Episode 1: How Azerbaijan’s Ruling Family Launder Their Millions
How did an 11-year-old Azerbaijani boy end up owning a building in London’s Mayfair that housed a restaurant with two Michelin stars, an art gallery, and the Condé Nast headquarters?
Hint: His father is the country’s president, Ilham Aliyev.
In this episode of Dirty Deeds…
When two of our top editors got ahold of the Pandora Papers — a vast trove of leaked documents from offshore service providers — they knew it could provide key insights into how some of the most corrupt people in the world, including rulers of entire countries, hide their wealth.
Miranda Patrucic and Ilya Lozovsky take you behind the scenes of their investigation, which revealed how Azerbaijan’s ruling Aliyev family acquired vast properties in London— and how they even used their children to do it.
Also in this episode:
- How Miranda and Ilya meld their unique skills to report on corruption from tough places like Azerbaijan and Central Asia
- The details of one particular clandestine meeting
- What happens when a source gets murdered
(The Pandora Papers is a project based on a leak of offshore documents obtained by the International Consortium of Investigative Journalists and shared with OCCRP and other media outlets.)
Host Nick Wallis talks to…
Miranda Patrucic - @MirandaOCCRP
Miranda is OCCRP’s editor-in-chief. She has overseen investigations around the globe, including the story that exposed the Aliyevs’ London property empire.
Ilya Lozovsky - @ichbinilya
Ilya is a staff writer and senior editor at OCCRP and was a member of the team investigating Aliyev.
Oliver Bullough - @OliverBullough
Oliver is a journalist and author. His latest book is “Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodges, Kleptocrats and Criminals.”
- [0:00] Introduction
- [0:51] Miranda Patrucic and Ilya Lozovsky talk about their interest in Azerbaijan
- [3:14] Miranda and Ilya give a crash course on Azerbaijan
- [5:21] Miranda and Ilya discuss how they began working together
- [7:21] What happens when a source is killed
- [9:55] How to keep yourself and contacts safe as a journalist
- [14:18] How the investigation into the Aliyevs began
- [21:30] Implications of the investigation
- [25:50] Oliver Bullough discusses the results of the investigation
- [29:54] Why the U.K. is a haven for money with questionable origins
- [34:43] Should U.K. citizens care?
Check out other episodes on the Dirty Deeds main page.
Follow The Money — and Our Investigations: Get our weekly newsletter.
Support investigative journalism in the public interest. Donate to OCCRP.
Episode 1: How Azerbaijan’s Ruling Family Launder Their Millions
Nick Wallis: Coming up: Ruling elites, repressive regimes, and the dangers of being an investigative reporter.
Ilya Lozovsky: That morning, Miranda comes down to the hotel breakfast and she said: “Saimaiti was murdered.” And it wasn’t anything like, you know, James Bond, anything…
Nick Wallis: You say that, you say that, but it sounds a lot like it.
Miranda Patrucic: You know, people think, well, I don’t really care what’s going on in Azerbaijan or I don’t really care what’s going on in Russia. They have their own country to run, why does it concern me? But what we’ve seen from investigations like this is first, that the West is the enabler of the corruption.
Oliver Bullough: The big competitive advantage that the UK has over the United States, which is its real only other competitor in terms of financial services, is that we don’t have the FBI in Britain. So your money is safe here. It’s very, very, very unlikely to be investigated.
Nick Wallis: My name is Nick Wallis and this is Dirty Deeds: Tales of Global Crime and Corruption, a podcast from the global journalism network the Organized Crime and Corruption Reporting Project, or OCCRP, as it’s known.
This episode is about the work of two OCCRP reporters: editor-in-chief Miranda Patrucic and Ilya Lozovsky, who produced an extraordinary investigation in October 2021 about the offshore wealth of Azerbaijan’s ruling elite. We go behind the scenes to learn more about what it takes to be an investigative journalist. Later, I chat with Oliver Bullough, author of the book Moneyland, about Britain’s unique role in the global criminal economy. But first, let’s get to how it all started for Miranda and Ilya. Miranda, tell me about your interest in Azerbaijan.
