Azerbaijan Has Been Selling Electricity to Georgia Through Secretive Offshores. Here’s Who’s Behind Them.

Even as Sulkhan Papashvili, one of Georgia’s richest businessmen, bought electricity from Azerbaijan’s state energy company, the family members of its leaders entered into business dealings with him on the side.

Key Findings

  • For years, Papashvili’s offshore companies have been buying electricity from Azerbaijan’s state energy company and selling it to Georgia, both for import and for transit to Turkey.
  • Meanwhile, the wife of the state company’s president became the co-owner of a company with Papashvili that bought property in Georgia.
  • When that president was replaced, his successor’s son bought property from Papashvili and is jointly renting retail space with him in Tbilisi.
  • A man who handled administrative tasks for Papashvili’s energy business opened companies for the family members of both Azerbaijani decision-makers.

The energy-rich country of Azerbaijan has become a power plant for its neighbors.

Though best known as a source of oil and gas, in recent years Baku has also begun selling hundreds of millions of dollars worth of electricity to neighboring Georgia, and transiting even more through Georgia to Turkey.

“We have transformed from a country importing electricity into one exporting it,” president Ilham Aliyev said in April 2020.

Plans are now underway to take these exports even further, with a power line envisioned under the Black Sea that will deliver Azerbaijani electricity through Georgia to the European Union.

But a new joint investigation by OCCRP and its Georgian and Azerbaijani partners reveals that the booming trade is characterized by a lack of transparency — and that the family members of officials in charge of authorizing it have made separate business deals with those who benefited.

Ever since Azerbaijan’s state energy company, Azerenergy, began its large-scale export of electricity to and through Georgia in 2016, the trade has been handled almost entirely by secretive offshore intermediaries, the first based in Belize and the second and third in special corporate zones in the United Arab Emirates.

For years, though they have been the only companies who have secured deals to transit Azerbaijani electricity to Georgia, uncertainty has reigned about who was behind them.

Now their ownership is confirmed: The man behind them is Sulkhan Papashvili, one of Georgia’s richest businessmen and the former head of the agency that protects the country’s president.

A Georgian law firm responding on his behalf confirmed his involvement to reporters, describing him as the companies’ “sole beneficiary and 100% shareholder.”

But there’s more. Just over a year after Papashvili secured his business buying electricity from Azerenergy, he entered into a separate partnership with the wife of the state-owned company’s president. The official’s wife issued an expansive power of attorney to a man who received the same power from Papashvili and described himself in an interview with OCCRP as a “trusted person” of the “management” of his offshore company.

When the Azerenergy president, Etibar Pirverdiyev, was fired in the wake of a nationwide Azerbaijani blackout in 2018, a man named Balababa Rzayev was named his successor. Rzayev’s son then began doing business with Papashvili, buying two large commercial properties from the Georgian businessman and renting out neighboring retail space together in the heart of Tbilisi.

Azerenergy head Balababa Rzayev with Azerbaijani President Ilham Aliyev
Credit: president.az Azerenergy head Balababa Rzayev (left) with Azerbaijani President Ilham Aliyev (right) visiting Azerenergy’s Jahangirbayli hydroelectric power plant in September 2023.

In addition, Rzayev’s son co-founded a company with Papashvili’s “trusted person,”starting a lucrative business selling electrical transmission cables from an Azerbaijani company founded by the elder Rzyaev.

During this period, Papashvili also went into business with the wife and daughters of a third senior Azerbaijani official: Baylar Eyyubov, the influential head of security for President Ilham Aliyev. Though reporters found no evidence that any money has changed hands, Eyyubov’s family has amassed vast real estate holdings that cannot be explained by his official salary.

“It’s a problem for our state … that the [offshore] companies’ activities are not transparent. Lies and truths get mixed up so much,” said Gia Arabidze, an energy expert and professor at Georgian Technical University. “If you go and Google it, you won’t find anything beyond the company name. That’s why transparency would solve a lot of problems.”

