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Theresa May challenged over Azerbaijani money-laundering scheme Azerbaijan hits back over 'scandalous' money laundering claims
(about 5 hours later)
Theresa May is facing calls to order an investigation into how UK companies were allowed to operate a £2.2bn lobbying and money-laundering scheme on behalf of Azerbaijan’s ruling elite. The government of Azerbaijan has responded angrily to revelations that it ran a secret $2.9bn (£2.2bn) fund which was used to pay prominent Europeans, run lobbying operations, and launder money via a group of opaque British companies.
Opposition politicians urged the government to open an inquiry after the Guardian published leaked information showing the Azerbaijani leadership made covert payments from 2012 to 2014 through a network of opaque British companies. Azerbaijan’s deputy president, Ali Hasanov, said the stories by the Guardian and other media partners were a smear. In the first official reaction from Baku, Hasanov said the regime was the victim of a “scandalous” campaign organised by British intelligence, the Armenian diaspora and the US.
Some of this money went to politicians and journalists as part of an international lobbying operation to deflect criticism of Azerbaijan’s president, Ilham Aliyev, and to promote a positive image of his oil-rich country. There is no suggestion that all the recipients were aware of the original source of the money. It arrived via a disguised route. “When did the Guardian write about the truth about Azerbaijan? This newspaper has been known for decades for being against Azerbaijan,” Hasanov told the Turkish newspaper Hürriyet. The reports were “biased, groundless and provocative,” he said.
Tim Farron, the former Liberal Democrat leader, led calls for an inquiry, saying this was what happens “when the corporate landscape is too lightly regulated”. On Tuesday, the authorities blocked access from inside Azerbaijan to the website of the Organized Crime and Corruption Reporting Project (OCCRP). The OCCRP published details of the scheme, nicknamed the Azerbaijani Laundromat, following a leak of data to the Danish newspaper Berlingske.
The use of British companies in the Laundromat has prompted calls for Theresa May to investigate. This is the second time this year that British corporate entities have been found to be at the heart of a large-scale money laundering operation run from a former Soviet state. In March, a similar scheme run from Moscow, the $20bn Global Laundromat, was exposed.
Opposition politicians urged the government to act to prevent the abuse of company vehicles. Four offshore-owned British companies – based in Glasgow, Birmingham, and Potters Bar in Hertfordshire – were used to funnel money into the western financial system. It went via the Estonian branch of a Danish bank, Danske.
Tim Farron, the former Liberal Democrat leader, led calls for an inquiry, saying this was what happened “when the corporate landscape is too lightly regulated”.
“Thanks to the Guardian investigation we learn of something called the Azerbaijani Laundromat,” he said. “But now is the time to wash some fairly dirty laundry in public and find out exactly who paid money to whom and why.“Thanks to the Guardian investigation we learn of something called the Azerbaijani Laundromat,” he said. “But now is the time to wash some fairly dirty laundry in public and find out exactly who paid money to whom and why.
“We need a full investigation to see that dirty money has not been used to buy influence in the UK. The Azerbaijani government is guilty of systematic human rights abuses and it would appear the regime has been making payments on an industrial scale.”“We need a full investigation to see that dirty money has not been used to buy influence in the UK. The Azerbaijani government is guilty of systematic human rights abuses and it would appear the regime has been making payments on an industrial scale.”
Margaret Hodge, the chair of the all-party parliamentary group for responsible tax who uncovered the use of tax havens as chair of the public accounts committee, added to calls for more transparency about the scandal. Margaret Hodge, the chair of the all-party parliamentary group for responsible tax who uncovered the use of tax havens as chair of the public accounts committee, added to calls for more transparency.
“Yet again a whistleblower has lifted the lid on some unconscionably awful behaviour,” she said. “It would seem that Britain and British overseas territories are facilitating alleged corrupt practices by refusing to introduce the full transparency the Conservatives promised but failed to deliver.“Yet again a whistleblower has lifted the lid on some unconscionably awful behaviour,” she said. “It would seem that Britain and British overseas territories are facilitating alleged corrupt practices by refusing to introduce the full transparency the Conservatives promised but failed to deliver.
“Until we know who owns companies and properties in Britain and in the tax havens we control, such unacceptable practices will continue and Britain will be culpable because of the government’s failure to act.”“Until we know who owns companies and properties in Britain and in the tax havens we control, such unacceptable practices will continue and Britain will be culpable because of the government’s failure to act.”
