Israel aerospace giant paid $155m to opaque firms linked to Azeri elites
Israel’s largest aerospace and aviation manufacturer transferred at least $155 million to two companies that were reportedly used as a secret slush fund for Azerbaijan’s kleptocratic elite, according to bank documents included in a massive new leak of US financial material.
The bank documents relating to Israel’s state-owned Israel
Aerospace Industries consist of more than a dozen suspicious activity reports
(or SARs) filed by Deutsche Bank with the Financial Crimes Enforcement Network
of the United States Department of the Treasury (FinCEN) in the years
2012-2014. They became public this weekend as part of a leak of FinCEN
documents that the BuzzFeed news site shared with the International Consortium
of Investigative Journalists (ICIJ) and with 108 other media outlets and some
some 400 journalists around the world, including Israeli reporter Uri Blau and
Shomrim, the Center for Media and Democracy.
It is not clear why the state-owned Israel Aerospace
Industries paid money to the two companies, Blau and Shomrim reported on
Sunday, but the payments aroused the suspicions of Deutsche Bank officials
charged with monitoring transactions they suspected may have been linked to
money laundering or terror financing.
The FinCEN leak comprises thousands of documents, including
over 2,000 SARs, “detailing $2 trillion of potentially corrupt transactions
that were washed through the US financial system,” the Guardian reported.
As reported in The Times of Israel on Sunday, other
documents in the leak indicate that the Jordan-headquartered Arab Bank
facilitated payments to organizations and bodies suspected to be connected to
terrorism even after it had agreed to pay massive amounts in compensation to
terror victims. The leaked material also includes additional reports on Israeli
businessmen, companies and banks.
The beneficiary
The Deutsche Bank reports describe two companies — Jetfield
Networks and Larkstone Ltd. — as recipients of the $155 million in IAI
payments.
Jetfield Networks was founded in New Zealand in 2009 and
became incorporated in the Marshall Islands in February 2012. It originally
described itself as engaged in commerce, including the buying and selling of
construction equipment, but later branched out into “consulting services.”
The company’s beneficiary, Blau and Shomrim reported, is
Javid Huseynov, an Azeri man born in 1961. Huseynov is also the beneficiary of
Larkstone Ltd., a company incorporated in Estonia, according to Blau and
Shomrim.
At the same time as its incorporation in the Marshall
Islands, Israeli and international media reported the signing of a $1.4 billion
contract between IAI and the Azerbaijani government. The two countries have had
a close but discreet relationship, Shomrim reported, with Israel buying oil from
Azerbaijan and the Azeris purchasing arms and agricultural equipment from
Israel.
Shomrim’s investigation revealed that IAI transferred the
funds shortly after the signing of its massive 2012 deal with the Azerbaijani
government. A source familiar with the deal told Shomrim that to the best of
his knowledge, it did not include an agreement regarding payment to any
intermediary.
In 2009, Israel became a signatory to the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, which criminalizes bribery of foreign government officials.
The submission of a suspicious activity report to FinCEN
does not mean that the individual or company mentioned in the document has done
anything illegal. The transactions described in such reports can be part of
entirely legitimate business activities that happened to conform to patterns
that aroused the suspicion of the financial institution reporting them.
Documents that the ICIJ provided to Shomrim show that
payments to Jetfield began in June 2012, just months after the deal with
Azerbaijan was signed, with a transfer of close to $30 million. In October, an
additional $6 million was wired to Jetfield, followed by additional transfers
in the months that followed.
Deutsche Bank’s reports to FinCEN show that by 2014, more
than $116 million had been transferred to Jetfield, while Larkstone Ltd.
received around $39 million during the same period.
In one such instance, IAI transferred about $8 million to
Jetfield for the stated purpose of purchasing helicopter rotor blades.
“Deutsche Bank wasn’t able to independently confirm the purpose of the transfer
of funds,” the report notes.
Jetfield and Larkstone were revealed in a 2017 expose by the
Organized Crime and Corruption Reporting Project (OCCRP) to be central nodes in
what became known as The Azerbaijani Laundromat.
The OCCRP revealed that Jetfield and Larkstone paid money
into companies that were used as a slush fund by Azeri elites and government
officials to purchase luxury goods as well as to buy good PR for the regime.
For instance, more than 2 million euros that left
Azerbaijan, with a portion going through Jetfield, reportedly ended up in 2012
in the bank account of Italian politician Luca Volontè, Rome’s representative to
the Parliamentary Assembly of the Council of Europe (PACE). Italian police
suspect that in exchange for the payment, Volontè tried to soften the European
Council criticisms of human rights violations in Azerbaijan. The investigation,
launched in 2015, is ongoing.
In its 2020 report, Human Rights Watch describes Azerbaijan
as a country with a poor human rights record: “Azerbaijan’s authorities
continued to maintain rigid control, severely curtailing freedoms of
association, expression, and assembly. “
In response to Shomrim’s article, IAI did not offer details
as to the nature of the payments to Jetfield Networks and Larkstone Ltd.
It said: “Israel Aerospace Industries is a government
company that operates in strict compliance with the provisions of the law. As a
defense company, and in keeping with company policy, it doesn’t address or
respond to information about its business activities other than as required by
law.”
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