From a distance, Azerbaijan may look like any other oil-rich country.
Its capital Baku shines at night, thanks to the multicolored lights from
newly-constructed futuristic buildings that evoke the architectural
playgrounds of the United Arab Emirates. The government is happily
spending billions on marquee events to show off the country such as this
year’s 2015 European Games, expected to cost US$ 8 billion.
But while outwardly the country is rich, that wealth is not trickling
down to the 9.6 million citizens of Azerbaijan who increasingly are
going into debt to survive.
As of Feb. 1, there were 2.3 million people who had bank loans, a sharp
increase of 17.7 percent in one year, as many struggle to cover sharply
rising living expenses.
Borrowing this money is not cheap: interest rates on consumer loans in
2014 averaged 18 percent, three times higher than in the European Union.
But while the people increasingly struggle, one family is benefiting
from the misery: the family of President Ilham Aliyev. According to
records collected by the Organized Crime and Corruption Reporting
Project (OCCRP), members of the Aliyev family and their close advisors
are significant shareholders in at least eight major Azerbaijan banks.
They control assets in those institutions worth more than US$ 3
In keeping with Azerbaijani law, President Aliyev has no known bank
shares in his name. But his three children are linked to some of the
banks through Ata Holding, a conglomerate that also includes the Aliyev
family’s vast and growing holdings in other economic sectors, including
telecommunications, construction, transportation, mining, and gas and
In addition, President Aliyev’s father-in-law, Arif Pashayev, controls
Pasha Holding, a conglomerate with interests in banking, as well as
construction, insurance, travel and investments, according to an Ernst
and Young audit.
That means some consumers are likely taking out high-interest loans from
banks tied to the First Family in order to pay for goods and services
provided by companies tied to the First Family.
Inflation has averaged 7 percent annually in Azerbaijan since 2007,
which may help explain why so many people are borrowing money to cover
both daily expenses and huge one-time costs like the lavish weddings
that are standard in Azerbaijan. By comparison, the annual rate of
inflation for European Union countries has exceeded 3 percent only in
2009, and the inflation rates on average have been near zero for the
past five years.
On top of all this, the value of the Azerbaijan manat dropped 33 percent
against the US dollar on Feb. 21. As a result, many people in Azerbaijan
are suffering their most serious cash squeeze in more than a decade.
Yet even taking into account the severe drop in the currency exchange
rate, OCCRP calculates that the banking assets controlled by the family
and close advisors at the beginning of 2014 were worth at least US$3
On that date, these eight private banks held 19 percent of the country’s
banking assets. Three of these banks (Capital Bank, Xalq Bank and Pasha
Bank) were ranked in the top four in assets held by private banks. The
majority state-owned International Bank of Azerbaijan held 38 percent of
bank assets.) There are 45 banks currently doing business in Azerbaijan.
Since Ilham Aliyev became president in 2003, his family members’
personal financial stake in many of Azerbaijan’s leading economic
sectors has grown. The children’s ties to the banking sector are just
the latest to come to light.
According to corporate records, Ata Holding is 75 percent owned by
companies that list daughter Leyla, age 29, and Arzu, age 26, as
officers – and the “ultimate controller of (Ata Holding)” as Heydar
Aliyev, the 18-year-old son of the president. Ata Holding, in turn,
holds shares in two banks.
These bank records extend through Dec. 31, 2013. OCCRP is not yet able
to collect all 2014 records, but at least three of these banks saw their
assets grow rapidly in 2014 – Pasha Bank by 40 percent, Atabank by 56
percent and Xalq Bank by 31 percent.
“I don’t think the Azerbaijani people know about the President’s family’s assets in the bank sector. Many people know that Pasha Bank and Kapital Bank belong to the President’s family. But about the other banks, I think people have no idea. The problem is a 2012 amendment in the law on access to information, which closed registry information for commercial institutions”, said Zohrab Ismayil, a prominent Azeri economist currently working overseas on a fellowship program.
Here is what the OCCRP analysis of bank data and records found:
Ata Holding controls 76 percent of the shares. Another 15.9 percent are
listed in the name of Deputy Minister of Taxes Kamil Ashrafov. An
earlier OCCRP investigation
that Ashrafov purchased high-end real estate for Aliyev’s daughter Arzu
in the Czech Republic.