Peter Dowd, Labour’s shadow chief secretary to the Treasury, said: “Money laundering hurts our economy, steals from others and corrupts our society. The financial system should effectively and efficiently provide investment that benefits the whole economy, not boost the offshore bank balances of plutocrats and criminals here and abroad.Peter Dowd, Labour’s shadow chief secretary to the Treasury, said: “Money laundering hurts our economy, steals from others and corrupts our society. The financial system should effectively and efficiently provide investment that benefits the whole economy, not boost the offshore bank balances of plutocrats and criminals here and abroad.
“We have seen too many of these shocking scandals in recent years because the Tories are incapable of taking on the rigged system, which hurts the many to support the very few.”“We have seen too many of these shocking scandals in recent years because the Tories are incapable of taking on the rigged system, which hurts the many to support the very few.”
“It’s time Britain had a Labour Government that, with our Tax Transparency and Enforcement Programme, is serious about challenging these people and institutions that are taking us all for a ride.”
Molly Scott Cato, a Green MEP who sits on the European parliament’s economics and monetary affairs committee and inquiry into the Panama Papers, said the revelations were shocking and reveal “once again that British claims to be a leader in transparency conceal a far grubbier reality”.Molly Scott Cato, a Green MEP who sits on the European parliament’s economics and monetary affairs committee and inquiry into the Panama Papers, said the revelations were shocking and reveal “once again that British claims to be a leader in transparency conceal a far grubbier reality”.
“The relationship between UK companies and our murky offshore tax havens permit the world’s corrupt elite to indulge their extravagant lifestyles at public expense,” she said. “They then use these ill-gotten gains to buy political influence that prevents them from being held to account for human rights abuses and bad government.”“The relationship between UK companies and our murky offshore tax havens permit the world’s corrupt elite to indulge their extravagant lifestyles at public expense,” she said. “They then use these ill-gotten gains to buy political influence that prevents them from being held to account for human rights abuses and bad government.”
The four firms at the centre of the Azerbaijani Laundromat were all limited partnerships registered in the UK. They were: Metastar Invest, based at a service address in Birmingham; Hilux Services and Polux Management, set up in Glasgow; and LCM Alliance, from Potters Bar, Hertfordshire. Their corporate “partners” are anonymous tax haven entities based in the British Virgin Islands, Seychelles and Belize. The four firms at the centre of the Azerbaijani Laundromat were all limited partnerships registered in the UK. They were: Metastar Invest, Hilux Services, Polux Management, and LCM Alliance. Their corporate “partners” are anonymous entities based in the British Virgin Islands, Seychelles and Belize.
Some of the cash from the £2.2bn fund was used to pay for luxuries such as cars, school fees, interior design and dentistry, while other sums went to European politicians and prominent figures linked to promotion of Azerbaijan. Some of the cash from the £2.2bn fund was used to pay for luxuries such as cars, interior design and dentistry, while other sums went to European politicians and prominent figures linked to the promotion of Azerbaijan. Seven million pounds was spent directly in the UK, including on private school fees.
Azerbaijan’s ruling family is not directly named in the leaked documents. But the Guardian investigation found evidence of a connection was overwhelming. Large sums came via the state-owned International Bank of Azerbaijan, which is the largest bank in an oil-wealthy country, and yet earlier this summer it filed for bankruptcy protection in New York. The defence and emergency situations ministries in Baku all contributed cash. Azerbaijan’s ruling family is not directly named in the leaked documents. But evidence of a connection was overwhelming. Large sums came via the state-owned International Bank of Azerbaijan, which is the largest bank in an oil-wealthy country, and yet earlier this summer it filed for bankruptcy protection in New York. The defence and emergency situations ministries in Baku all contributed cash.
The scheme was used to pay for the government’s incidental expenses including the medical bills of Yaqub Eyyubov, Azerbaijan’s first deputy prime minister. There were separate payments to Eyyubov’s son Emin, Azerbaijan’s EU ambassador, and to the president’s press secretary, Azer Gasimov.The scheme was used to pay for the government’s incidental expenses including the medical bills of Yaqub Eyyubov, Azerbaijan’s first deputy prime minister. There were separate payments to Eyyubov’s son Emin, Azerbaijan’s EU ambassador, and to the president’s press secretary, Azer Gasimov.