Bush to Receive Azerbaijan's Leader

By David S. Hilzenrath and Bradley Graham
Washington Post Staff Writers
Friday, April 28, 2006

As President Bush hosts a White House visit today by the president of Azerbaijan, an increasingly important player in global energy markets, court documents filed by the Justice Department mention members of the Azerbaijani leader's family in describing a nearly decade-old scheme to sell a state-owned oil company to private investors in return for bribes.

The case highlights the trade-offs confronting Bush in agreeing to meet Azerbaijani President Ilham Aliyev.

On one hand, the State Department's human rights report this year continued to fault Aliyev's government for corruption, political repression and prisoner mistreatment, rating Azerbaijan's overall human rights record as "poor." On the other hand, the former Soviet republic carries considerable strategic importance as an energy source and as a U.S. security partner bordering Iran and Russia.

Aliyev has repeatedly denied the bribery allegations. Asked for comment on the latest court documents, a spokesman for the Azerbaijani Embassy in Washington said he was in no position to offer any remark, and a message left for Aliyev's spokesman was not returned.

In welcoming Aliyev, U.S. officials have stressed Azerbaijan's key role as an alternative to Russia for delivering oil and natural gas to Europe. The Bush administration has expressed growing concern about the increasing dominance of Russia's state-owned energy giant Gazprom and the need for Europe to diversify its energy sources.

Aliyev, a secular Muslim politician, has also contributed troops to the U.S.-led operations in Iraq and Afghanistan. And in the controversy over Iran's nuclear program, there has been speculation that the Azerbaijani leader could play some kind of go-between role. Iran contains a large Azerbaijani ethnic minority.

Still, until now, the White House had avoided inviting Aliyev, who was elected three years ago to succeed his late father, Heydar Aliyev, in a vote marked by serious allegations of irregularities. U.S. officials had made clear that they were waiting to see improvements in Azerbaijan's treatment of human rights.

Administration officials dispute suggestions that, by agreeing to the visit, Bush has allowed oil and military considerations to supersede his goal of advancing democracy around the world. One official, who spoke on the condition of anonymity, said the administration made "the calculation" that having Aliyev visit Washington now offers "the best chance of eliciting the sorts of changes and reforms we seek."

Some Azerbaijani human rights activists, though questioning the U.S. justification for the three-day visit that began Wednesday, say they hope the trip will at least call attention to Aliyev's democratic deficiencies. "We consider the visit important because we can convey our own views, and we hope U.S. officials will raise these issues directly with President Aliyev," said Rana Sadaddinivo, a leader of an Azerbaijani group.

The events underlying the alleged bribery scheme have been the subject of news coverage and litigation for several years. Two U.S. officials designated to discuss the visit declined to comment on the case.

In a federal indictment announced in October, a Czech-born businessman named Viktor Kozeny was charged with bribing Azerbaijani government officials in an unsuccessful effort to gain control of the state-owned oil company. According to the indictment, Kozeny and others promised to give Azerbaijani officials two-thirds of their profits on the deal, which was never completed. Today, Kozeny is in prison in the Bahamas fighting extradition to the United States.

The indictment did not name the Azerbaijani officials, but two affidavits later filed by the Justice Department as part of the extradition proceeding in the Bahamas contain more specific allegations.

Kozeny asked a Chechen mobster for introductions to high-ranking officials in the Azerbaijani government, and the mobster brought him to see Ilham Aliyev, then deputy head of the oil company and son of the president, according an affidavit by a former Kozeny colleague.

Aliyev told Kozeny to see the chairman of an Azerbaijani government committee overseeing the privatization process, the affidavit of Thomas Farrell says.

Neither affidavit states that Ilham Aliyev received any money in the alleged bribery scheme.

Kozeny met with the chairman of the committee and his deputy, Farrell said. In negotiations with the deputy, Kozeny said he would give Azerbaijani officials two-thirds of the profits, according to Farrell. In 1998, the deputy said that then-President Heydar Aliyev had directed that Kozeny wire money to bank accounts "held for the benefit of relatives of Heydar Aliyev," Farrell said.

Farrell said that, three or four times, either Kozeny or an Azerbaijani official told him that Heydar Aliyev had instructed that money -- typically $1 million -- be sent to members of his family for "shopping sprees."

Another former Kozeny associate, Swiss lawyer Hans Bodmer, said in an affidavit that Kozeny gave him the task of creating Liechtenstein trusts for various Azerbaijani officials. The deputy chairman of the state committee overseeing privatization told Bodmer that the beneficiaries of the trusts were to include Sevil Aliyeva, daughter of then-president Heydar Aliyev, and Ilham Aliyev, Bodmer said. But the trusts were not finalized "because we never received the necessary information," Bodmer said.

Farrell pleaded guilty to violating the Foreign Corrupt Practices Act, and Bodmer pleaded guilty to conspiracy to launder money. Both have been cooperating with the U.S. government.

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