Pandora Papers reveal South Caucasus connections to offshore tax havens

The ‘Pandora Papers’ have implicated figures in Azerbaijan, Georgia, and Armenia in a global network of tax-havens. Two prominent figures from the South Caucasus include the founder of Georgia’s ruling Georgian Dream party Bidzina Ivanishvili, and Azerbaijani President Ilham Aliyev. 

The Pandora Papers are a massive leak of nearly 12 million files, obtained by the International Consortium of Investigative Journalists (ICIJ) that reveals a globe-spanning network of offshore tax havens that has been used by the rich and powerful to hide their wealth.

The biggest revelations for the region concern the wealth of Ilham Aliyev whose relatives have been revealed as the owners of nearly $700 million of real-estate in London. 

According to an investigation into the files by OCCRP, 84 ‘previously unknown offshore companies’ registered in the British Virgin Islands that have been or are still owned by Aliyev, his relatives, or close associates have been discovered. 

Through the company, Aliyev and close relatives including his children Arzu, Leyla, and Heydar own or have owned ritzy locations in the UK capital, including apartments, commercial developments, and even a historic pub just steps away from the British Museum. 

While ‘in most cases’ the leak ‘contained no information about how money entered the offshore empire of the Aliyevs and their associates’ OCCRP did unearth several connections between the London properties and a shell company ‘at the heart’ of the so-called Russian Laundromat — a $20 billion money laundering operation.

Bidzina’s companies in the islands

According to latest revelations, Georgian tycoon, former Prime Minister, and founder of the ruling Georgian Dream party Bidzina Ivanishvili opened 12 companies registered in the British Virgin Islands — a noted tax haven —  between 1998-2016. 

In 2012, local regulators in the British Virgin Islands inquired about Finseck, an entity belonging to Ivanishvili created on his behalf by the the Panama-based Alcogal firm, which reportedly described Finseck to regulators as ‘linked to a trust Ivanishvili established for the benefit of his children’. 

ICIJ describe Alcogal as a ‘go-to offshore provider for top politicians and elites in Latin America and beyond’ having ties with ‘nearly half of all politicians’ implicated by Pandora Papers, including Czech PM Andrej Babiš, Vladimir Putin’s Associate Svetlana Krivonogikh and a Russian oil magnate also close to Putin — Gennady Timchenko. 

Yet another Ivanishvili-owned company, Brighton Corporate Ltd. registered offshore was set up to finance ‘via debt equity’ unidentified projects under Georgia’s Co-Investment Fund (GCF). 

Pledging $1 billion of his own money, Ivanishvili established GCF in 2013 and vowed to lure foreign investments in Georgia. Since it was founded, the GCF has been marred by a lack of transparency and unclear connections with official structures within the Georgian Government. 

Mining connections

According to an investigation by Armenia-based media outlet Hetq, a member of the ICIJ, the ‘managing companies’ of the Azatek gold mine, and a prospective mine in the Bazum iron deposit were registered in offshore tax havens. 

According to the leaks, in 2014, the Azatek gold mine, located in Armenia’s Vayots Dzor province was to be managed by Coeur Gold Armenia, a company registered in the Seychelles. Meanwhile, a prospective mine that was planned to exploit the Bazum deposit was to be managed by ‘Bazum Steel’, based in Belize and founded in 2013. 

The Bazum deposit was reportedly not exploited due to a drop in the international price of iron. 

VaykGold and Surart, which were to be the local subsidiaries running the Azatek and Bazum mines, respectively, were, as of 2012, owned by Vardan Ayvazyan who had served as the Minister of Environmental protection between 2001 and 2007, and was an MP from the then-ruling Republican Party between 2007 and 2018.

In 2012, Ayvazyan was ordered by a US Federal Court to pay $37.5 million in damages to a U.S. mining company for alleged corruption.