Sons of Azerbaijani Strongman Vasif Talibov Received Millions From Money Laundering Systems

Key points:

• The Talibov brothers’ bank accounts received dozens of wire transfers from shell companies that were part of the Azerbaijani and Troika Laundromats, two massive money laundering systems previously uncovered by OCCRP.
• A financial crime expert who reviewed the transactions found multiple red flags for money laundering that he said banks should have noticed.
• In subsequent years, the brothers bought up properties in Dubai and Georgia worth an estimated $63 million.

In late 2007, two young Azerbaijani brothers received an infusion of cash just in time for the holidays.

But this wasn’t pocket money. Nineteen-year-old Seymur had $40,000 transferred to his personal bank account on December 27. On the same day, his 25-year-old brother Rza got $95,000 of his own.

As an explanation, both transactions listed simply the word “textile.” This was strange, since these were not corporate accounts — and the brothers had no known connection to any textile business.

It didn’t end there. Within months, Seymur and Rza both started to receive more cash, in much larger bank transfers — up to $500,000 at a time, often in implausibly round figures. The listed reasons for the transfers expanded to include “metal,” “metal parts,” and “electrical equipment.” By the end of 2012, they had received over $20 million in total.

Clearly, these weren’t ordinary transactions. But then, these were not ordinary brothers.

Seymur and Rza are the sons of one of Azerbaijan’s top officials: Their father, Vasif Talibov, is the ruler of Nakhchivan, an autonomous exclave located between Iran, Turkey, and Armenia.

Talibov has led Nakhchivan with an iron fist for more than 26 years. Under his rule, detainees have been subject to beatings and vicious torture. Dissidents have been forced into psychiatric hospitals. He has also used his power to silence independent media: Journalists and activists who criticized his rule have faced pressure, arrest, and exile.

Now, through an analysis of several leaks of banking data and property records, OCCRP can show that the Talibov family enriched itself from questionable sources even as Nakhchivan’s people suffered.

Leaked banking records show that the millions Talibov’s sons received came from shell companies associated with the Azerbaijani and Troika Laundromats, massive money laundering schemes discovered by OCCRP. Previous investigations showed that Azerbaijani elites, including a cousin of President Ilham Aliyev, benefitted from one of these systems. Now the powerful Talibov family — which is also connected to the president by marriage — can be added to the list.

The data obtained by reporters doesn’t show what the Talibovs did with the money they received. But soon after the transactions began, they started spending.

In 2008, the elder Talibov brother, Rza, his mother, a cousin, and several businessmen founded a bank together.

Four years later, just as the Laundromat transactions reached their peak, Rza bought two adjacent buildings in the Georgian resort town of Batumi that he converted into a five-star hotel. Rza, Seymur, and their sister Baharkhanim — who also received nearly a million dollars from Laundromat companies — have also acquired about a dozen properties in Dubai, including a luxurious villa, a 12-floor apartment hotel, and multiple individual apartments. In total, their properties are worth an estimated $63 million.

This is despite Vasif Talibov’s official salary of less than $26,000 per year and his sons’ own low-paying government jobs. (Rza is a migration service official and Seymur is a member of the Nakhchivan parliament.)

In fact, their family’s political status should have subjected their financial transactions to greater scrutiny. The bank accounts where they received their millions were held with major financial institutions in multiple countries, including Emirates NBD, Barclays, and Credit Suisse. It is unknown whether any of the transactions were flagged as suspicious.

Graham Barrow, an independent financial crime specialist who reviewed the transactions, said the brothers’ accounts should have been flagged given their questionable origins and the Talibovs’ status as politically exposed persons.

‘Politically Exposed Person’ is someone with a prominent political position or public function, or their close relative. Banks are required to subject such clients to extra scrutiny.‘Politically Exposed Persons’

“[The banks] should do what’s known as adverse media screening,” he said. “They should see whether their client has been involved in any potential criminal activity or suspicious activity and they should monitor them. It’s called enhanced monitoring.”

“It’s ridiculous. Those round figures, it’s just stupid. I mean, nobody does business that way.”

