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Pricey real estate deals in Dubai raise questions about Azerbaijan's president

By Andrew Higgins
Friday, March 5, 2010; A01

DUBAI, UNITED ARAB EMIRATES -- Even by the standards of a city that celebrates extravagance, it was a spectacular shopping spree: In just two weeks early last year, an 11-year-old boy from Azerbaijan became the owner of nine waterfront mansions.

The total price tag: about $44 million -- or roughly 10,000 years' worth of salary for the average citizen of Azerbaijan. But the preteen who owns a big chunk of some of Dubai's priciest real estate seems to be anything but average.

His name, according to Dubai Land Department records, is Heydar Aliyev, which just happens to be the same name as that of the son of Azerbaijan's president, Ilham Aliyev. The owner's date of birth, listed in property records, is also the same as that of the president's son.

Officials in Baku, the capital of Azerbaijan, declined to comment on how the president's son -- or at least an Azerbaijani schoolboy with the same birth date and the same name as the son's -- came to own mansions on Palm Jumeirah, a luxury real estate development popular with multimillionaire British soccer stars and others with cash to burn. Ilham Aliyev's annual salary as president is the equivalent of $228,000, far short of what is needed to buy even the smallest Palm property.

Azer Gasimov, the president's spokesman, declined to discuss the Dubai real estate purchases. "I have no comment on anything. I am stopping this talk. Goodbye," he said when contacted by telephone and told about the names on the property records. Gasimov did not respond to requests for further comment sent by fax, e-mail and cellphone text message.

Azerbaijan, a former Soviet republic blessed with plentiful oil and gas reserves yet blighted by widespread poverty outside its glitzy capital, has long had a reputation for corruption. But the Dubai purchases, which have not been reported before, could provide a rare concrete example of just how much money the country's governing elite has amassed and of the ways in which at least part of this wealth has been stashed overseas.

Problem for Washington

The transactions sharpen a dilemma that has shadowed Washington's relations with Azerbaijan for years: how to reconcile the United States' security and energy interests in the oil-rich Caspian Sea nation with what the State Department, in a report last year on human rights around the world, described as the "pervasive corruption" of its increasingly authoritarian regime.

Azerbaijan has sent troops to support U.S. democracy-building efforts in Afghanistan and Iraq but at home has retreated steadily from democratic practices, according to diplomats and experts on the region. Transparency International, in a 2009 survey of global corruption, ranked Azerbaijan among the worst at 143 out of 180 nations.

In addition to recording nine properties owned by Heydar Aliyev, the now-12-year-old schoolboy, Dubai's Land Department also has files in the names of Leyla and Arzu Aliyeva. President Aliyev has two daughters with the same names and roughly the same ages. Their exact dates of birth could not be established, but various reports indicate Leyla's birthday is the same as that of the Azerbaijani woman who figures in the Land Department records.

In all, Azerbaijanis with the same names as the president's three children own real estate in Dubai worth about $75 million, property data indicate. Dubai real estate dealers with knowledge of some of the transactions said the purchases were made by a buyer representing Azerbaijan's ruling family. The dealers said the properties were paid for upfront.

Ali Kerimli, chairman of the Azerbaijani Popular Front, an opposition party, said in a telephone interview, "We all know that our country is one of the most corrupt." But when told about the Dubai purchases, he added that he was surprised at the apparent lack of effort to conceal them.

Azerbaijan's leaders, Kerimli said, "face no danger" because the judiciary, anti-corruption bodies and most of the country's media outlets are firmly under their control.

The rush to move assets overseas, often with scant regard for returns, is a common feature of many oil-producing nations, where corrupt elites seek to ensure that their wealth is safe just in case political winds at home change. The phenomenon is part of the "resource curse," an ailment that has deformed the economies and politics of corruption-addled, oil-producing nations from Nigeria to Venezuela.

Kerimli said Washington paid too much attention to security and energy issues and thus "sent a signal to our country that democratic reform is not important." When Richard B. Cheney visited Baku as vice president in 2008, he not only held talks with President Aliyev focused on energy but also met with executives of BP and the U.S. oil company Chevron, both of which have operations in Azerbaijan, as do Exxon and other foreign oil companies. Azerbaijan and the United States, Cheney said, "have many interests in common."

The Obama administration has also focused on strategic issues in its relations with Azerbaijan. On a visit to Baku two weeks ago, William J. Burns, undersecretary of state for political affairs, praised Azerbaijan for supporting the United States in Afghanistan and trumpeted the role of a U.S.-backed oil pipeline from Baku to Turkey that broke Russia's stranglehold on energy exports from the Caspian Sea.

In a speech, Burns avoided direct criticism of Azerbaijan, noting only: "We also believe that the strengthening of democratic institutions, rule of law and respect for human rights will have a positive effect on the future of this country."

The Aliyev government and its supporters, meanwhile, have tried to burnish Azerbaijan's image, sponsoring trips to Baku by prominent foreigners and hiring lobbyists to trumpet the country's achievements. David Plouffe, President Obama's former election campaign manager, visited Baku last year to deliver a paid-for speech; a few months later came former British prime minister Tony Blair, who also received a fee to speak. Plouffe declined to comment about his trip.

All in the family

Azerbaijan, which became an independent nation with the collapse of the Soviet Union in 1991, has been ruled almost continuously by the same family. Aliyev took over from his father, Heydar Aliyev, who was president from 1993 until his death in 2003.

The Aliyev family's long grip on power has provided a measure of stability and robust, energy-fueled economic growth in a country that shares borders with Iran and Russia. But it has also left Azerbaijan riddled with graft and a culture of impunity.

The role played by the Aliyev family at the center of this system figured prominently in the New York trial last year of Frederic A. Bourke Jr., an American millionaire convicted of violating the Foreign Corrupt Practices Act as a result of bribes paid in Azerbaijan. Bourke has appealed his conviction.

The case related to an abortive attempt in the 1990s to buy Azerbaijan's state oil company, SOCAR, where Aliyev, now the country's president, was then a senior executive. In courtroom testimony and an affidavit filed with the court, Thomas Farrell, a Virginia businessman involved in the failed scheme, told of large illicit payments that he thought were destined for "the family."

Farrell, in his affidavit, related how Heydar Aliyev, the father, "had directed that we wire transfer sums of money into bank accounts held for the benefit of relatives of Heydar Aliyev." Farrell also told that he had been "instructed that money be sent to members of Heydar Aliyev's family for 'shopping sprees.' Typically the amount of money requested was $1 million."

These alleged payments, however, are dwarfed by the amounts invested in a series of Dubai real estate deals that, according to property records, began in 2008 and reached their climax in January and February last year.

The Dubai properties registered in the names of three people with the same names as President Aliyev's children cost roughly 330 times his annual salary.

Some members of the family, however, do have money. The president's older daughter, Leyla, is married to Emin Agalarov, a wealthy Russian businessman, and relatives of the first lady, Mehriban, have lucrative business interests in Azerbaijan. Agalarov declined to comment when asked whether he had helped buy Dubai properties for his wife or Aliyev's other children. He said he had "joined businesses and properties" with his wife but did not elaborate, saying in an e-mail: "We wish not to comment on that."

Sabit Bagirov, a former head of SOCAR, the oil company, said that he did not know whether the Aliyevs own property in Dubai but that it would be highly unusual for them to register any such property purchases under their real names. "They would not do this so openly. It could be a provocation," he said, suggesting that the regime's enemies may have staged the Dubai deals to embarrass Aliyev. Bagirov declined to elaborate.

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