When asked about his dealings with the family members of Azerbaijani officials, a law firm representing Papashvili wrote: “The fact that businessmen related to the families of the Azerbaijani officials are engaged in various businesses and/or are acquiring assets in Georgia is not proof of them receiving preferential treatment in any of their business dealings because of Mr. Papashvili.”

The assertion that Papashvili’s business lacks transparency is “devoid of any basis,” the law firm added. They noted that Papashvili has provided journalists with “complete information regarding the company’s shareholder structure,” but did not address questions about why the businessman operated through opaque offshore companies.

Finally, the firm wrote that Papashvili’s business of buying energy from Azerbaijan “strengthens Georgia’s energy independence from Russia.” They denied that the business was a monopoly, maintaining that “there was no competing economic agent/company having interest in the electricity transit business from Azerbaijan to Turkey.”

Rzayev told reporters he was not aware of his son’s business dealings. His son Fuad Rzayev said his business activities had no connection to his father’s and did not constitute a conflict of interest. Pirverdiyev, his wife, Eyyubov, and Eyyubov’s family members also did not reply.

The Rise of Elgreen

In early November 2015, Ilham Aliyev paid an official visit to Georgia. After a series of one-to-one meetings, the Azerbaijani president signed a joint declaration with his Georgian counterpart Giorgi Margvelashvili.

Among its nearly three dozen clauses was one that, at the time, attracted little attention: The two presidents promised to “support the organization of the South Caucasus electricity transit corridor from Azerbaijan via the Georgian system to Turkey.”

In fact, the occasion marked a turning point in the two countries’ electricity trade.

Over the previous few years, Azerbaijani exports to Georgia had amounted to only a few million dollars’ worth of electricity, traded directly between the two state energy companies.

But after the 2015 deal, the exports skyrocketed. Between 2016 and 2023, Georgia imported over $247 million worth of electricity from Azerbaijan, according to UN trade data. Over the same period, another $400 millions’ worth was transited through Georgia and sold to Turkey, according to reporters’ estimates based on official Georgian data about the volume of the trade.

Ilham Aliyev and Georgia Giorgi Margvelashvili
Credit: president.az The Azerbaijani president Ilham Aliyev (left) and Former President of Georgia Giorgi Margvelashvili signing the joint declaration.

No official announcements were ever made to explain who was handling this booming trade. But corporate documents and government statistics help shed light on how the massive business developed and was shielded from public view.

On the same day in November 2015, just weeks after the Azerbaijani and Georgian presidents had signed their joint declaration, two companies called Eltransit and Elgreen Holdings were founded in Georgia and Belize.

Georgian statistics show that Eltransit, owned by a longtime business partner of Papashvili’s, began buying electricity from Azerenergy and spent a few months selling it to Turkey.

Then the business moved offshore, with the Belizian Elgreen taking over the transit trade and also beginning to import Azerbaijani electricity for Georgian use. Since Belize is a jurisdiction where information about a company’s owners is not publicly available, this effectively shielded the beneficiaries of the business from public scrutiny.

In 2017, the trade was handed over to another Elgreen Holdings, this one registered at a secretive corporate registry The Khaimah International Corporate Centre in the United Arab Emirates. As of October 2023, yet another company, Sheldon Corporation, registered in a different Emirati “economic zone,” Dubai Silicon Oasis took over the trade.

Elgreen has no functioning website, discloses no information about its finances, managers, or administrators, and spent years operating its monopoly completely under the radar. Its existence, and the fact that Papashvili had something to do with it, was first reported in a 2020 investigation by Studio Monitori, one of OCCRP’s Georgian partners, whose reporters received a tip from an insider.

The report identified Zurab Noghaideli, who had served as Georgia’s prime minister between 2005 and 2007, as one of the people behind Elgreen. After this revelation, Noghaideli began to speak to the media for the first time in almost a decade. In an interview with Forbes Georgia a month after the Studio Monitori report, he revealed that Papashvili was one of Elgreen’s owners, but said it had other investors as well.

