CORPORATE SECRECY SHOCK IN AZERBAIJAN
By Shahla Sultanova
Institute for War and Peace Reporting IWPR
Caucasus Reporting Service – Issue 647
June 22 2012
UK
Critics accuse officials of passing self-serving law to conceal their
own business interests.
A new law that will surround company ownership in secrecy has caused
dismay in Azerbaijan, with critics saying it contradicts every
principle of open government.
Legislative amendments passed by parliament on June 13 mean that
from now on, shareholders’ identities and the stakes they hold in
companies will be kept confidential.
On the eve of the vote, the REAL movement, which campaigns for openness
and democracy in Azerbaijan, organised a protest outside parliament.
Ilgar Mammadov, one of REAL’s co-founders, said the changes to the
law reflected a desire by officials to conceal their own stakes in
major companies.
“The global trend towards increased openness worries top leaders
in Baku. In 2009, Panama made public all company ownership data,
and this resulted in corruption scandals in Azerbaijan implicating
the president’s family,” Mammadov said. “They therefore now want to
make Azerbaijan itself into something of an off-shore zone, thereby
expanding the scope for corruption.”
Shahveled Chobanoghlu, an investigative journalist with the Azadliq
newspaper who focuses on corruption issues, said the law was changed
after a series of media investigations alleged links between members
of President Ilham Aliyev’s family and large businesses.
He said the new law would stop many investigative journalists from
doing their job.
“This law… is not for the benefit of society. It will not bring
us anything good. No developing society would pass a law that limits
access to commercial information,” he said.
IWPR tried to reach members of the presidential administration for
comment. Both Elnur Aslanov, head of the department of political
analysis and information, and Ali Hasanov, head of the public affairs
and politics department in the administration, declined to make any
comment, and no one else was available to speak.
Chingiz Genizade, who sits on parliament’s committee for legal policy,
said the law had nothing to do with the president’s family or the
business interests of officials.
“The public knows everything about the president’s family. There
is no need to conceal it,” he said. “This law was passed to offer
entrepreneurs a chance to build their businesses in safety. Of
course, it will slightly limit access to information, but it will
help businesses to develop rapidly.”
That did not convince Khalid Shukurov, a member of the Azerbaijan
Lawyers Association, who described the law as “the start of a dangerous
new system”.
“It moves this country from being an unofficial authoritarian regime to
being an official totalitarian regime. The law does not serve democracy
at all; it limits the acquisition and dissemination of information,”
he said.
United States Secretary of State Hillary Clinton discussed governance
and transparency issues when she met civil society representatives
when she visited Azerbaijan in early June.
Fidan Najafova, deputy director of Open Society Institute Azerbaijan
and director of the OSI’s Transparency of Oil Revenues and Public
Finance programme, was among those invited to meet Clinton. She said
the main issue discussed at the meeting was transparency of budget
spending and open governance.
“This law goes against the commitment to open governance. I am
disappointed by it,” Najafova said. “It also restricts journalists’
access to commercial information. From now on, journalists can be
charged just for using the names of shareholders in their stories.”
Azerbaijan is among 55 countries that have signed up to the Open
Government Partnership, joining last year. To become a member of the
partnership, states must promise to open the work of government up
to scrutiny, and allow their citizens access to information.
Galib Abbaszade, coordinator of the National Budget Group, a local NGO,
said the law ran directly counter to those principles, since it would
protect the privacy of businessmen and block public oversight over
the incomes of elected and appointed officials and their relatives.
“All these factors contradict the values of the Open Governance
Partnership, and may increase tensions in society because of the
unfair distribution of revenues,” he said.
Abbaszade was one of a group of activists and journalists who, on
June 6, signed a statement condemning the amendment.
“Preventing public access to information about commercial legal
entities cannot be justified with the public-interest argument. This
level of secrecy will cause mistrust and lack of confidence among
participants in what purports to be a free market economy, and will
probably increase organised crime,” the statement said.
Abbaszade said parliament should repeal the amendments and instead
draft proposals for enhanced access to information.
Rashid Hajili, director of the Media Rights Institute, said the law
would actually make it harder to do business in Azerbaijan.
“When businesses are deciding whether to go into business with
other companies, they want to get as much information as possible,”
he explained. “The first thing they’re interested in is finding out
who the owner is. Unfortunately, now that this law has been passed,
it will be impossible to find that out.”
Shukurov argued that commercial litigation would also be complicated
by the new rules.
“If someone is accused of breaking the law, the case will not be open
to the public, as it will relate to commercial information,” he said.
“The public will have no right to follow the case in a transparent
manner.”
Shahla Sultanova is a freelance journalist in Azerbaijan.