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Congress Must Investigate U.S. Loans To Azerbaijan’s Secretive Silk Way Airline

Silk-Way

Silk Way Airlines

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?

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Fox News’ Devastating Attack On Turkey, President Erdogan

Kennedy-Fox-News-Insider-2018

Lisa Kennedy Montgomery of Fox News Business

By Harut Sassounian

As the conflict between Turkey and United States is heating up, Turkish President Recep Tayyip Erdogan is too stupid to realize that by continuing to hold American Pastor Andrew Brunson on trumped-up charges, he is undermining Turkey’s economy and its membership in NATO. Any other intelligent Turkish leader would have released Pastor Brunson a long time ago and maintained military and trade relations with the United States.   Even though the Turkish government is paying millions of dollars a year to hire high-powered American lobbying and public relations firms, none of them can protect Turkey’s reputation from Erdogan’s erratic behavior.

Every time he opens his mouth and takes an inept action, Erdogan further damages Turkey’s relations with other countries, reminding the world and reinforcing the long-established image of the “Barbarian Turk.”   Here is an example of the negative PR generated by Erdogan against his own country in the American media. Lisa “Kennedy” Montgomery on Fox News Business TV, President Trump’s favorite channel, delivered the following devastating attack against Pres. Erdogan on August 16, 2018. In addition to millions of Americans who watched her commentary on TV, 662,000 others saw it on Facebook and many more on Twitter. Kennedy even mentioned the Armenian Genocide, as a way of getting back at Turkey.  

“How do I despise thee Erdogan? Let me count the ways. The Turkish president is putting his country in a diplomatic pickle by refusing to free an American Pastor over ‘terrorism charges.’ The fake crime is a bunch of hot malarkey, a rancid plate of Turkish non-delight; and although Erdogan has been concentrating his power to fake elections, imprisoning journalists, and purging academics, he didn’t bet that he would be strong-armed by another strong man. Our president has had it up to his eyeballs with Turkey trolling, and instead of empty words, President Trump is offering a full-throttled digital slap to Erdogan, tweeting: ‘I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!’”  

Kennedy continued her criticism by stating: “When were they [relations with Turkey] ever good? The Turkish government is a disgrace, and past administrations have either coddled them or sat idly by while they’ve rolled out the welcome mat and threw the door open for ISIS, all while cozying up to Russia. This is not our strategic partner. This is a corrupt, murderous regime that should be kicked out of NATO for a host of human rights violations, not to mention deep kissing the Russians who are supposedly the biggest regional threat. Now, sure, there have been counter-threats. Now Erdogan is saying he will pull the iPhone off the market as if the people there can use the device to mobilize, enrich themselves or seek freedom from a murderous regime that wants total control, and is willing to tank the global economy to prove a childish point! And while we are at it, and while the president [Trump] is hot under the collar, if he really wants to make his new party pal Kim Kardashian happy, he should officially, and once and for all, acknowledge the Armenian Genocide which was not ‘an issue’ or ‘a series of unfortunate events,’ but a cold-blooded slaughter of 1.5 million people whose memory will not be erased by any Napoleonic nincompoop. Release Pastor Andrew Brunson, President Erdogan, and fear [Pres. Trump’s National Security Advisor John R. Bolton’s] mustache [as] Bolton is mongering, so for the sake of world peace put up and shut up so you don’t get blown up!”

To make matters worse for Erdogan, President Trump told American journalists on August 17, 2018: “Turkey has been a problem for a long time. They have not acted as a friend. We will see what happens. They have a wonderful Christian pastor. He is a wonderful man, Pastor Brunson. They made this phony charge that he is a spy, and he is not a spy. He is going through a trial right now, if you call it a ‘trial.’ They should have given him back a long time ago. And Turkey has, in my opinion, acted very, very badly. So we have not seen the last of that. We are not going to take it sitting down. They can’t take our people. So you will see what happens!”

Before Armenians get too impressed with President Trump’s threatening words, they must remember that despite Turkey’s anti-U.S. and anti-NATO policies for several decades, the West has kept heaping praises on Turkish leaders. No one in the West has had the guts to put Turkey in its place. If tomorrow, the unpredictable Erdogan releases Pastor Brunson, I am afraid President Trump will start praising Erdogan once again, as he has done with Kim Jong Un of North Korea and Vladimir Putin of Russia.  

President Trump should not forget that in addition to holding Pastor Brunson, Turkey invaded and occupied Northern Cyprus in 1974, banned the crossing of American troops into Northern Iraq from Turkey during the Iraq War, attacked the Kurdish allies of the United States in Northern Syria, is planning to purchase the Russian S-400 missile system contrary to NATO’s admonition, helped circumvent U.S. sanctions on Iran, and supported the entry of ISIS terrorists to Syria from Turkey.   Even after Pastor Brunson is liberated, Turkey should not be forgiven for its many indiscretions. As numerous analysts have recently suggested, Turkey should be immediately kicked out of NATO.