Two years later, in a witness statement to a court case, Noghaideli contradicted his Forbes interview, saying that Elgreen’s sole owner was an EU citizen he didn’t name. Papashvili, he said, was a “decision-maker who sets company policy.”

In a new interview for this story, Noghaideli attributed the error to a misunderstanding. Elgreen’s sole owner is indeed and has always been Papashvili, he said, though he described the company as his brainchild.

“That was my idea,” Noghaideli said. “I have set the structure of the business and have it agreed with Azerenergy, the Azerbaijani side …. I didn’t have resources myself. So I invited Sulkhan Papashvili, he is [the] financial investor.”

Zurab Noghaideli during a video interview
Credit: OCCRP/Studio Monitori Zurab Noghaideli during a video interview with OCCRP/Studio Monitori.

At the request of reporters, the law firm responding on behalf of Papashvili has now confirmed that he has indeed been the sole beneficiary of the three offshore companies. They also wrote: “Elgreen is a private company and it is under no obligation to create and maintain a website. Both Elgreen and Sheldon in a due form and manner submit their financial statements in their respective jurisdictions.”

Noghaideli rejected the idea that the move offshore had been done for secrecy, explaining that he had recommended the change of jurisdiction to save on taxes.

“We changed our mind because I decided,” he said. “I advised the partners that [it would be] better. It will be more tax efficient.”

So how did Azerbaijan’s state energy company come to do business with a newly-created Georgian company that had no track record in the energy sector?

Noghaideli’s account — that he had presented the idea to the Azeris — is confirmed by Azerenergy itself. It was Elgreen, the company told Studio Monitori in 2020, that drew their attention to the “possibility of exporting electricity to Georgia on a competitive basis and to the possibility of exporting electricity to Turkey and further to the EU in transit through Georgia.”

But corporate records and legal documents obtained by reporters suggest that there may have been other considerations. Even as President Aliyev supported the trade and senior Azerenergy decisionmakers led their state company into partnership with Elgreen, the family members of Aliyev’s security chief and two successive heads of Azerenergy entered into business with Papashvili and two senior representatives of Elgreen.

Entangled Interests

One man involved in Elgreen, whom Noghaideli described as handling “some of the day-to-day management,” is Paata Jgenti, a former deputy chief of the Tbilisi Police Department.

In an email to reporters, he described himself as the man responsible for carrying out decisions reached by company leaders. “Due to the fact that the company’s management is very busy, by their own decision, I was given a power of attorney to represent [them] in various instances,” he wrote. “I don’t make decisions and only do their tasks.”

He had been entrusted with this authority, he wrote, due to his “professionalism and meticulous attitude towards work.”

Reporters obtained nearly a dozen documents showing that Jgenti was granted power of attorney on behalf of Papashvili, his wife, and his daughter. These show that the family entrusted him with expansive powers to manage their affairs.

But Jgenti’s authority to act on behalf of others went beyond Elgreen, and even beyond Georgia. Two of the documents in particular stand out. One was issued on behalf of Parvana Pirverdiyeva, the wife of Etibar Pirverdiyev, who headed Azerenergy at the time the company accepted Elgreen’s offer to do business.

The other is from Zohra Sultanova, the wife of Azerbaijani president Ilham Aliyev’s security service chief Baylar Eyyubov. Though Eyyubov has no known direct ties to Azerenergy, he has long been rumored to hold vast power and influence in the country due to his closeness to the authoritarian leader.

Both documents were issued in May 2017, the same year Azerenergy said it took “a leading role” as an exporter of electricity to Georgia. They show that Jgenti received broad powers from both women: He was able to represent their interests, open and close bank accounts, withdraw funds, buy, sell, or gift real estate, and even receive correspondence on their behalf.

