
overall regulator of many aspects of the economy. Born in 1961, he
holds a degree in Geology and International Law from the Azerbaijan
State University. He held executive positions in a number of private
and public enterprises prior to his appointment at the ripe old age of
35 as Chairman of the State Customs Committee (SCC), an agency that is
notoriously corrupt, even by Azerbaijani standards. Heydarov’s rise to
power was partly a result of the strong relationship between his father
Fattah and former President Heydar Aliyev (also from Nakhchivan),
but also partly a result of Heydarov’s strong management skills. As
he gained wealth for the ruling party, Heydar Aliyev’s respect for
him grew, until finally he was entrusted with the valuable role of
Chairman of the SCC.
The State Customs position allowed him to gain his massive wealth,
as significant illicit payments were paid “up the food chain” in an
elaborate and well-orchestrated system of payoff and patronage.
Heydarov likely still enjoys a sizeable income from the SCC, as it
is controlled by his loyal successor. When President Ilham Aliyev
appointed Heydarov as Minister of Emergency Situations in 2006,
he was replaced at the SCC by his Deputy Aydin Aliyev. Aydin Aliyev
is not related to President Aliyev, and Heydarov is Aydin Aliyev’s
sole benefactor, a symbiotic relationship in which Aliyev presumably
gives undying loyalty (and a hefty cut) to the powerful Heydarov in
order to retain his position. When Charge first met Heydarov in 2007,
the Minister had been in office for less than a year but had a chest
full of military ribbons that would rival the U.S. Chairman of the
Joint Chiefs. Presumably he transferred them directly from his old
State Customs uniform.
The Ministry of Everything Significant (MES)
The Ministry of Emergency Situations (MES) has consistently proven
itself to be one of the most powerful ministries in Azerbaijan. It is
suspected to have the largest revenue of any Ministry. It even has its
own para-military unit, consistent with other such ministries in the
CIS. Heydarov mentioned to a visiting Washington VIP in 2008 that his
ministry had recently taken control of an anti-aircraft battery near
Baku in which he had served as a young conscript during Soviet times.
The Ministry now controls the fire departments and other emergency
services, fire code inspections, state grain reserves, and construction
licensing. This last area of responsibility (perhaps the most important
for foreign entities operating in Azerbaijan) also covers building
inspectors who can interfere with, delay, or stop any construction
project they declare to be “unsafe.” In fact, MES staff have previously
warned American and other foreign businessmen that their purview covers
anything that is associated with temperature, pressure, or isotopes —
categories broadly interpreted to include just about everything under
the sun.
It is often said mockingly that in Azerbaijan’s judicial system, one
can only win a case if one is friends with the judge – or if introduced
by Benjamin Franklin (read: significant cash). Of course being known
to the judge as politically powerful is another path to courtroom
victory. The path to certifying a building’s safety is likely similar,
and the true structural integrity of Baku’s recent construction
boom is suspect. In 2007, a multi-story high-rise under construction
crashed to the ground, killing several workers. In January 2010, three
workers were killed when they fell from a building under construction
on high-rent Neftchiler Prospect (reftel). Suspect construction is
widespread in Baku, as new, speculative real estate ventures in
central Baku (including high-rise buildings) are largely vacant,
while practical buyers bid up the prices of flats in “Stalin-ka”
buildings that pre-date independence. These older buildings, which
tend to be low-rise, are thought to have had higher construction
standards and generally be safer and more dependable.
These types of market developments do not bode well for the reputation
of MES, which is widely viewed as a cash cow for Baku’s elite, and the
Heydarov family in particular. If an event such as an earthquake led to
widespread destruction of property, it is assumed that outrage would
be private, rather than public, and would not boil over into attacks
on contractors or corrupt bureaucrats, as was the case after the 1999
earthquake in Istanbul. Some less powerful contractors would become
easy targets, but the true architects of disaster such as Heydarov’s
MES would find a way to use its resources and the tools of the state
to escape any reprisal.
His Boys and Their Toys
Kamaladdin’s two sons, Nijat Heydarov and Tale Heydarov, have recently
expressed a desire to purchase two Gulfstream jets, valued at $20
million each. The family also owns an Airbus A319 corporate jet that
is presently undergoing cabin completion in Basel, Switzerland.
According to initial reports, ownership of the Gulfstreams would be
shared between “Shams al Sahra FZCO” (registered in Dubai to Tale and
Nijat) and Mr. Manouchehr Ahadpur Khangah, with Shams al Sahra and
Kangah each holding 50 percent of each jet. Khangah was not previously
known to the Embassy, but according to information from Gulfstream
appears to be a citizen of both Iran and Azerbaijan (unclear if he also
holds other passports). Purportedly as part of Patriot Act compliance,
Gulfstream asked the Heydarovs for information that would confirm
the lawful sources of their wealth. The BAKU 00000127 003 OF 004
Heydarovs provided Gulfstream an overview of their family holdings,
and it appears they own more businesses than any other Azerbaijani
family, including companies in food canning, construction materials,
concrete, asphalt, chemicals, bricks, textiles, CD and DVD production
(since licensed CDs or DVDs are generally unavailable on the local
market, these are certainly all pirated), milk processing, tourism,
gypsum materials, leather, agriculture, pianos, alcohol and spirits,
juices, banking, insurance, and construction.
One Embassy contact, a prominent Iranian businessman in Baku,
referred to Khangah as the Chief Executive Officer or “front man”
of a substantial portion of the Heydarov family conglomerate. This
contact noted that while Khangah is listed as the official owner
of various businesses, they are very much Heydarov-owned operations
in which Khangah functions more as a manager. This source added that
Khangah’s role was mirrored by an unnamed Turkish citizen who controls
another segment of the family businesses.