House Committee Approves Assistance for Nations Hosting Syrian Refugees

House Approps Cmte banner

WASHINGTON, D.C. – Last week, the U.S. House Appropriations Committee approved the Fiscal Year (FY) 2018 State, Foreign Operations, and Related Programs (SFOPS) Appropriations Bill, the Armenian Assembly of America (Assembly) reported. In total, the bill provides $47.4 billion in funding for SFOPS, which is $10 billion less than FY17. The bill maintains Section 907 of the FREEDOM Support Act and includes language for aid to nations hosting Syrian refugees.

The SFOPS Report highlighted the need for additional assistance to “vulnerable populations in Syria and in neighboring countries,” comprised of Syrian refugees, Christians, and other minorities affected by the Syrian civil war and persecuted by the Islamic State (ISIS). The Committee raised concerns regarding “the lengthy displacement of Syrians and the ongoing burden they face, as well as the continued strain Syrian refugees are placing on host communities.”

“We commend the House Appropriations Committee for emphasizing the importance of humanitarian aid for both refugees and the nations hosting them,” Assembly Executive Director Bryan Ardouny said. “To date, Armenia has welcomed over 22,000 refugees from Syria who have escaped with their families. As conditions worsen in Syria, Armenia continues to serve as a sanctuary for persecuted Christians and other at-risk groups escaping genocide and violence in the Middle East. As the humanitarian crisis in Syria continues, we must ensure that relief aid reaches those in need, which includes Armenia as a host nation for refugee resettlement,” he added.

Referencing the designation of genocide committed against religious minorities in Syria and Iraq by Islamist extremists made by Secretary of State John Kerry on March 18, 2016, the bill allocates funds to “be made available for programs to protect vulnerable and persecuted religious minorities.” This includes programs authorized by H.R. 390, the Iraq and Syria Genocide Emergency Relief and Accountability Act of 2017, which the Armenian Assembly strongly supported, and was unanimously adopted by the House of Representatives on June 6, 2017. The Committee recommends not less than $10 million to be made available for programs to protect vulnerable and persecuted religious minorities. In addition, the bill states that $10 million should also be made available for international religious freedom programs.

The House Report also incorporated a section on Genocide Victim Memorial Sites and Tribunals, where funds are appropriated “to establish and maintain memorial sites of genocide” in Europe, Eurasia, and Central Asia.

“The Armenian Assembly will continue to push for additional assistance. Despite reductions across the board, it is imperative that Armenia and Artsakh have the resources necessary to address the compelling humanitarian needs as a result of the current refugee crisis as well as Azerbaijan’s ongoing and deadly ceasefire violations,” Ardouny stated.

Although the President’s budget cut aid to Azerbaijan, it also sharply reduced proposed aid to Armenia. The President’s budget request for Armenia included $4 million in Economic Support and Development Fund, $1.5 million for International Narcotics Control and Law Enforcement, and $700,000 for Nonproliferation, Antiterrorism, Demining, and Related Programs. The House Subcommittee on Europe, Eurasia, and Emerging Threats will hold a hearing tomorrow entitled “Examining the President’s FY 2018 Budget Proposal for Europe and Eurasia” for further discussion.

With action in the House Appropriations Committee completed, attention turns to the Senate Appropriations Committee, where a mark-up of its version of the bill is pending.

The Assembly submitted testimony earlier this year to the House Appropriations State, Foreign Operations, and Related Programs Subcommittee highlighting key areas of concern, including the ongoing Turkish and Azerbaijani blockades, the need for continued and robust funding as well as safeguarding of Christian minorities at risk in the Middle East, and support for a second U.S.-Armenia Millennium Challenge compact.

On March 17, Armenian Caucus Co-Chair Rep. Frank Pallone, Jr. (D-NJ) and House Intelligence Committee Ranking Member and Armenian Caucus Vice Chair Rep. Adam Schiff (D-CA) provided testimony in support of aid to Armenia and Artsakh as the Administration first released the budget blueprint for FY18. They also signed a bipartisan letter, initiated by Rep. Pallone, on March 30 advocating “to advance U.S. interests by strengthening Armenia’s independence, promoting peace in Nagorno-Karabagh, and supporting Armenia as a regional safe haven for at-risk Middle East refugees” with Armenian Caucus Co-Chair Jackie Speier (D-CA) and 22 other Representatives.

Spearheaded by Rep. Anna Eshoo (D-CA), 27 Members of Congress sent a letter last month to House Appropriations SFOPS Subcommittee Chairman Rep. Hal Rogers (R-KY) and Ranking Member Rep. Nita Lowey (D-NY) expressing concern about the 67 percent reduction in foreign aid to Armenia.

“At a time of tremendous global uncertainty, the U.S. should continue to foster the progress of its allies, not retreat from its responsibilities as the world’s leading democracy. As the U.S. and Armenia commemorate the 25th anniversary of diplomatic relations, we urge the committee to reject the harmful cuts to U.S. aid to Armenia proposed by the President’s FY18 budget,” the Representatives stated in the letter.

The FY 2018 State and Foreign Operations Bill – Full Committee Draft is available here.

The FY 2018 State and Foreign Operations Bill – Full Committee Report is available here.

The Armenian Assembly of America’s FY 2017 Testimony is available here.