Sandro Kevkhishvili, an analyst at the Georgian chapter of Transparency International who reviewed the powers of attorney documents, described them as “definitely unusual,” and indicative of a “level of trust [that] is clearly very high.” Papashvili’s law firm denied this characterization, describing them as a standard business practice in Georgia.

In any event, Jgenti wasted no time stepping up in his role. Just two weeks after receiving the powers of attorney, he established a Georgian company called Esko LLC for Pirverdiyeva, Sultanova, and Papashvili, who became its co-owners.

Immediately afterwards, Esko purchased a plot of land in a village northeast of Tbilisi valued at about $852,000. Jgenti would not say what this was for, mentioning only “a certain business idea that we couldn’t get the necessary permits for.”

“The project has not yet been implemented,” he said.

Pirverdiyeva and Sultanova did not respond to questions about the origin of the money. The law firm answering for Papashvili wrote that Pirverdiyeva’s daughter “owns an official and legal business which would provide her mother with the means to make an equity contribution” to Esko.

Esko then made a failed bid to win a Georgian government tender to build up to 22 electrical transmission towers. Reporters couldn’t find any other publicly available information about the company’s activities.

The law firm responding for Papashvili wrote that “this company owns a single asset and conducts practically no business activity” and said they were “unaware of Esko’s participation in any energy sector related tenders.”

🔗A Grand Opening

In December 2017, Papashvili traveled to Azerbaijan for the opening of STDC, a cryptocurrency mining center in the city of Sumgait, of which he owned a minority stake through an offshore company registered in St. Lucia.

The pro-government press described the state energy company, Azerenergy, as supporting the venture, and its head Pirverdiyev attended the opening ceremony. Also in attendance was President Aliyev himself, who gave a laudatory speech praising the center as a testimony of Azerbaijan’s technological development. (Papashvili confirmed that he still owns the offshore company in St. Lucia, but did not comment on whether it still holds its STDC stake. This information is not available from public records.)

In July 2018, Azerbaijan suffered a nationwide blackout after an accident at the country’s largest power station. With air conditioners and refrigerators useless in the summer heat, and people stranded in the Baku subway, Pirverdiyev was publicly rebuked by President Aliyev.

“You should simply be ashamed of yourself,” Aliyev said. “You have caused so much suffering for the people in this heat!”

Azerbaijan President Ilham Aliyev attending cryptocurrency mining center
Credit: president.az Sulkhan Papashvili (second from left), Azerbaijan President Ilham Aliyev (second from right), and Etibar Pirverdiyev (right) attending the inauguration of Papashvili’s STDC cryptocurrency mining center in December 2017 in Sumgait, Azerbaijan. (Current records from STDC do not indicate whether Papashvili still owns it today.)

Pirverdiev was dismissed that September. But Jgenti continued his work on behalf of his family. In 2019, the former deputy police chief registered another company for Pirverdiyev’s son Elvin, then a 19-year-old university student, who then used it to acquire properties in Georgia.

The following year, Elvin and Papashvili acquired a company that is building a 9-story residential building in the Georgian capital of Tbilisi.

The Cable Guy

In 2018, immediately after Pirverdiyev’s dismissal, Balababa Rzayev, better known as Baba, was appointed Azerenergy’s new president.

His son Fuad has also done business with Papashvili and Jgenti.

In January 2022, at the age of 33, Fuad Rzayev granted a similarly broad power of attorney to Jgenti. The following month, Jgenti founded a company called Cabliance LLC with Fuad and even signed the founding documents for both of them. (Again, the law firm responding on Papashvili’s behalf described these powers of attorney as “nothing unusual.”)

This time Jgenti got a share for himself as well, attributing this as a gesture from Fuad “as a result of successful participation in numerous negotiations.”

Fuad and Jgenti owned 25 percent of Cabliance each, while the remaining 50 percent was held by Georgia’s largest manufacturer of high-voltage power cables, Sakcable.