In a response, Credit Suisse said xxx. Barclays, Emirates NBD and members of the Talibov family did not respond to requests for comment.

“A World Upside-Down”

Vasif Talibov has ruled over Nakhchivan for so long that it’s hard to imagine the territory without him. But his beginnings were modest: In the late Soviet years he was the head of a department at a local garment factory.

His ticket to power turned out to be his marriage to Sevil Sultanova, whose mother’s uncle was a senior Soviet official named Heydar Aliyev.

As the country neared collapse in 1990, Aliyev returned from Moscow to his home region of Nakhchivan. Having nowhere else to stay, he temporarily lived with Talibov in his two-bedroom apartment.

He returned the favor the following year. After being elected chairman of Nakhchivan’s parliament, Aliyev made Talibov, then in his early 30s, his head assistant.

“When I chose Vasif Talibov for this position, I knew many of his characteristics,” Aliyev said later. “He was very young. Inwardly, I thought for a while that it would be difficult because of his youth. But he proved that a person who is loyal to his homeland, nation and people, regardless of age, can do great things.”

In 1993, Aliyev became president of newly independent Azerbaijan. And with his backing, Talibov’s star continued to rise. In 1995, not long after being elected to both the Azerbaijani and the local Nakhchivani parliaments, he became chairman of the latter.

This position, to which he has regularly been “reelected” every five years, makes him the republic’s absolute ruler, able to appoint ministers, push laws through a pliant parliament, control the justice system, and run the security agencies.

He has now ruled for nearly three decades, outlasting his original patron, Heydar Aliyev, and now enjoying a similarly close relationship with his son, Ilham, who succeeded him to the presidency.

The local media in Nakhchivan heaps praise on Talibov’s rule. “Today is HIS day,” wrote the local news agency Nuhcixan on his 60th birthday, describing him as “the great patriot, resolute, courageous, as well as humanist,” but also “extremely humble.”

Internationally, the headlines are somewhat different, often focusing on the draconian rules Talibov has imposed — like his instruction for local citizens to read Hemingway, or his bans on hanging laundry on balconies or civil servants wearing patterned tights. Foreign outlets have also reported on his crackdowns on journalists and dissidents.

This has earned Nakhchivan a variety of nicknames: Opposition activists call it the “North Korea of Azerbaijan,” while the Norwegian Helsinki Committee described it as “Azerbaijan’s Dark Island.”

On visiting the territory, a U.S. diplomat wrote to his superiors in Washington that the region was Talibov’s “fiefdom.”

“Nakhchivan is a world upside down,” the diplomat wrote.

The Talibovs’ Tight Grip

The Talibovs’ stranglehold on Nakhchivan is not just political. It is widely assumed in Nakhchivan that the family dominates the local economy, and experts have described them restricting imports, driving competitors out of business, and even putting residents to work harvesting their produce.

According to an exiled Nakhchivani, many products in the territory are sold under the brand Gamigaya, a group of companies widely assumed to belong to the family. The Gamigaya holding has also built or renovated dozens of public facilities across Nakhchivan, including ministry buildings, hospitals, universities, and a mosque.

Little documented proof of the Talibovs’ connection to this group of companies — or to Cahan Holding, another omnipresent local conglomerate — has ever emerged. In 2014, Rza Talibov described himself on Facebook as Gamigaya’s chairman. But no company ownership records are available to show who actually owns either conglomerate.

Instead, the Gamigaya and Cahan holdings are run by two businessmen associated with the Talibovs named Vugar Abassov and Emin Uchar.

Abassov and Uchar partnered with Rza Talibov, his mother, and a cousin in the only business in which they have ever been documented to be shareholders: Nakhchivanbank, a local financial institution founded in 2008. The bank has since stopped disclosing its shareholders, leaving it unclear whether the family is still involved, though Rza’s sister Baharkhanim is a member of its supervisory board. If they are still part owners of the institution, it is unclear how much they may be earning.