Many of the family’s operations are part of the “Gilan,” “Qabala,”
“Jala,” or “United Enterprises International (UEI)” family of
companies. Gilan Holdings is omnipresent in Baku, as the company
is one of several major real estate developers and has been in the
forefront of Baku’s highly speculative real estate market. Observers
compare Gilan to Dubai World or Nakheel, although admittedly on a
smaller scale. The Heydarovs have largely cornered the fruit juice
market in Azerbaijan, maintaining extremely high prices for locally
produced juices and watered-down juice drinks, while making life
difficult — with the help of State Customs — for cheaper competitors
from Turkey, Ukraine and Russia. When USAID tried to support the
production and distribution of pomegranate products in Azerbaijan,
they quickly learned that no one sells pomegranate juice, concentrate,
or derivatives from Azerbaijan without Heydarov’s permission.
Azerbaijan’s economy is largely dominated by monopolistic interests,
and observers suggest that the Heydarovs are at the top of this
mountain of non-competition. It is rumored that the Heydarovs also
have interests in the local Pepsi bottler, the local license for Red
Bull, British American Tobacco, Japan Tobacco, and Imperial Tobacco.
Heydarov has readily admitted to visiting U.S. delegations that he owns
and operates the Caspian Fish Company which controls the lucrative
(and previously Russian Mafia-controlled) Beluga Caviar production
in Azerbaijan.
The Heydarovs are also active in cultural endeavors. Kamaladdin
Heydarov is a composer and has written a song about former President
Heydar Aliyev that was sung by Azeri singer Aghadadash Aghayev. His
wife is ethnic Korean, and he himself is quite the Koreaphile; he
is President of the Azerbaijan Taekwondo Federation and owner of the
recently opened high-end Korean restaurant “Shilla.” Korean diplomats
have confirmed that Heydarov was the protector for several major
business deals, but have complained that many of these deals have
gone awry after the Korean firms refused to pay adequate patronage
to Heydarov.
Heydarov’s son Tale is the President of The European Azerbaijan Society
(TEAS), and has made rounds to U.S. embassies in European capitals
from his London base. The “society” purports to be an independent
advocacy group, but its talking points very much reflect the goals and
objectives of the GOAJ. In recent meetings, Tale and his cohorts have
raised “Armenian aggression” in Nagorno-Karabakh and “double standards”
of U.S. human rights and democracy reporting in the region, and
complained about efforts of the U.S. Congress to provide humanitarian
assistance within the Nagorno-Karabakh enclave. Tale and/or Nijat
also own the Qabala Football Club — perhaps as a small-scale effort
to replicate the Chelsea antics of Russia’s Roman Abramovich. The
Qabala squad is a virtual United Nations team, with BAKU 00000127 004
OF 004 players from across Europe, Latin America and Africa — the
best team money can buy, at least for central Azerbaijan. Both sons
were educated in London and presently live there. Tale holds a B.A. in
International Relations and History from the London School of Economics
and an M.A. in Security and Global Governance from Birkbeck College,
while Nijat holds a B.A. in Politics and East European Studies from
University College London and an M.A.
in Management, Organizations, and Governance from the London School
of Economics. Some newspapers have reported that Tale might return
to Baku to become a Member of Parliament later this year. It’s Good to
Be King
The family’s influence is strongest in the regions of Qabala, Masalli,
and Lenkeran. Postsuspects that Heydarov continues to control the tate
Customs Committee and wield influence over the Ministry of Taxes, the
Ministry of Ecology and Natural Resources, and Ministry of Economic
Development, which is now led by a former Ministry of Taxes official.
Additionally, of course, Heydarov profits significantly from widespread
activities of the Ministry of Emergency Situations. That ministry,
according to observers, may be the most sought after employer in
official Baku, as Heydarov has made a reputation for paying salaries
on time and in full. Employees benefit from perks of MES employment,
such as the ability to enroll children in one of Baku’s best-looking
and best-financed public schools. Measures like these, contacts report,
create a loyal following for the minister among his minions.
Turf Wars: Don’t Cross Kamaladdin
Embassy contacts note that Kamaladdin Heydarov is currently in a
“fight over grain” with Minister of Agriculture Ismat Abbasov, and
wants Abbasov replaced by Member of Parliament Eldar Ibrahimov.
Historically, those who have fought with Heydarov have always
fared poorly: Farhad Aliyev and Heydar Babayev were (in succession)
driven out as Minister of Economic Development in part after falling
on Heydarov’s bad side. Both were billed as reformers, and the
economic reforms they were seen to propose stood to hurt Heydarov’s
interests at the State Customs Committee and the Ministry of Emergency
Situations. In addition, some opposition newspapers had begun to call
them potential candidates for the position of Prime Minister. Feeling
threatened by their reform activity and growing power, Heydarov
allegedly put his foot down. Both were removed from government and
their business interests were seriously damaged. Rumors circulated
in 2009 that Heydarov may have even been behind the assassination of
Air Force Chief and Deputy Defense Minister General Rail Rzayev. The
rumors point to the widely-reported forced landing of Heydarov’s
helicopter after it took off without obtaining flight clearance.
The next issue of “Who Owns What” will profile the family of Ziya
Mammadov, the Minister of Transportation. With so much of the nation’s
oil wealth being poured into road construction, the Mammadovs also
control a significant source of rent-seeking. His holdings extend to
the buses that run throughout Baku. A recent television report asked if
the Mammadovs controlled mysterious construction company ZQAN Holding;
the reporter pointed out the letters of ZQAN matched the initials of
father Ziya, mother Qanira, son Anar, and daughter Nigar.
A ZQAN representative brushed this aside as innuendo.
From: A. Papazian