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International

Theresa May challenged over Azerbaijani money-laundering scheme

16:35, Tuesday, 05 September, 2017
Theresa May challenged over Azerbaijani money-laundering scheme

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.

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.

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.

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     Billions of pounds came through two Glasgow-based companies using obscure structure that let owners hide identities
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     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”.

“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.”

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.

“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.”

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.”

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     “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”.

“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.

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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.

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.

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.

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