Miranda Patrucic: So my interest actually came through knowing Khadija Ismayilova. She is a well-known Azerbaijani, probably the most well-known Azerbaijani journalist. She was my friend, you know, we were very close. And at the time when I got involved in reporting about Azerbaijan, she was facing threats. The government had planted a camera inside her home, filmed, filmed her in an intimate situation, [and] released that publicly. She was facing threats, pressures to stop reporting and actually a criminal prosecution. So, she was aware that she might be arrested.
This was a time when [the] government was conducting a wide crackdown on media in Azerbaijan in 2012. And before she was arrested, she came to several of us and she basically said: if I’m jailed, please continue my reporting. She was arrested, later convicted to five years in prison. When she was in jail, obviously I felt a personal duty to a friend.
Nick Wallis: Now, I understand your friend Khadija was released in 2016, but has since been the subject of a travel ban and so is unable to leave the country. She’s now working as editor-in-chief of Toplum TV, an independent media outlet in Azerbaijan. And Miranda, you’ve become something of an expert in Azerbaijani affairs. Give us an idiot’s guide to the country, where it is, its relationship to its neighbors, what kind of state it is and who runs it.
Miranda Patrucic: So, a crash course in Azerbaijan. Azerbaijan is a country in the Caucasus region. It is situated by the Caspian Sea. Its neighbors are Georgia and Armenia and Iran. It has-
Nick Wallis: And it’s a former Soviet state, isn’t it?
Miranda Patrucic: It is a former Soviet state. Actually, the ruling family comes from that time. Heydar Aliyev, the father of the current president, Ilham Aliyev, basically got in power after the collapse of [the] Soviet Union. And he has been, you know, the family has been ruling the country ever since then. It is an oil-rich country. It should be like the Norway of the Caspian, it should be very rich. And a lot of money in the country is spent on the appearance. So, a lot of modern buildings are built in Baku. A lot of that money has been looted and stolen by the ruling elite.
Nick Wallis: Where does Azerbaijan sit on the international stage?
Ilya Lozovsky: Aliyev is pretty keen to present himself as an ally to the West. He has this way of selling — it’s a largely Muslim country and oil-rich, but he takes care to present it like: “We’re not like those other bad oil-rich Muslim countries. You know, we’re modern. Look at our capital city. We are friends with Israel, we are moderate. We are part of the world, we’re selling oil.”
So there’s a lot of stories in the U.S. and in Western Europe of sort of various projects and non-profit organizations that present the country in as positive a light as possible, even though at home, the few journalists who are brave enough like Khadija to stay there and not to flee end up being imprisoned or worse. So, it’s really one of the most horrific dictatorships in the world, probably without being often recognized as such, because it kind of tries to present a pretty nice image. And even before I joined OCCRP, I was doing stories about Khadija and her imprisonment and about this kind of image laundering campaign.
Nick Wallis: When you first started working together, was it inside the OCCRP or did you know each other from before then?
Ilya Lozovsky: We met at OCCRP. Miranda has been there since pretty much the beginning. I joined about five and a half years ago, and that’s when we met. And I think initially I was more of a coordinating editor. We didn’t work too much together right away. But then once I started editing stories a lot more, I think our first big one, Miranda, was Kazakhstan, right?
Miranda Patrucic: Yes. We were looking into a former minister of oil in Kazakhstan. I was captured by Ilya’s narrative and the way he writes — it makes the story really beautiful. I’m more on the reporting side. So, I care about the facts. I care about, you know, going deep, tracking down money, figuring out what the person is up to. But I’m not so much of a writer. So, for me, I saw how beautiful [a] writer he is and I felt we needed to work together. So that was the first project where we worked together.
Nick Wallis: And have you worked together regularly since?
Miranda Patrucic: Yeah.
Ilya Lozovsky: Yeah, we work together all the time. That project was the first one where really, I was so floored by Miranda’s command of all the documents and understanding the technical documents and corporate documents and offshore documents and all the stuff that underlay that story. But I kept trying to get out of her: “I don’t understand what is the narrative we’re putting together from this.” And we just kept, I wouldn’t say fighting, but, you know, we had a lot of very passionate discussions about it until that story came together.
