Millions of euros in laundered money of Azerbaijani origin is thought to have passed through Estonia to the UK, that country's National Crime Agency (NCA) reports. A UK judge said evidence that the scheme, known as the 'Azerbaijan laundromat', had been in operation was 'overwhelming'. Some of the funds are thought to have passed though the now-defunct Tallinn branch of Danske Bank.
The "Laundromat" operated on behalf of figures among Azerbaijan's elite, the NCA reports, while the sum frozen totals £15.3m (€18.4 million), with £5,630,994.19 (€6,765,702.31) of this forfeited, following an investigation into money held in bank accounts linked to an Azeri politician.
Much of the money had passed through both Estonia and Latvia, the NCA says.
The Laundromat worked on behalf of what global network of investigative journalists the Organized Crime and Corruption Reporting Project (OCCRP) called Azerbaijan's kleptocratic ruling clique.
The main period during which the Laundromat was working at full spin, 2012-2014, was also accompanied by major human rights clampdowns on those who opposed the authoritarian regime of President Ilham Aliyev. Many of the companies linked to the scheme reportedly belong to Aliyev.
NCA chief: Substantial forfeiture of money
A politician tasked with combating corruption in the oil- and natural gas-rich South Caucasus nation, population 10 million, was himself one of the beneficiaries of the Laundromat.
Andy Lewis, Head of Civil Recovery at the NCA, said: "This is a substantial forfeiture of money laundered through the Azerbaijan laundromat, and our success highlights the risk to anyone who uses these schemes.
"We were able to recover these millions without needing to prove the exact nature of the original criminal activity. We will continue to use civil powers to target money entering the U.K. via illegitimate means," Lewis continued.
Ben Russell, Deputy Director at the U.K.'s National Economic Crime Centre, said: "This case demonstrates the NCA's commitment to investigating and seizing the proceeds of international corruption and associated money laundering."
"The UK is hostile to illicit finance, and will use every available tool to tackle it," he went on.
Complex web of shell companies, offshore accounts
The Laundromat operated whereby money was moved via a complex web of shell companies operating bank accounts in Estonia and Latvia, a principle known as layering.
Some of the transfers were accompanied by documentation, including invoices and contracts, purporting legitimize the transfers, the NCA, whose proceedings were filed last November, says.
District Judge John Zani said, at the end of a three-week hearing at the lower-tier Westminster Magistrates Court in London, that the evidence that the documentation was entirely fictitious and was produced in order to mask money laundering activity was "overwhelming".
A forfeiture order concerns £5.6million (€6.8 million - see above) held in U.K. bank accounts belonging to family members of Javanshir Feyziyev, an Azeri MP.
Feyziyev is Chair of the UK-Azerbaijan All Parliamentary Co-operation Committee, and Co-chair of the EU-Azerbaijan Parliamentary Co-operation Committee.
Six Account Freezing Orders have also been obtained in relation to accounts held in the name of Feyziyev 's wife, Parvana Feyziyeva, one of his children, Orkhan Javanshir, and his nephew, Elman Javanshir, the NCA reports.
UK's Guardian reported on Laundromat in 2017
Reporting on the Azerbaijani Laundromat back in September 2017, U.K. daily The Guardian called it a scheme to curry influence, pay lobbyists, apologists and European politicians and to launder cash, and putting its total value at $2.9bn (£2.2bn), between 2012 and 2014 – on average $3m was cleared out of Azerbaijan every day.
Much of the funds came from companies linked to President, Ilham Aliyev, state ministries and the International Bank of Azerbaijan, the country's largest bank.
The International Bank of Azerbaijan had recently filed for bankruptcy protection, The Guardian reported in 2017.
After being transferred into four offshore-managed U.K. companies, the funds were spent in various countries, there and also in Germany, France, Turkey, Iran and Kazakhstan, the Guardian says.
Investigative journalist organization: Funds used to purchase luxury goods, buy off European politicians
The OCCRP notes that the scheme operating at a time when Azerbaijan's government was arresting activists and journalists wholesale, while the funds were used to both purchase luxury goods and to pay-off European politicians.
The £2.5 billion (US$ 2.9 billion) figure was leaked to the Danish newspaper Berlingske, the OCCRP said, after the paper had shared the information with it, i.e. the OCCRP.
The two parties organized a collaborative investigation, further to track down the money's destination.
The OCCRP article was also the subject of a libel claim by Javanshir Feyziyev, one which has been settled.
Feyziyev categorically denies involvement in money laundering or any unlawful activity, the OCCRP reports.
Nearly 100 opponents of Azeri regime locked up
The project revealed the many uses to which the country's kleptocratic ruling clique puts some of its billions, including in effect buying silence, and imprisoning nearly 100 activities, opposition politicians and journalists on politically trumped up-charges, in a crackdown roundly condemned by international human rights groups.
At least three European politicians, a journalist who wrote stories friendly to the regime, and businessmen who praised the government were beneficiaries of OCCRP funds, the organization says, and in some cases these beneficiaries were able to mobilize important international organizations, such as UNESCO and the Parliamentary Assembly of the Council of Europe, to score PR victories for the regime.
The over 16,000 leaked transactions reveal that the core of the Azerbaijani Laundromat was formed by four shell companies registered in the U.K., made easier by what the OCCRP calls that country's lax regulations in the area.
Danske Bank, a major European financial institution, furthermore turned a blind eye to transactions that should have raised red flags, while the now-defunct Tallinn branch handled the accounts of all four Azerbaijani Laundromat shell companies, allowing the billions to pass through it without the requisite due diligence, the OCCRP says.
Large suns also went to companies in the UAE and Turkey, the OCCRP says, with some commonality there with companies involved in the so-called Russian Laundromat, scheme.
One of scheme's beneficiaries was tasked with combatting corruption in Azerbaijan
Recipients also included the family of Yaqub Eyyubov, Azerbaijan's first deputy prime minister, Ali Nagiyev, ironically a man responsible for battling corruption in Azerbaijan. As it turns out, with another $138 million likely going to AvroMed, a major drug company co-founded by Javashir Feyziyev.
A portion of the laundered funds were also sourced from Rosoboronexport, a state-owned Russian arms exporter, the OCCRP says, concluding by saying that further revelations on the scheme are likely to follow in the ensuing years.
Danske in Estonia was forced to close in 2019 after revelations that in excess of €200 billion in potentially laundered funds had passed through its portals, 2007-2015. An additional estimated €37 billion in potentially illicit funds is though to have passed through another Scandinavian bank with an Estonian presence, Swedbank, in the period 2014-2019.
Editor: Andrew Whyte