Another Corruption Scandal - Will the Minister Survive?

Baku / 01.05.20 / Turan: The International Journalism Project on the Investigation of Organized Crime and Corruption (OCCRP) continues to publish materials on corruption by the Minister of Youth and Sports of Azerbaijan, Azad Rahimov. A series of revelations concerns the activities of firms belonging to Rahimov’s companies for more than 10 years.

The day before, the first part of the investigation was published, telling about the terrifying working and living conditions of foreigners working for Rahimov’s company in Azerbaijan.

The second part of the investigation reveals the activities of the offshore company SerbAz, which turned out to be at the center of the largest labor exploitation scandal in modern Europe.

In 2006-2009 the company attracted more than 700 workers from the Balkans for the construction and repair of a number of buildings in Baku, in particular, the Buta Palace and the Baku Expo exhibition center, where important government events are held. The implementation of these projects was funded by the Ministry of Youth and Sports.

“Foreign workers were treated like modern slaves. They lived in cramped conditions, provided with a small amount of food. Moreover, they worked 12 hours a day. Their passports were seized, and wages were cut, some were beaten, and two died,” the investigation said.

Complaints of foreigners that they were not paid the promised amounts under the contract were ignored. A long-term investigation of the OCCRP showed that the powerful patron of SerbAz was none other than Azad Rahimov, the country's Minister of Youth and Sports.

It has been proven that SerbAz has received multimillion-dollar government orders for several years and entered into contracts with the company in the name of Rahimov's wife, ItalDizain, an importer of luxury goods. Before becoming Minister in 2006, Rahimov himself was the director of ItalDizain.

At the end of 2006, it was announced that the European Rhythmic Gymnastics Championships will be held in Azerbaijan next summer. To do this, it was necessary to repair a large sports complex and the Ministry of Youth and Sports signed a contract for these works with SerbAz in the amount of 5.3 million dollars.

When Azad Rahimov was asked why he chose this company, he explained this by saying that the object has a “complex configuration and architecture” and “modern materials” produced abroad are needed for its reconstruction. Therefore, we need an operator with "great experience in this area."

It is noteworthy that before signing the contract SerbAz did not even exist and was registered in Azerbaijan a week later. Moreover, local media reported that the company began work a year before it was officially selected for work.

After the initial reconstruction, SerbAz received another contract from Rahimov for $ 700 thousand for additional work. These data are taken from Rahimov’s official letter sent to the prosecutor’s office, in which he explains the reasons for his Ministry’s cooperation with SerbAz.

From 2007 to 2009, foreign workers worked in six more projects, two of which were also funded by the Ministry of Youth and Sports - on the restoration of the Happiness Palace ($ 20.9 million) and on the construction of the Olympic Rowing Center ($ 38.8 million).

Other SerbAz projects include Buta Palace, Baku Expo Exhibition Center and 28 Mall.

It took years to uncover the jurisdiction system under which Azad Rahimov’s connection with SerbAz was hidden. This company was registered as two different companies with different jurisdictions. In Azerbaijan, it operates under the name SerbAz Design and Construction and is owned by Acora Business, whose true owners are unknown, since it is registered in the offshore zone in the Antilles.

Another SerbAz is registered in the Netherlands as the SerbAz Property, but its documents provide absolute anonymity.

OCCRP researchers found that the Azerbaijani company Creacon Construction took over the construction work from SerbAz after the foreigners were returned home.

In 2012, Azerbaijan restricted access to corporate information, making the ownership structure of the company secret. But before that, Azerbaijani journalists managed to get part of the database, according to which one of the two shareholders of Creacon is ItalDizain Group.

ItalDizain today has become a large holding company, which includes dozens of companies, including telecommunications, real estate, and Premium boutiques, ranging from Cartier to Baccarat.

The online archive, consisting of millions of websites, has retained early versions of ItalDizain, containing its corporate structure, listing SerbAz as a subsidiary in January 2009. It was this year that SerbAz employees were abused in a cruel way.

Having established that ItalDizain is the ultimate beneficiary of labor, journalists through corporate reports have found that ItalDizain is owned by the Luxembourg company Argulux. It, in turn, belongs to Zulfiya Rahimova, wife of the Minister of Youth and Sports Azad Rahimov.

An investigation into the SerbAz worker abuse scandal continued in Bosnia, and the local prosecutor’s office announced four verdicts to 13 members of the local SerbAz office for trafficking.

At the end of 2019, the four defendants pleaded guilty and were convicted. However, no investigation has been conducted in Azerbaijan.

According to one of the SerbAz managers, who spoke with reporters on condition of anonymity, the money for the projects came in cash to the company’s main office in suitcases. Suppliers of cement and other materials received payment from these funds, without proper accounting procedures.

At the same time, electronic money transfers were made to offshore accounts.

Part of the money was stolen in the fall of 2009, when the workers' money disappeared.

The Ministry of Youth and Sports continued to pay SerbAz payments following the disclosure of worker abuse, sending the company another $ 4.4 million in November 2009. The following year, it paid the company another $ 10 million.

OCCRP has official reports from the Ministry of Youth and Sports with all SerbAZ payments. A significant portion of transfers continued even after the company ceased operations.

Azad Rahimov did not respond to OCCRP requests to comment on the outcome of the investigation.     -02D-