And we were like: “Wow, this worked really well,” where our very kind of different skill sets came together to make that story really work. And then after that, we worked together a few more times and then we had one big adventure involving Central Asia, which is a region that Miranda focuses on, and I now do, too, with her, where we had a story involving a source who was murdered in the middle of our investigation and we found ourselves… that’s a whole separate story, but we found ourselves -
Nick Wallis: No, no, and tell me more. I mean, that’s a horrible situation to be in. What was the context and where exactly were you?
Ilya Lozovsky: Miranda and I were partnering with Radio Free Europe, who are based in Prague, and we were working on a story about smuggling in Kyrgyzstan and Uzbekistan. And we went to Prague together to just work with our partners at Radio Free Europe. We’re working with another editor there and several reporters and it was just going to be a trip, I think, for one or two days, just to kind of meet with them and outline the stories and kind of get started on writing maybe.
And then that morning, Miranda comes down to the hotel breakfast where I’m having breakfast, and she said: “Saimaiti was murdered.” And Saimaiti was this Uighur guy who had — born in China, but working in Central Asia — who was kind of the money launderer for this family. And he had come clean and given us a lot of documents, you know, piles and piles of documents attesting to all this laundering. And his documents were the main source for this investigation.
And then it turned out he had been shot and killed in Istanbul. And we were just like: “Oh, my God, what is going on with the story?” And we knew that, you know, obviously the safety issue had just been heightened by a million times because who knows, if we didn’t know who had killed him or why, but we were afraid it had something to do with our story and that maybe they would come after our reporters next. We weren’t personally feeling in any danger, really, in Prague, but we had a lot of reporters who were working on this who were much more exposed.
So, we knew we had to publish as soon as possible. That’s kind of the main principle in these, one of the main principles in these safety situations is you want to — the most dangerous period is when you’re about to publish, because that’s when they can still stop you. So, if you’re in danger, you try to publish as soon as possible, but the story wasn’t really anywhere near ready. So, our one-day trip to Prague turned into I think two or three weeks, two-and-a-half weeks of just round-the-clock, day and night, doing the reporting, outlining the stories, writing the stories, rewriting, editing, fact checking, everything to get them out. And it was just probably one of the most intense journalistic times of my life. But Miranda and I, we had worked together before on several projects by this point, so we knew each other well. I think we worked together quite well, but we had never been in this kind of pressure before together.
Miranda Patrucic: Yeah, I mean, it was definitely the most insane two-and-a-half weeks we ever had, and it was insane for [a] few reason[s], one was we had to deal with a lot of stress. You know, the source who was killed, everybody was traumatized by just that fact. And obviously we were facing a lot of issues back in Central Asia with some threats.
Nick Wallis: Many people would be fascinated by a situation that you’re in where you are in some kind of danger, not necessarily immediate mortal danger, but your contacts and your colleagues may be in danger. How do you ensure what you are doing is safe? So, what do you do when you are potentially aware that your reporters are operating in red zones and may need to be got out very quickly or at least need some protection or to go into hiding?
Miranda Patrucic: I mean, part of it is, you know, we try first to prevent a situation like this [from happening]. So, for the longest of the time, we actually tried to work in silence. We plan out every step. We plan out when we’re going to reach out to who we are going to contact. And we try to limit the number of people who are aware of the investigation in the first place.
In this case, the source was killed. So, we had to change everything around. And part of it meant we needed to get everybody in a safe place. So, we had the specific procedures for the reporters of, you know, not walking home alone, making sure somebody escorts them. In one case, [a] reporter actually did not leave the newsroom for a few days and basically slept inside the newsroom because that was the safest thing to do.
For us, it was obviously working as fast as we can, but at the same time, you really need to worry about the facts and making sure that everything is you know, if you’re concerned about the story being correct in normal circumstances, in these circumstances, that’s even more important because you already have somebody out there who is very angry about what’s going on. You don’t want to make a mistake and make them even more angry. So, they go after other reporters and try to physically harm them.
