Congress Must Investigate U.S. Loans To Azerbaijan’s Secretive Silk Way Airline
By Harut Sassounian
Last year, I wrote an article reporting that the Silk Way Airlines of Azerbaijan made 350 secret flights to transport hundreds of tons of weapons from Bulgaria to ISIS terrorists in Syria and other Middle Eastern countries between 2014 and 2017. We now have a new surprising revelation that Silk Way received $419.5 million of loans from the U.S. Export-Import Bank (EXIM) to buy three 747-8 cargo planes from Boeing to continue its sinister operations.
The disclosure was made by a reporter for the Organized Crime and Corruption Reporting Project (OCCRP) by filing a Freedom of Information Act (FOIA) request with the U.S. government in 2016. It is noteworthy that Silk Way, “owned by a company with past ties to Azerbaijan’s Aliyev family, won some lucrative contracts from the U.S. military,” according to FOIA documents. In fact, “Silk Way was given contracts worth more than $400 million with the U.S. Defense Department’s Transportation Command for more than decade,” according to Devansh Mehta of OCCRP. Silk Way transported “ammunition and other non-lethal materials” to Afghanistan as of 2005. “In addition to its relationship with the U.S. government, Silk Way Airlines has also worked as a subcontractor for the Canadian Department of National Defense, the German armed forces, and the French army,” Mehta revealed.
In April 2017, Silk Way increased its purchases from Boeing, signing a $1 billion deal for 10 new 737 MAX passenger planes, according to reporter Mehta. However, it is not known how the new acquisition was financed. Last October, Silk Way announced plans to buy two more 747-8 cargo planes.
Mehta disclosed that “the airline is owned by Silk Way Group, which, at least at one point, was closely associated with Azerbaijan’s ruling Aliyev family (which has used its planes for private trips) and has benefited from benevolent state deals. Information obtained through FOIA shows that Silk Way Airlines took steps to conceal its owners’ identity, perhaps to improve its chances of winning the valuable U.S. loan guarantees and military contracts.”
Mehta added that “Azerbaijan ranks 122nd out of 180 countries in Transparency International’s corruption perception index, while President Ilham Aliyev’s family owns luxury properties around the world worth over $140 million. The Panama Papers and other leaks have implicated the country’s first family as being involved in nearly all sectors of the Azerbaijani economy, from luxury hotels to mining to banking.”
According to the terms of the Export-Import Bank’s $419.5 million loan to Silk Way, in case of default the loss would be repaid by the state-owned International Bank of Azerbaijan (IBA). The problem is that IBA has been “implicated in the Azerbaijani Laundromat, a massive scheme that pumped nearly $3 billion out of the country through various shell companies,” Mehta wrote. Furthermore, IBA is not in a position to guarantee the Silk Way loan, as the IBA itself declared bankruptcy in 2015, unable to pay its $3.3 billion debt!
Nate Schenkkan, project director of the Nations in Transit report at Freedom House, a US-based nonprofit that monitors democracy and human rights around the world, questioned the wisdom of EXIM Bank’s loan to Silk Way: “In Azerbaijan, where one family dominates economically and politically, and is then using state institutions to back its economic projects, there’s an obvious conflict of interest.”
Arzu Aliyeva, Pres. Aliyev’s 21-year-old daughter in 2010, was one of the three owners of Silk Way Bank, the financial arm of Silk Way Holding. Since 2017, her name is no longer mentioned as an owner. “Silk Way Holding, also referred to as Silk Way Group (SW Group) on its website, is a conglomerate that has currently listed 11 companies in its portfolio, including the airline,” according to Mehta. Silk Way Holding dominated Azerbaijan’s aviation sector after the state carrier AZAL airlines was privatized in a highly secretive manner without any bids and tenders. Mehta wrote that “a similar privatization of the telecom sector ended up with the [Aliyev] family earning about $1 billion in bribes in cash and share value, according to an earlier OCCRP story. The investigation also found that the money was funneled to the first family through various secret offshore companies. These companies have enabled the Aliyevs to control stakes in gold mines, telecommunications and construction businesses in Azerbaijan.”
According to a filing in 2006, Silk Way Airlines was owned by IHC (International Handling Company), an offshore entity based in the British Virgin Islands. In a 2017 filing, Silk Way Airlines stated that 40% of the company was owned by IHC, while 60% was owned by SW Holding, “effectively controlled” by Zaur Akhundov, an Azerbaijani citizen. Mehta stated that “IHC is linked to the Aliyev family through its director Jaouad Dbila who reportedly served as a proxy for the first family’s business interests in the past.”
In 2011, a Russian-born manager, Grigory Yurkov, was given power of attorney for both Silk Way Holding and IHC, according to Luxembourg’s official gazette. This appointment was used as a means to conceal the true owners of IHC.
Meanwhile, Zaur Akhundov had mysteriously become the 100% owner of the entire Silk Way Group in 2014. By that time, the firm and its many holdings were already worth billions of dollars, Mehta declared, based on the company’s loan guarantee application. Akhundov, 50, had held several official positions in Azerbaijan. “It is unclear how Akhundov became the owner of a billion-dollar conglomerate with more than 10 aircrafts, an insurance company, a construction company and an aircraft maintenance company, to name a few of the enterprises in the Silk Way Group,” Mehta wondered.
