The international Extractive Industries Transparency Initiative (EITI) was set up to give citizens of resource-rich countries information about how much their governments were earning from natural resources in order to prevent corruption. It is a voluntary initiative, focusing on oil, gas and mining revenues. Azerbaijan was the first country to be assessed as EITI-compliant, yet “Azerbaijan Anonymous”, a new report by Global Witness, shows that private companies are benefitting from billions of dollars’ worth of business handling Azerbaijani oil even though it is not clear why they are involved or who owns them.
As information on ownership is not currently available from EITI reports, Global Witness has pieced together, over the course of a year, the links between many of these deals by examining company records and annual accounts from various countries’ corporate registries. This new investigation has found that one man, Anar Aliyev, has held ownership stakes in at least 48 deals with the State Oil Company of the Azerbaijan Republic (Socar), including production sharing agreements and joint ventures, although very little is known about him or how he achieved this position in the Azerbaijani oil industry.
Global Witness has found that Anar Aliyev’s companies published accounts showing profits of US$375 million over five years, though the companies’ auditors found that these accounts were incomplete, so a more exact figure is unknown. Socar has not properly explained its dealings with Anar Aliyev, nor has it disclosed the hidden beneficiaries of other companies it does business with.
The lack of transparency highlights gaps in the EITI, as it shows that countries can comply with its rules while large deals are being struck with very little transparency. The beneficial ownership of companies operating, investing or bidding on extractive assets will be disclosed under a new EITI pilot programme with the intention of making it mandatory in 2016: this report shows how vital it is for Azerbaijan to be part of this pilot and for EITI participants to ensure the rule is observed.
Socar’s full response to detailed questions by Global Witness can be downloaded below, as well as an extract from a corporate filing that features the signatures of the representatives of the shareholders of Socar Trading SA (pictured on page 21 of ‘Azerbaijan Anonymous’), a filing that documents Valery Golovushkin’s shareholding in Socar Trading SA (until 2012) (see page 18 of ‘Azerbaijan Anonymous’) and 'Annex 2' that documents in more detail the 50 Socar-related companies/deals that have links to Anar Aliyev.
Since publication of the report Socar and Anar Aliyev have published statements in response. These statements are available at http://new.socar.az/socar/en/news-and-media/news-archives/news-archives/2013/12/13 and http://www.ugepte.com/index.php?page=page&MasterPageID=1&ID=54.
Following Socar’s statement Global Witness issued a response which is available at http://www.globalwitness.org/library/azerbaijan-anonymous-response-socar
Global Witness also issued a response following an interview given by Anar Aliyev to Business Time magazine in January 2014. This is available here.
Anar Aliyev’s interview with BusinessTime Magazine 8th January 2014 (Russian): http://btime.az/page.html?id_node=415&id_file=4800&lang
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