Just over a week after its founding, Cabliance received exclusive rights to import and sell in Georgia products made by an Azerbaijani cable company called Goknur Baku Ltd., which had been founded by Fuad’s father Balababa Rzayev in 2003.

In response to reporters’ requests for comment, Balababa Rzayev wrote that Goknur Baku “has no connections with me” and that the company was currently owned by family members he didn’t name.

As a state official, he is supposed to have divested from the private company. However, though corporate ownership records are not available in Azerbaijan, reporters obtained the company’s financial statements for 2020 and 2021. These show that Rzayev still owned 70 percent of Goknur Baku at that time.

Meanwhile, Fuad Rzayev’s investment in Georgia has continued in the real estate sector.

In March 2022, Jgenti handled the paperwork for the establishment of another new company opened for Fuad. Called Rustaveli 1 LLC, Jgenti once again signed the incorporation document on Fuad’s behalf. Through the newly established company, just two days later, Rzayev paid over $3 million in cash to buy another company that owns commercial spaces in the center of the Georgian capital Tbilisi.

That space is currently being rented for $21,000 a month to two Russian businessmen active in the luxury retail sector who are preparing to open a store. The neighboring property, which is also being rented to the Russians, is owned by Papashvili.

Along with another Georgian businessman, Fuad Rzayev also bought $5 million worth of prime commercial real estate in Tbilisi from Papashvili, his brother, and another man, including a business center on well-known Shardeni street.

🔗Big Brothers

Fuad Rzayev’s business ties in Georgia go beyond Papashvili. He also has an interest in an agricultural company, Mtsvane Bolnisi, that cultivates grapes. The company has as additional co-owners:

  • Rafig Hasanov, the brother of powerful Azerbaijani security chief Baylar Eyyubov.
  • Givi Gigineishvili, a brother of the director of Georgia’s state energy company GSE, George Gigineishvili.

Unrealized Plans

Eldyar Eyyubov, the son of the head of security for Azerbaijan’s president, Baylar Eyyubov, also got into the Georgian energy business at just 23 years old.

His company Kalevolt LLC spent about half-a-million dollars in December 2018 to buy another company, Kamara Energy, which had concluded two memorandums with the Georgian government to build hydropower plants.

The next year, Eldar Eyyubov gave power of attorney to a longtime business partner of Papashvili’s, George Kukhaleishvili, to represent his interests in a company called Kalevolt LLC.

Leyla Aliyeva during an art exhibition
Credit: Chris Jackson/Staf/Getty images Azerbaijani President’s daughter Leyla Aliyeva (on stage) during an art exhibition in London in 2012. Among the crowd, holding wine glasses, business partners George Kukhaleishvili (left) and Sulkhan Papashvili (right).

Kukhaleishvili has also been involved in Elgreen, though reporters received conflicting accounts of the role he played (see box).

🔗Kukhaleishvili and Elgreen

Noghaideli described Kukhaleishvili as a “financial advisor” for the company. A lawyer representing Kukashvili wrote that his role was limited to “providing administrative services.” The law firm responding on behalf of Papashvili wrote: “Mr. Kukhaleishvili has not participated and does not participate in the day-to-day or any kind of management of Elgreen, he is not employed by Elgreen.”

The power of attorney enabled Kukhaleishvili to attend board meetings on Eyyubov’s behalf, change the company’s charter, alter the size of his shareholding, approve the purchase or sale of real estate, and many other functions. It also noted that these rights were not exhaustive: Kukhaleishvili received the right to “undertake any other actions, which are not directly indicated in this power of attorney, but are necessary to carry out the rights and legal interests of [Eyyubov].”

Before any construction went ahead, in June 2020 Eldar Eyyubov sold Kamara Energy for a million dollars.

Additional reporting by Habib Abdullayev (Meydan TV) and Khatia Nikolaishvili (GMC), and OCCRP’s Research and Data Team.

Fact-checking was provided by the OCCRP Fact-Checking Desk.

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