And then part of it is the way we plan out for rights of replies. You want to make sure that you send them at the very last minute possible, when the story’s ready to be published and you’re just waiting for them to respond, you know, during a very short period of time. So, you are minimizing the amount of time that people have to act. And then you’re trying to make it seem that there [are] a lot more people who are involved in the project in order to confuse and kind of like dilute [the] number of targets.
Nick Wallis: Do you have conversations about how to keep communications secure and to ensure that information or communications doesn’t get tapped into or leaked or go missing?
Miranda Patrucic: I mean, we normally use an app called Signal. It’s an app which provides encrypted conversation. And what we do is make the messages disappear within a very short period of time. At the same time, we also sometimes just walk outside the office and speak. So, this way we kind of like to try to keep the conversations far from any ears that might want to hear about it. But most of it is really keeping the number of people who are aware of what’s coming to a minimum.
Nick Wallis: And do you ever consider personal security? Because I work in broadcast news, and obviously we are very obvious targets when we’re carrying around big cameras. So, security in dangerous areas is a given. But I imagine if you’re a journalist working alone, the security can often attract attention because they’re normally pretty obvious themselves, aren’t they?
Ilya Lozovsky: The way we work, I mean, we try to make it not obvious. You know, I mentioned that one of our reporters met with the source, this money launderer who had given up the documents. And actually, we were trying to get him to give us some more documents because we were missing a few crucial pieces. So, we arranged a meeting in Istanbul. Our main security concern there was just making sure that our reporter wasn’t being observed by someone else because we didn’t really know this guy well or necessarily trust him, or even if his intentions were 100% benign towards us, we never know if he’s being followed or if someone is after him.
And of course, then it ended up that someone was after him. So, we sat off to the side and drank some nice coffee at this really fancy hotel bar and kind of just observed. But it was very quiet, if you were there, you wouldn’t have noticed it was just two people having coffee. It wasn’t anything — I guess it was clandestine. It wasn’t anything like James Bond. It was very calm on the surface.
Nick Wallis: You say that. You say that, but it sounds a lot like it. So you’ve got a working relationship which is forged in the crucible of a very intense situation. Okay. So, you’ve got this journalistic interest in Azerbaijan and the Aliyev family and then suddenly the Pandora Papers arrive. What happened next?
Miranda Patrucic: Pandora Papers was the huge leak that was obtained by the International Consortium of Investigative Journalists and shared with OCCRP and a number of other news organizations in the world. Basically, what it had is data from 14 offshore service providers. These law firms are helping people like members of [the] Aliyev family establish secretive companies in different jurisdictions around the world. So obviously for me, as soon as I got access to this leak, the first thing to do was to search Aliyev. And the moment I hit the search button, we got hundreds of hits with Aliyev’s name. From then on, we started compiling a long list of offshore companies in which they showed up either as a shareholder or in some cases even directors. And then, [we] started looking into each of these.
Ilya Lozovsky: And Miranda had this crazy spreadsheet of, you know, because these companies are so difficult to trace. And I think we ended up with 84 companies in this story that kind of looked like they were functioning as a system. And so you had to trace the shareholders, the Aliyev family or a few of their associates, but also how the companies work together and how sometimes all the directors will change at the same time of a certain group, or there will be certain transactions that you can trace from company to company.
And I remember looking at this crazy spreadsheet that Miranda had put together of these companies and each one’s director and shareholder and where it was incorporated and how some properties were handed out from company to company, sometimes multiple times. And this is where Miranda really is among the best in the world at figuring out these systems and really systematically figuring out what these companies are doing. And then we come together and then we start — the challenge is how do you turn this into a narrative that’s interesting for readers? And so, then that was a lot of, a lot of work.
Nick Wallis: Well it was a very successful article, and I would love to see the spreadsheet, although I probably wouldn’t understand it as much as the finished piece. But what you were able to establish is that the Aliyev family were beneficial owners of more than $600 million worth of property in central London, which is a staggering figure. I mean, I presume the whole point of having this Byzantine web of offshore companies is to disguise the fact that they have so much wealth invested in central London. But what is the assumption about how they have come by that wealth in order to be able to own these properties?