According Schenkkan of Freedom House, “Azerbaijan can be described as a centralized, vertical pyramid where the benefits go to one family that collects rents throughout the economy. This includes all sorts of transactions, not only official state transactions that might involve taxes and public funds, but also things that involve what we normally consider the private sector: import-export, consumer goods, transport—any area of the economy, the family has a stake in it and receives a cut on what takes place.”
The U.S. Congress should hold a hearing to investigate the appropriateness of EXIM Bank’s $419.5 million loan guarantee to Silk Way Airlines, its arms shipments to terrorist groups in the Middle East, and its hidden ownership by the ruling Aliyev family. After all, why should Azerbaijan, a country with billions of petrodollars, be given a U.S. loan?
U.S., Europe Should Investigate Azerbaijan Shipments of Weapons to Terrorists
By Harut Sassounian
FLArmenians Guest Contributor
A stunning investigation by Bulgarian reporter Dilyana Gaytandzhieva revealed that Azerbaijan’s state-run Silk Way Airlines has shipped under diplomatic cover 350 planeloads of heavy weapons and ammunition to terrorist groups around the world in the last three years! Azerbaijan asked the Foreign Ministries of various countries to issue a diplomatic exemption for these flights, allowing civilian planes to carry weapons which would normally be prohibited by the International Air Transport Association.
The reporter’s information is based on a large number of emails sent to her by an anonymous source: “The leaked files include correspondence between the Bulgarian Ministry of Foreign Affairs and the Embassy of Azerbaijan to Bulgaria with attached documents for weapons deals and diplomatic clearance for overflight and/or landing in Bulgaria and many other European countries,” in addition to Syria, Iraq, the United States, Saudi Arabia, UAE, Turkey, and Israel, to name a few.
According to documents obtained by Gaytandzhieva, “Silk Way Airlines offered diplomatic flights to private companies and arms manufacturers from the US, the Balkans, and Israel, as well as to the militaries of Saudi Arabia, UAE, and US Special Operations Command (USSOCOM), and the military forces of Germany and Denmark in Afghanistan and of Sweden in Iraq. Diplomatic flights are exempt of checks, air bills, and taxes, meaning that Silk Way airplanes freely transported hundreds of tons of weapons to different locations around the world without regulation.”
The leaked documents also reveal that American weapons manufacturers had shipped over $1 billion of weapons through Silk Way Airlines. These were non-US standard weapons which means that they were not intended for use by U.S. forces. When Silk Way Airlines did not have enough available planes, Azerbaijan’s Air Force jets would transport the military shipments, Gaytandzhieva reported.
According to the U.S. federal contracts registry, in December 2014, the U.S. Special Operations Command signed a $26.7 million contract with the American company Purple Shovel. Bulgaria was listed as the country of origin for the shipped weapons and Azerbaijan’s Defense Ministry as the consignee. Another US company, Orbital ATK, received a contract for $250 million of non-US standard weapons.
Amazingly, the daring Bulgarian reporter went to Aleppo, Syria, in December of last year where she “found and filmed 9 underground warehouses full of heavy weapons with Bulgaria as their country of origin. They were used by Al Nusra Front (Al Qaeda affiliate in Syria designated as a terrorist organization by the UN).”
Gaytandzhieva discovered that just in April and May of 2017, Azerbaijan’s Air Force jets transported 282 tons of grenades on 10 diplomatic flights.
Another major purchaser of non-US standard weapons is Saudi Arabia which cannot use these weapons for its own defense as they are not compatible with its arsenal of western weapons. In 2016 and 2017, there were 23 diplomatic flights carrying weapons from Bulgaria, Serbia and Azerbaijan to Jeddah and Riyadh. These weapons were transported to the Kingdom of Saudi Arabia through Silk Way Airlines and ended up in the hands of militants in Syria and Yemen that Saudi Arabia officially admits supporting, according to Gaytandzhieva.
On April 28 and May 12 of this year, Silk Way Airlines carried out two diplomatic flights from Baku to Burgas-Jeddah-Brazzaville (Republic of Congo). The military cargo on board both flights was paid for by Saudi Arabia. The aircraft was loaded with mortars and anti-tank grenades. These very same weapons were discovered by the Iraqi army a month ago in an Islamic State warehouse in Mosul. It is not surprising that Islamic State terrorists have displayed these weapons in their propaganda videos, according to Gaytandzhieva.
The same situation existed with the shipment of Coyote machine guns which appeared on propaganda videos posted online by militant groups in Syria. These weapons were transported on a diplomatic flight via Turkey and Saudi Arabia a few months earlier. There are many other examples of such shipments that ended up in the hands of terrorists, including some shipments sponsored by United Arab Emirates.
In February and March 2017, Saudi Arabia received 350 tons of weapons on Silk Way Airlines’ diplomatic flights originating from Baku. The cargo included 27,350 pieces of 128-mm rockets and 10,000 pieces of 122 mm. Grad rockets.
Some of these shipments were paid in cash which may account for the huge amount of wealth accumulated by Pres. Aliyev and his family.
Just as concerning are the shipments of large quantities (around 200 tons) of white phosphorus which could be deadly. Ironically, Azerbaijan, which possesses white phosphorus, accuses Armenia of using it in the Artsakh conflict.
This is not just another article which should be read and forgotten! The U.S. Congress and European governments should hold hearings and investigate these huge shipments of weapons, most of which are destined for terrorists in the Middle East and elsewhere.