The Azerbaijani Laundromat one year on: has justice been served?

The Azerbaijani Laundromat one year on: has justice been served?

This text was updated on 1 October 2018

In September last year, a massive leak of bank records from 2012 to 2014 showed that the ruling elite of Azerbaijan ran a US$2.9 billion slush fund and an international money laundering scheme. Part of the money was used to help whitewash Azerbaijan’s international image, which had been rightly tainted due to grave human rights violations. European politicians, who took money to talk up Azerbaijan were complicit, along with European financial institutions that enabled the scheme.

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The Azerbaijani Laundromat revelations shook Brussels and Strasbourg. At the heart of the scandal was the Council of Europe, an organisation of 47 member states including Azerbaijan, dedicated to protecting human rights and upholding rule of law in Europe. Investigative journalists from the Organized Crime and Reporting Project (OCCRP) identified several delegates of the Parliamentary Assembly of the Council (PACE), among the ultimate recipients of the laundered money – most notably from Belgium, Germany, Italy and Spain.

Transparency International was already calling for an independent investigation into vote-buying allegations at the Council of Europe. Immediately after the Laundromat story broke, we ran a public campaign, in which hundreds of people sent letters to their delegations in PACE to urge them to come clean and help an independent inquiry get to the bottom of the scheme.

WHAT PRESIDENT ALIYEV DOESN’T WANT YOU TO KNOW

Azerbaijan scores just 31 out of 100 in the 2017 Corruption Perceptions Index, alongside Liberia, Nepal and Kazakhstan. Azerbaijan is also a vivid example of how human rights and civil liberties suffer in a country where corruption is rampant.

Incidentally, when the Laundromat revelations broke, PACE was finalising a report on the functioning of democratic institutions in Azerbaijan. The report, which was up for vote later in October, highlighted the case of Ilgar Mammadov, an Azerbaijani opposition leader and presidential contender who had been jailed since 2013 on fabricated charges. His case, along with those of investigative journalist Khadija Ismayilova and others, had become symbolic of the injustices faced by critics of President Ilham Aliyev.

Both Mammadov and Ismayilova were recently released. While this is a positive development, individuals who criticise the regime are still commonly prosecuted. According to Amnesty International, in 2017 150 people remained in prison on politically motivated charges.

Some former political prisoners and journalists have sought asylum in the EU Member States. Many Azerbaijani activists have also fled into exile in neighbouring Georgia. This seemed like a safe path to pursue until last year, when the Azerbaijani government allegedly conspired with the Georgian government to forcibly return Afghan Mukhtarli, an investigative journalist, back to Azerbaijan.

COUNCIL OF EUROPE POST-CRISIS

Following mounting calls to investigate allegations, PACE set up an independent investigation body made up of former judges from France, Sweden and the United Kingdom, drawn mostly from the European Court of Human Rights.

In April this year, the investigation published its report with numerous findings showing breaches of codes of conduct and, in some cases, corruptive activities.

But the investigators didn’t have police powers to compel witnesses to testify or seize evidence, nor prosecute and sanction wrong-doers. In June, based on the report, the PACE Committee on Rules of Procedure banned 14 former members from the Council of Europe premises for their alleged involvement in the Laundromat scheme.

The investigation also uncovered facts and allegations implicating eight further countries: Armenia, Kazakhstan, Macedonia, Monaco, Montenegro, Russia, Turkey, and Ukraine. Due to limited time and resources, however, there was no proper investigation into these new allegations.

Transparency International has appealed to the newly elected president of PACE, Liliane Maury Pasquier, asking her to extend the investigative body’s mandate to continue their inquiry into the allegations against these countries.  

The effect of these activities is to provide a veneer of respectability to foreign regimes that stymie freedom of expression, ride roughshod over the rule of law and abuse their positions of power for personal enrichment.

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THE GLOBAL LAUNDROMAT

In May 2018, OCCRP revealed that the Azerbaijani Laundromat also financed lobbying and reputation laundering in the US. In July, Transparency International filed a request to the US Department of Justice to open investigations into potential violations of the Foreign Agents Registration Act (FARA).

Transparency International's letter to the President of PACE, June 2018 Read more Transparency International's letter to the US Department of Justice, June 2018 Read more

WHAT CONSEQUENCES FOR BRIBE-TAKERS?

The investigation’s report presented sufficient evidence for 18 European countries to launch their own investigations into corruptive activities, including bribery and money laundering.

In its follow-up resolution, PACE concluded that it is up to national authorities to investigate and prosecute corrupt and criminal activity, and called for the report’s findings to be followed up “without exception”.

We have tried to determine which implicated countries pursued legal action. In 12 European countries, there has been no official follow-up by law enforcement, while investigations are pending in four. In one country, Italy, there is an ongoing criminal procedure in court on charges in bribery. Two of the countries – Azerbaijan and Hungary – refused to open investigations.

WHAT CONSEQUENCES FOR ALIYEV?

Despite the Laundromat revelations, Azerbaijan continues to enjoy a remarkably cozy relationship with Europe and the international community.

In October 2017, the European Bank for Reconstruction and Development approved a €430 million loan for the construction of the Azeri-Turkish part of the Southern Gas Corridor (TANAP), a mostly government-owned gas pipeline. In July 2018, the EBRD also approved another €500 million for the Trans Adriatic Pipeline, which will be the Western-most part of the same project. This was despite Azerbaijan’s withdrawal from the EBRD-endorsed international oil and gas transparency initiative, EITI, in March 2017. EITI criticised the country because of its repression of civil society.

In October 2017, the European Bank for Reconstruction and Development approved a US$500 million loan for the construction of a government-owned gas pipeline. This was despite Azerbaijan’s suspension from the EBRD-endorsed international oil and gas transparency initiative in March 2017, due to its repression of civil society.

Negotiations over a new strategic partnership agreement between the EU and Azerbaijan to deepen their economic relationship have continued.

Germany is reportedly considering granting Azerbaijan a €1.2bn loan towards its Southern Corridor natural gas pipelines project. In August, German Chancellor Angela Merkel paid a visit to Baku. Ahead of the meeting, we urged the Chancellor to “ensure that her actions promote and represent European values, and bring enduring results for the release of political prisoners and eased restrictions on funding for civil society organisations”. After the meeting, Merkel said she held “open discussions” about the human rights situation and the role of civil society in Azerbaijan with her counterpart.

What next?

All leaders dealing with Azerbaijan must show a principled approach and put human rights on the agenda of every conversation.

Moreover, politicians who allegedly took bribes from the Laundromat must be investigated and held accountable for their actions.

In the coming weeks, we’ll be calling on national authorities and international organisations to take action. Watch this space.

The Global Anti-Corruption Consortium

The Azerbaijani Laundromat is a large-scale journalistic investigation and an ongoing campaign produced by the Global Anti-Corruption Consortium, a groundbreaking partnership between investigative journalists and civil society. As part of the Consortium, Transparency International works with the Organized Crime and Corruption Reporting Project (OCCRP) to ensure that the corruption uncovered in investigations are followed up, the corrupt are held to account and loopholes in regulations that enable corruption are closed.

Learn more about this partnership

For any press enquiries please contact press@transparency.org

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