Ilya Lozovsky: That’s a great question. In most cases, we don’t know. What we know is that that wealth does not correspond to their official income. So, if you look at Ilham Aliyev before he was president, when he was the son of the previous president, he worked at SOCAR, the national oil company. So, he had a salary there and now he makes a salary as president. And if you add up all the different official sort of declared sources of income of him and his family, it doesn’t come close to explaining hundreds of millions of dollars of property.
So mostly we don’t see where the money is coming from and it probably has something to do with their fellow elites in the country. It’s kind of a crony system, you know, where if you are an associate or ally or friend of the president and you’re a businessman, somehow some of the money trickles over. What we did find is that a few of these offshores received money from some of the laundromat systems that we had previously discovered.
A laundromat is a system for disguising the origin of money. And mostly these laundromats are in some cases interconnected, but they’re systems of dozens and dozens of companies and each of the companies have bank accounts and they usually pick some sketchy bank to have their account at, which doesn’t do a lot of checks on the money. And you see the money — when we have leaks of the bank transfers, we can see the money entering the laundromat and then being split and then sent to this company, that company, and that company, and then from those companies to another and those to another, and then eventually [it] comes out the other end.
And by that time, it has gone through four or five or six or more transactions, which has completely obliterated any trace of where it came from. And all those transactions we can see are essentially fraudulent, because every time there’s a bank transaction, you have to indicate the reason for the transaction. And the reasons listed for these transactions are pretty obviously fraudulent because it’s stuff like “purchase of mechanical equipment,” “purchase of computer equipment,” whatever, from one shell company to another shell company [in] different jurisdictions, secret jurisdictions around the world. These are obviously not companies that are really trading in any of these goods.
And we see other evidence, too, that the transactions are fake, including a bank account will be empty and then a bunch of money will enter that account and then the same amount will leave the next day. So, it’s not a bank account that really holds money for a company like a normal bank account. It’s clearly just used as a sort of transit point for the money. So that’s why even when we do have access to some of these leaks or some secret whistleblower or some source to look at the internal mechanisms of these systems, we still can’t often figure out where the money came from. But in the case of these Aliyev companies that [owned] property in London, in a few cases, we did see money entering those companies from these laundromats.
So, again, it doesn’t really tell us the origin, whether it was oil money or some corrupt scheme in the tax ministry or whatever it could have been. We don’t really know the origin, but we do know that it entered these companies through this extremely sketchy system, the whole purpose of which is to disguise the origin of the money.
Miranda Patrucic: In earlier investigations, we have uncovered that the family owned [a] few properties in London, but nothing to this scale. It was interesting because we had just assumed that when they were buying properties in London, they were buying real estate that they would want to live in when they’re spending time there. We did not really know that they are engaged in commercial activities in London, and some of these properties were really high-end developments. So that was kind of like realizing that actually they have a business in mind, and they actually have an interesting operation in mind in addition to buying properties where they can live in.
Ilya Lozovsky: My favorite example is this — Miranda mentioned that they don’t just own penthouses to live in. One of them is a building on Maddox Street in Mayfair in London, which hosted a restaurant with two Michelin stars, an art gallery, and the headquarters of Condé Nast. I should say the building was acquired by an offshore company that belonged to one of the family’s associates. And then it was transferred to the 11-year-old son of the president, Heydar. So when he was 11, he got this building that was worth many millions, dozens of millions of dollars. He owned it for seven years. And then the company transferred back to Kamilov, the associate. And then eventually it was transferred offshore and sold and they made a big profit. So, for seven years, this building was owned by an 11 [year-old] boy, essentially, not even a teenager.
Nick Wallis: Now you have established the beneficial owners of all these properties as the Aliyev family in Azerbaijan. And I think the worst that you can say at the moment about them is that it is both interesting and suspicious how they have acquired this, this fortune. What do you want to see happen now? You’ve laid out this incredibly intricate jigsaw. What needs to now happen for people to be able to properly investigate how they came by the wealth which allowed them to amass this kind of fortune?
