Your trusted source

Panorama.am earlier reported about the huge leak of confidential documents under the name of "The Panama Papers" which revealed the use of offshore companies by politicians and their relatives, unveiling their involvement in many different tax havens. The network of companies used by Azerbaijan’s ruling family and their associates were revealed in the Panama Papers as well.

This time The Guardian writes on the secret offshore companies owned by Azerbaijani President daughters, and comments on the suspicious activity of two London-based law firms which facilitated the offshore deals on behalf of the Aliyevs.

The paper gives an introductory saying “business interests and property portfolios of President Ilham Aliyev and his family have been the subjects of extensive reporting in recent years.”

These fresh revelations show that President Aliyev’s daughter Leyla Aliyeva set up a new offshore firm at the time of her 2015 divorce from Emin Agalarov.

Notably, under the British government rules, Leyla and Arzu Aliyeva are classified as “PEPs” – politically exposed persons. The term encompasses anybody with links to top political leaders, including family members and close associates. However, it appears that Child & Child, the firm of London solicitors that acted on behalf of Aliyev’s daughters, did not declare their high-profile status.

The Guardian repeatedly asked Child & Child to comment but it declined to do so. Child & Child bought Exaltation Ltd on behalf of the Aliyev daughters from the Jersey branch of the Panamanian law firm Mossack Fonseca. The total value of Exaltation Ltd’s assets is unclear, writes the newspaper, adding that is put in documents at “over $1m”. The money is said to come from “personal savings”.

Another London solicitor, Derrick French, was involved in arranging a separate hidden foundation belonging to Azerbaijan’s first family. His firm, Derrick French & Co, set up a clandestine Panamanian trust called UF Universe Foundation, which controlled a majority stake in Ata Holding, one of Azerbaijan’s biggest conglomerates.

Ata Holding was established in 2003. The files suggest its first owner was Azerbaijan’s minister of taxes, Fazil Mammadov, with a secret controlling stake in the $600m conglomerate from 2003.

Documents in 2005 show how he planned to share Ata Holding, which owns two major banks, construction firms and Baku’s five-star Excelsior hotel, with President Aliyev’s three children.

“According to documents, the scheme was managed through the UK. In December 2002, a company called FM Financial Management Holding (UK) Ltd was incorporated in England. Its only share was held on trust by French, and it controlled 75% of Ata, according to company accounts. Its purpose appeared to be to channel tax free dividends from Ata to an offshore company, the Panama-registered FM Management Holding Group SA.

Evidence to suggest Mammadov was the person referred to as FM comes from documents sent to Mossack Fonseca in 2005.

The solicitor issued papers in 2005 outlining a change of control at UF Universe Foundation. Aliyev’s children were to become beneficiaries. Leyla, Arzu and their brother, Heydar, who at the time was just seven, would have a combined 50% interest in the trust. Their mother, Mehriban, was to be the “protector”, an anonymous role giving control over the foundation. The other “protector” was to be Mammadov. Should the beneficiaries die, 18 children and other relatives were named as substitutes, with a date of birth, address and percentage share carefully noted next to each entry. Mammadov had 10 replacements, some of them young children.

The Guardian shows a chart “how money was to flow from Ata via two other offshore firms to the president’s three children: “anonymous beneficiaries”. Their payments are described in documents as tax-free. UF Universe Foundation was wound up in 2007 but Leyla and Arzu Aliyeva are currently listed as the majority owners of Ata via yet another Panamanian firm, Hughson Management Inc.”

Derrick French, Aliyev’s daughters and Mammadov did not respond for requests for comment.

“Officially, President Aliyev has no personal business interests. Leaked US diplomatic cables, however, suggest that he is Azerbaijan’s richest person, concludes the paper.