The South Caucasus connected to the shadow financial system

A massive offshore data leak exposing the hidden wealth of global elites has implicated figures from the South Caucasus.

The Pandora Papers are a cache of 11.9 million files that reveal how wealthy people hide their income and assets from tax in offshore jurisdictions, or tax havens. The files, described by the Guardian as “the biggest offshore data breach treasure house in history,” reveals a complex web of offshore companies and business service providers that conceals the movement of hundreds of billions of dollars around the world each year.

The Pandora Papers include data on 35 world leaders, including current and former presidents and prime ministers, and 300 other officials in more than 90 countries. Government officials are referred to as “Politically Exposed Persons” (PEPs) because their proximity to public funds puts them at higher risk of money laundering. Records reveal how service providers helped corrupt and authoritarian rulers hide their wealth abroad without subjecting the source of their money to scrutiny.

While the Panama Papers and Paradise Papers previously revealed massive networks of offshore companies, the Pandora Papers are unprecedented in scale and scope. The Organized Crime and Corruption Reporting Project (OCCRP) wrote that the Pandora Papers put an end to “the idea that abuse of the offshore system is the work of a few bad apples.” Instead, they “expose a vast and often interconnected system that fuels crises and discontent across the world.”

The files were leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington, DC, which shared access with more than 600 journalists around the world.

The Pandora Papers involve Armenian businessmen in an international network of tax havens. According to a hetq survey (ICIJ member), two Armenian mining companies were registered in offshore jurisdictions.

In October 2012, British investors published a statement in Haykakan Zhamanak (the newspaper owned by the family of Prime Minister Nikol Pashinyan) stating that they planned to launch two mining projects in 2013: the Bazum iron ore mine in the Lori province and the Azatek polymetallic gold mine. mine in the province of Vayots Dzor. Investors, including former UK Member of Parliament Sir Tony Paldry, are reportedly contributing $ 400 million to the projects through Surart Ltd. and VaykGold Ltd.

Vardan Ayvazyan (Photo: Facebook)

Surat Ltd. and VaykGold Ltd. were founded by Vardan Ayvazyan, a former Republican MP who was also Chairman of the Standing Parliamentary Committee on Economic Affairs (2007-2017) and Minister of Nature (2001-2007).

George Howard Richmond (Photo: LinkedIn)

The Armenian Agency for the State Register of Legal Entities listed Ayvazyan in 2012 as the owner of VaykGold Ltd., which came under the management of Coeur Gold Armenia Ltd. in 2014. However, as revealed by the Pandora Papers, at the time of the Haykakan Ad by Zhamanak VaykGold Ltd. was managed by Coeur Gold Armenia Ltd., which was founded the previous year in Seychelles by Tbilisi-born British citizen George Howard Richmond.

Sir Paldry told the ICIJ he had no recollection of meeting Ayvazyan or knowledge of the newspaper’s advertisement.

In 2011, Coeur Gold Armenia Ltd. and Bazum Steel Ltd., based in Belize, briefly became shareholders of Surart Ltd., which was fully acquired by Bazum Steel Ltd. two years later. According to the National Revenue Committee of Armenia, Surart Ltd. has suspended operations and no company has the right to explore the Bazum iron ore mine. However, Ayvazyan’s relatives founded another company, Iron Mining Ltd., in 2016, which was granted a permit from the Ministry of Energy Infrastructure and Natural Resources the following year to operate in Bazum.

In 2021, VaykGold Ltd. signed a contract with the ministry to develop the Azatek mine. In 2018, the attorney general’s office opened a criminal investigation to determine whether the license was issued illegally. The office also determined that a mineral extraction in 2017 caused significant damage to the subsoil and its minerals. The Armenian commission of inquiry indicted Ayvazyan and Ashot Hovhannisyan, co-owner of the company, with malicious tax evasion. The charges were later dropped, but the company’s right to operate the Azatek mine was terminated by the Ministry of Territorial Administration and Infrastructure. Hovhannisyan has asked the Administrative Court of Armenia to overturn the order and the trial is ongoing.

Heydar Aliyev (Photo: Official website of the President of Azerbaijan)

The most damning revelations in the Pandora Papers linked to the South Caucasus concern Azerbaijani President Ilham Aliyev, whose relatives are found to hold nearly $ 700 million in real estate in London, acquired through an interconnected network of 84 secret offshore companies that the family has owned it since 2006.

While it was previously known that the Aliyevs owned assets worth millions of dollars abroad, the British assets discovered by a OCCRP survey, including luxury apartments, historic buildings, and commercial developments, eclipse earlier discoveries.

Heydar, Aliev’s son acquired his first building for $ 48.9 million in 2009, when he was only 11 years old. The strip of commercial property in London’s exclusive Mayfair area was owned by Mallnick Holdings SA, established in the British Virgin Islands, and secretly handed over to Aliyev’s young son.

At the age of 19, Aliyev’s youngest daughter, Arzu Aliyeva, was a shareholder in Strahan Holding and Finance, an offshore company that acquired three apartments worth $ 9.7 million in the upscale district of Knightsbridge in London.

Trident Trust Group, the source of the largest slice of records in the Pandora Papers, more than 3.75 million, has tasked a UK due diligence firm to investigate Arzu’s background. The firm concluded that “any transaction involving it should be subject to careful and continuous review and verification.”

“We draw our client’s attention to the widespread and sustained allegations of corruption against the subject’s father, Ilham Aliyev, and the apparently widespread view that all funds held by President Aliyev and his family were accumulated in direct consequence of his post as President of Azerbaijan, ”the report reads.

Leyla Aliyeva (Photo: Official website of Leyla Aliyeva)

By this point, Trident Trust had already formed at least 16 offshore companies for Arzu Aliyeva. That year, Arzu’s older sister, Leyla Aliyeva, became the owner of an offshore company that owned a large office building near London’s famous Regent Street, while Heydar became the owner of a Michelin-starred restaurant. Michelin, an art gallery and the head office of Conde. Nast.

In response to a request from OCCRP, a representative of Trident Trust wrote that “each of Trident’s trust and business services activities is regulated in the jurisdiction in which it operates and is fully committed to complying with all applicable regulations. Trident regularly cooperates with any competent authority that requests information.

The Pandora Papers connect the Aliyevs to the British Crown Estate, which bought an office and retail building in Mayfair for more than $ 90 million in August 2018. Money Laundering Investigator Dylan Kennedy , told The Guardian that while the source of the funds was questionable, the sale of property to the Crown Estate is the “pinnacle of legitimation.”

The origin of the money used to purchase these properties is unclear. However, reporters found that at least eight of the companies, registered in the British Virgin Islands, had received millions of dollars from money laundering and transfer schemes, including the Azerbaijani, Russian and Troika laundries. The Azerbaijani Laundromat is a secret multibillion-dollar slush fund, possibly linked to the Aliyev family, used among other things to buy the silence of European politicians regarding Azerbaijani human rights violations.

Lillian avedian

Lillian Avedian is a writer for Armenian Weekly. His writings have also appeared in the Los Angeles Review of Books, Hetq, and the Daily Californian. She is pursuing a Masters degree in Journalism and Near Eastern Studies at New York University. A human rights journalist and feminist poet, Lillian’s Journey to Tatev debut collection of poetry was released with Girls on Key Press in the spring of 2021.

Lillian avedian

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