Miranda Patrucic: In an ideal world we would see all the banking transactions so we can see exactly who paid the money and when and how. But that requires much more transparency than I think government[s] at the time being are willing to offer. But that’s basically what you really need. I mean, there needs to be a mechanism to force the Aliyev family to disclose where they get the money to acquire these properties.
Nick Wallis: Is that on the governments of the West to say to the banks and the companies in the British Virgin Islands: “You’ve got to be more transparent about the way you are trading with people in these other states, because we don’t know how they’re getting their wealth and it may not be through legal means?”
Miranda Patrucic: Yes, because, you know, the way that today’s corruption works is that, people think, “well, I don’t really care what’s going on in Azerbaijan or I don’t really care what’s going on in Russia. They have their own country to run. Why does it concern me?” But what we’ve seen from investigations like this is first, that the West is the enabler of the corruption in those parts of the world, but also that the corruption ultimately comes to the countries which enable it.
Because In order to have these massive properties in London, the Aliyev family is paying lawyers, property developers and so on to help them in this. And the cost is ultimately paid by the people of London, the people who live there and cannot afford these properties anymore because, the Aliyev ruling family has [an] incredible pool of money available to them that they can just take from and pay for anything they want while regular people cannot. We see that the offshore jurisdictions, every party that plays a role in this kind of system is doing it for a cut in the profit while at the same time inflicting a huge suffering both on the local people in the West but also people in Azerbaijan.
Ilya Lozovsky: If you are in Azerbaijan, whether you’re the president or just some oligarch or whether you’re in Russia or any other corrupt country, if you’ve managed to amass a fortune through corruption or crime or just through political connections, you don’t want to keep your fortune in that country because the rule of law is weak. You know, someone could take it back from you. Who knows what could happen?
So, you see that in the West, you have [a] strong rule of law. You have courts that actually function. You have armies of lawyers and real estate developers. And it’s just a perfect place to take your money, pull it out of the country whose people you robbed and put it into London or New York or Miami or wherever, and then you’ll be safe. And I just think that clearly the Western world should not be using its achievements in the rule of law to launder the money of some of the worst people in the world. So, I think if we care about how our politics and policies affect, you know, some of the least fortunate people in the world — these are things we should be looking at.
Nick Wallis: Does it frustrate you that it is left to journalists to do the sort of work you are doing, the detective work to put together the beneficial ownership, the connections between the wealth of foreign states and where they own property, because surely this should be something that the authorities with their resources should be looking into?
Miranda Patrucic: It is frustrating because what we don’t see is in our own little bubbles, it’s easy to kind of feel happy and think, “we have a good life, everything is nice,” but globally, the world is poor. There’s so many millions of people who are suffering exactly because of the corruption. And we don’t always see the suffering. And, you know, we don’t see what these countries could be if their ruling elites were not stealing as much as they are stealing. Tracking down these transactions, figuring out who is behind the offshore companies — it should be done by the governments.
Nick Wallis: My thanks to Miranda Patrucic, the OCCRP’s editor-in-chief, and Ilya Lozovsky, an OCCRP senior editor. Now, when I asked who might make an interesting guest for this episode, Ilya immediately suggested Oliver Bullough, a British author who’s written a number of superb books, including Moneyland and his latest, Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals. Both books describe how money is looted by corrupt elites from the countries they rule, is then washed through banks and anonymous shell companies and then used to buy assets in the West. I started by asking Oliver if he believes the Aliyevs have aped the Russian oligarch model.
Oliver Bullough: I don’t know if I’d say they’ve aped the model of the Russian oligarchs, but there’s no doubt that their money has followed exactly the same patterns as that of the Russian oligarchs or indeed the oligarchs of, I think, all of the former Soviet states. They’re clearly essentially finding the same advisors or if not the same advisors, advisors who are offering them exactly the same solutions to move their money through the same jurisdictions, to hide it behind the same kind of shell companies, to invest it in the same kind of assets. And I think interestingly, also for their children to end up doing similar things, there’s this weird pattern whereby, you know, very hard-nosed exponents of realpolitik in former Soviet republics like Azerbaijan or Russia or Ukraine or wherever, always seem to end up with children engaged in, you know, media, the arts, publishing. It’s very strange. It seems to be a generational shift that’s very hard for anyone to do anything about.
