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EURASIA INSIGHT

US INDICTMENT IMPLICATES TOP AZERBAIJANI OFFICIALS IN CORRUPTION CASE
9/11/03

A federal grand jury in New York has indicted a Swiss lawyer for his alleged role in facilitating illicit payments made to top officials in Azerbaijan by a consortium of Western business interests. The indictment stands to create a sizeable political problem for Heidar Aliyev’s administration just over a month before Azerbaijan holds a presidential election.

The two-count indictment against Hans Bodmer -- described as "a Swiss citizen and a lawyer with the Swiss law firm von Meiss Blum & Partners" -- says he acted as an agent of a "domestic concern" as defined by the US Foreign Corrupt Practices Act [FCPA]. In that capacity, he allegedly conspired to facilitate the participation of foreign entities in Azerbaijan’s privatization process through improper payments made to Azerbaijani officials.

At present, Bodmer is reportedly in custody in South Korea and US officials are seeking his extradition. The indictment, handed down in the United States District Court, Southern District of New York, seeks at least $150 million in damages in connection with the alleged FCPA violations.

According to the indictment, "the intended recipients of corrupt payments were senior officials of the Government of Azerbaijan." The four officials were not identified by name. Instead they are labeled as a "senior Azeri official, a senior official of SOCAR, Azerbaijan’s national oil company and two senior officials of the SPC [State Property Commission]."

The indictment went on to state that the senior SOCAR official "wielded great influence with respect to any privatization of SOCAR, including great influence with the senior Azeri official."

Among the Western entities named in the indictment are the investment banking firms, Oily Rock Group Ltd and Minaret Group Ltd, both registered in the British Virgin Islands. Other entities allegedly represented by Bodmer in Azerbaijani dealings and named in the indictment are Omega Advisers Inc. and Pharos Capital Management, both of which had their "principal place of business in New York."

The indictment states that the Western entities cooperated during the late 1990s in a scheme to participate in the privatization of Azerbaijani companies. In particular Oily Rock "invested in Azerbaijani privatization vouchers and options for the primary purpose of acquiring at auction a controlling interest in SOCAR."

According to the indictment, Bodmer "paid bribes and authorized the payment of bribes to induce Azeri officials to allow the [Oily Rock-led] investment consortium’s continued participation in privatization.

The indictment adds that the bribes took "numerous forms," including millions of dollars in cash payments, Oily Rock stock and "gifts of things of value and other favors."

The US indictment comes at a sensitive time in Azerbaijan, during which the ailing president, Heidar Aliyev, is trying to implement a dynastic transfer of power to his son, Ilham. [For background information see the Eurasia Insight archive]. Azerbaijan’s presidential election is scheduled for October 15. Ilham Aliyev is the ruling New Azerbaijan Party’s presidential candidate. In August, Ilham was appointed prime minister. Prior to his appointment as premier, he served as deputy head of SOCAR.

News of the indictment are likely to invigorate those trying to defeat Ilham Aliyev in the election. Opposition leaders have repeatedly denounced the Aliyev administration for engaging in corrupt practices and for restricting basic rights. [For background see the Eurasia Insight archive].

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