The Laundromat Millions

But despite this lack of public records, leaked bank data from Switzerland — part of the international Suisse Secrets investigation — allowed reporters to document some of their wealth for the first time. At their maximum in March 2011, the records show, Seymur’s Credit Suisse account held $7.3 million, and Rza’s held $9.3 million.

Because these figures only show the account balance at one point in time, it’s impossible to know how much money passed through the accounts over the years. But both brothers’ account numbers also appear in two other leaks of banking data previously obtained by OCCRP.

They show that, between 2007 and 2012, Rza and Seymur’s accounts at Credit Suisse and several other banks received over a hundred separate wire transfers worth a total of $20.5 million from two shell companies, Murova Systems and Continus Corporation.

Both companies were identified as money laundering vehicles by Bosnian prosecutors who looked into them as part of a human trafficking investigation.

These shell companies, which never did any substantive business, were part of the Azerbaijani and Troika Laundromats, two massive money laundering systems uncovered in previous OCCRP investigations. Laundromats are essentially groups of connected shell companies that send money around and around to each other, using many separate fake transactions to obscure its origins.

“That’s incredibly unusual,” said Barrow, the financial crime specialist who reviewed the transactions, explaining that they contained multiple warning signs.

Most obviously, he said, was the origin of the money: shell companies that registered no real business activity.

“Second problem, every single one of those payments is a round figure,” Barrow said. “Business isn’t conducted that way. … Banks are supposed to have monitoring in place that picks up on round figure sums and flags them as suspicious.”

“And the other [suspicious] thing is when somebody is apparently doing a massively wide variety of different businesses,” he said. “We saw textiles and electronics going through the same company accounts. What company does that? It makes no commercial sense whatsoever.”

For politically connected people, Barrow said, banks have a “legal duty to do enhanced due diligence. Enhanced due diligence to establish the source of wealth.”

But the money kept flowing, with the three Talibov children receiving more and more until 2012, the last year that appears in the records.

“Getting Acquainted” with Batumi

That January, Vasif Talibov paid a three-day visit to the seaside Georgian resort city of Batumi, in the autonomous republic of Adjara. According to the press office of the local government, his goal was to “get acquainted with the economic and tourist[ic] potential of the region.”

His elder son Rza, who accompanied him on the official trip, soon made a personal real estate investment in the city, buying a historical building just a few blocks from the beach for $1.5 million.

A few months later, Adjara representatives visited Nakhchivan and signed a memorandum of economic cooperation between the two regions.

Afterwards, Rza wasted no time snapping up an adjacent 19th-century building from the government through a special agreement with the Adjara economic ministry. Though it was valued at over half a million dollars, he was charged only a symbolic amount of sixty cents to acquire it, in the interests of redevelopment. Rza also bought out several people who already owned space in the building for another $1.2 million.

He then merged the two buildings together to open a five-star hotel, Divan Suites Batumi. According to an announcement by the city administration, he would spend $10 million on its construction.

Rza also paid over $6 million to have a company owned by Emin Uchar, who co-founded Nakhchivanbank with the family, build him an elite villa in the city’s exclusive Green Cape neighborhood.

But the bulk of the family’s acquisitions were in Dubai.

By 2020, Vasif Talibov’s sons had acquired 11 properties in the Emirate worth a total of at least $45 million today, including a 12-floor luxury hotel. According to a leak of real estate data obtained by the non-profit research organization C4ADS, both brothers held Emirati identification cards, indicating that they had residency there.

Scroll through the gallery below to see the Talibovs’ acquisitions. The data is current as of 2020.

None of these extravagant properties appear on the brothers’ social media accounts. Unlike some other children of authoritarian rulers, Seymur and Rza avoid displays of conspicuous wealth on their social media pages, posting instead about their love for their country, their father’s achievements, and their devotion to President Aliyev.

In one Twitter post last year, Rza shared a quote from Aliyev in large block letters, apparently designed to underscore the regime’s frugality.

“Our traditions, values, and lifestyle are our assets,” he wrote.

He didn’t mention the other ones.

The OCCRP’s story READ HERE.