Nick Wallis: Yes. And that also links into the way that respectability can be bought with this kind of money, can’t it? If you become a patron of the arts as well as working within them, then British society in particular seems to welcome your money and your influence rather more readily than perhaps it should.
Oliver Bullough: I’m always wondering how cynical to be about this process whereby, as you put it, respectability is bought. I would be surprised if anyone involved in the process sees it in those terms. I suspect they see themselves, these wealthy scions of ex-Soviet oligarchical families. They see themselves as having important things to say. And it turns out that they have the means with which to express them. And then there are other people in the industry who are very happy to provide them with the facilities with which they can express themselves.
But in practice, what you do end up with is very wealthy children of politically connected, oligarchic families who end up occupying quite prominent positions in publishing houses, in the artistic collecting world, in music, the music industry or whatever, which definitely gives them a position in society that they wouldn’t have if they were just, you know, the sort of son or daughter of a president or an oligarch from somewhere.
Nick Wallis: And that is exercising soft power, isn’t it?
Oliver Bullough: Yes, it is a form of soft power, I suppose, though, always the interesting question — and I think it’s a question that isn’t answered, because I’m not sure that in a way it’s an either-or, but on whose behalf is this soft power being exercised? Is the soft power just being exercised on behalf of the ruling family or the politically connected family, in this case, the Aliyevs? Or is it being exercised on behalf of the country?
But in practice, what it means is that you do end up with a class of people, whether they’re involved in, you know, sporting events being staged in Baku or musical or cultural events being staged in Baku, or whether they have been recipients of generous hospitality from very well-connected members of the Azeri elite. You know, they do end up being reluctant to bite the hand that feeds them. And yes, the elite in Azerbaijan is extremely small, you know, we’re talking about a few dozen people, and they have been extremely skillful in how they’ve been leveraging their wealth in order to insert themselves, particularly into British society. But not only, they’ve also been doing this in other European countries and to a certain extent, in Washington.
Nick Wallis: I’ve done a couple of stories like this now and one common thread that seems to run through any story about international corruption: there always seems to be a British element to it. Am I, am I just being unfair to Britain here, or is Britain particularly good at attracting these sort of very interesting people with their interesting cash?
Oliver Bullough: Britain plays a unique role in the global economy as a sort of offshore center, offering offshore services of a far greater variety than any other place. It also occupies a unique role in the global criminal economy because those same services are available not just to reputable businesses, but also to anyone willing to pay them. You might have to pay a little bit more if you are a criminal, but the same services are available essentially if you are prepared to stump up the fees.
And what London in particular and Britain more broadly is able to offer is an unrivaled breadth of services. You know, this is a place that will move your money, invest your money, protect your money, hide your money, help you spend your money, welcome you with open arms into its establishment in a way that no other country will. And crucially, the big competitive advantage that the UK has over the United States, which is its real only other competitor in terms of financial services, is that we don’t have the FBI in Britain. So, your money is safe here. It’s very, very, very unlikely to be investigated. It’s not to say it’s impossible for it to happen, but it’s vanishingly unlikely for it to be investigated in Britain.
Nick Wallis: Where are the checks and balances? Because I’m sure the city law firms and the banks and the financial institutions that take on money and help, help it find a home in the UK would say, “Well, no, we, we do diligent and proper persons checks with every client that we have, especially the high value ones,” which is presumably how the Aliyevs were able to build a $600 million property empire in central London.
Oliver Bullough: Obviously, when it comes to the top end financial companies, companies, you know, the really big institutions that operate in more than one country, and are [reliant] on using the U.S. dollar for most of their transactions, they obviously have to abide by the rules set by the Department of Justice in the U.S. because they can be prosecuted in the U.S. At the very top end of the market, they are as subject to U.S. regulations as any U.S. institution is.