Ata Holding controls 49 percent of the shares. The majority share of 51
percent is held by Bank VTB OJSC, which is majority owned by the
government of the Russian Federation.
Pasha Holding controls 60 percent of the shares. Aliyev’s father-in-law
controls another 10 percent of the shares. But Aliyev’s daughters were
the ultimate owners and exercised joint control over the bank, according
to Pasha Bank’s latest public financial statement (June 30, 2014).
Pasha Holding controls 99.8 percent of Kapital Bank’s shares, and bank
documents list Leyla and Arzu Aliyeva as the ultimate owners. The
financial institution traces its history back to 1874 and claims to be
the first savings bank established in Baku.
Its shareholders in a 2012 independent audit report by Crowe Horwath
were Ideal Biznes Ko LLC (50 percent), Yevro Standart LLC (34 percent)
and Avangard-1 LLC (16 percent). However, the ultimate controlling party
was listed as L. Aliyeva. The bank was formed in 2004, one year after
President Aliyev was first elected.
Silk Way Bank
Arzu Aliyeva has been listed as controlling 29 percent of the shares in
Silk Way Bank. Presidential spokesman Azer Gasimov confirmed that Arzu
Aliyeva held Silk Way Bank shares. The bank is a division of SW Holding,
a conglomerate close to the First Family that controls Silk Way Airlines
and several airline services companies. The First Family often uses Silk
Way planes for private trips.
ADOR LLC controls 42 percent of the shares. A 2013 audit report lists
ADOR LLC as having ultimate control of the bank. ADOR’s only known
registered address is Samad Vurgun 7 in Baku. Also registered at that
address are the first lady of Azerbaijan, Mehriban Aliyeva, and her
daughters Leyla and Arzu.
Azerbaijan Industrial Bank
Anadolu Investment Company, owns 94.2517% of Azerbaijan Industrial Bank.
Anadolu investments has links to the Gozal brothers, Hassan and
Abdolbari. Documents indicated that Anadolu’s representative in the tax
ministry is Leyla Gozal Abdolbari. She is the daughter of Abdolbari
Gozal. Hassan Gozal set up three offshore companies in the British
Virgin Islands for the presidential daughters, according to an
investigation by the International Consortium of Investigative
In addition, government officials, their family members and close
associates of President Ilham Aliyev have ownership shares in five more
99 percent of its shares are controlled by Gilan MMC, a major real
estate and construction conglomerate that has benefited immensely from a
building boom that has seen Baku try to reinvent itself as an
Emirate-style 21st-century dream city.
The parent company of Gilan MMC is United Enterprises-International
Limited. Minister of Emergency Situations Kamaladdin Heydarov has two
sons, Tale and Nicat Heydarov, who have been listed as directors of the
United Enterprises-International Limited.
Bank of Azerbaijan
Anar Mammadov is the son of Minister of Transportation Ziya Mammadov,
who is close to the ruling family. Anar Mammadov was at one time an 81
percent owner of the bank. An OCCRP investigation established that Ziya
Mammadov shares multiple business interests with Baghlan Group founder
Hafiz Mammadov (no
Now the two major bank shareholders are Hafiz Mammadov’s two sons, Kanan
and Sanan . Each hold 44 percent. Their uncle, Mubariz Mammadov, holds
Mehdiyeva Nigar Ismayil controls 75 percent of the shares. She is the
daughter-in-law of Ramiz Mehdiyev, the powerful head of the Presidential
Administration who works very closely with Aliyev. She is also on the
The lack of competition has not only raised rates but may have had other
effects. “For the last three years, we don’t see much competition in
the banking sector, and in some banks the level of service has gone
down,” said Zohrab Ismayil, the economist.
He also called for greater transparency.
“It is very important that the assets of public servants be declared.
Despite the existence of relevant legislation, the government has not
enforced it since 2005. I think this legislation should also cover
family members of the president and other high level officials, as
well as members of Parliament and opposition leaders.”
Here are two charts showing the value of the holdings of the Aliyev
family and their close associates in these banks. The figures listed are
for December 31, 2013. The dollar value takes into account the 33
percent drop in the currency exchange rate on February 21. The amounts
have been rounded off to the nearest thousand.