But when you get further down the food chain into the sort of legal and accountancy world where there are companies that only operate in the UK, then the situation is much murkier. Yes, there are strict rules in the UK about complying with anti-money laundering regulations and with not moving dirty money, but those laws aren’t really enforced in any meaningful sense. Well, certainly only in a very sporadic sense if they are at all. And this in practice means that they are voluntary. If you are a diligent and moral person, then you will have very strict due diligence processes which prevent this money entering your firm or moving through your firm. But if you are not, then you won’t have those processes and you won’t really pay any price for not having them. So, it ends up as essentially a voluntary tax on the goodies, which isn’t in any way imposed on the baddies.
Nick Wallis: But what this suggests to me is not necessarily a lack of resources, but a lack of political will to tackle this properly, because if there was political will, there’d be more resources to tackle it. And it just seems as if there isn’t anyone policing the sector anywhere near as effectively as they should, which has to be down to our legislators. It has to be down to some kind of accumulative policy, whether or not it’s written down, that if we don’t ask too many questions, then, hey, the City of London gets richer, it underwrites the British economy, so we can’t complain too much.
Oliver Bullough: It’s a really complicated and important question, which goes back decades really to find its origins. When Britain was looking for its post-imperial role, it established itself, or the City of London established itself as this offshore center, a place where you could use the U.S. dollar without the checks imposed by the U.S. authorities and therefore, more profitably.
And ever since there has been a concern that if the City of London is regulated too tightly, then that business and this sort of golden goose will fly away and we’ll end up, you know, all the poorer as a result. But exactly who is to blame for the failure to regulate is a really complicated one and which people involved in the system become very frustrated by. Obviously, at its core, this is a political issue. Successive prime ministers, home secretaries, business secretaries, and so on have failed to adequately resource the enforcement bodies and to, and to make them do the job they’re supposed to do.
Nick Wallis: To what extent should UK citizens care about this? If people want to bring their money to this country and they want to spend it in this country, then to what extent is that, “Well, happy days. We’re not going to ask too many questions because every regime around the world has got its fingers in slightly dodgy pies?”
Oliver Bullough: Yeah, I mean, that has been the philosophy of previous governments that, you know, if the money wants to come here and pay taxes, which will pay for us to have schools and roads and hospitals, then, you know, bring it on. But I think that has been an extremely shortsighted policy here. The money is being stolen from countries where it is desperately needed, and that leads to those countries essentially collapsing. This is what’s happened to large parts of northern Nigeria, obviously to eastern Ukraine, to other places that have become so corrupt that they’re known as failed states, just like what happened in Afghanistan.
Or failing that, some regimes have been able to weaponize their control of these money flows. Russia obviously is the most dramatic example, but China also does it to a certain extent in order to buy influence and corrupt politics overseas. And what you are creating with corruption is something that undermines the legitimacy of democracy everywhere. So though, in the short term you are making profits for UK PLC, in the long term, you’re essentially empowering Britain’s enemies to become stronger and to work against us. You know, if we had turned away the Rosneft IPO from the London Stock Exchange or prevented oligarchs from settling their disputes in London, then the oligarchs would not have become so powerful. The Kremlin would not have become so rich. And who knows, maybe the invasion of Ukraine wouldn’t have happened in the first place.
Nick Wallis: Oliver Bullough, author of Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals. My thanks to him and my thanks also to Miranda and Ilya, whose investigation into the Aliyev family can be found on the OCCRP website. Just search OCCRP Aliyev. The article’s full title is “Azerbaijan’s Ruling Aliyev Family and Their Associates Acquired Dozens of Prime London Properties Worth Nearly $700 Million.” We tried to make contact with the Aliyev family so we could put the points raised in this podcast to them but they didn’t respond to any of our emails.
Dirty Deeds: Tales of Global Crime & Corruption was produced by Lindsay Riley, with research from Phoebe Adler-Ryan and Riham Maged, at Rethink Audio. The series is a Little Gem production for the OCCRP. We’ll be back with more episodes, giving you an insight into the adventures of journalists who work on stories of international crime and corruption. My name is Nick Wallis. Goodbye.