The state-owned oil company of Azerbaijan secretly funded an all-expenses-paid trip to a conference in Baku, on the Caspian Sea, in 2013 for 10 members of Congress and 32 staff members, according to a confidential ethics report obtained by The Washington Post. Three former top aides to President Obama appeared as speakers at the event.
Lawmakers and their staff members received hundreds of thousands of dollars’ worth of travel expenses, silk scarves, crystal tea sets and Azerbaijani rugs valued at $2,500 to $10,000, according to the ethics report. Airfare for the lawmakers and some of their spouses cost $112,899, travel invoices show.
The State Oil Company of the Azerbaijan Republic, known as SOCAR, allegedly funneled $750,000 through nonprofit corporations based in the United States to conceal the source of the funding for the conference in the former Soviet republic, according to the 70-page report by the Office of Congressional Ethics, an independent investigative arm of the House.
The report reflects the most extensive investigation undertaken by the ethics office, which was created seven years ago in response to a number of scandals on Capitol Hill, including lobbyist Jack Abramoff's illegal funding of lawmakers' trips.
The nonprofit corporations allegedly filed false statements with Congress swearing that they were sponsoring the conference. The findings have been referred to the House Ethics Committee for investigation of possible violations of congressional rules and federal laws that bar foreign governments from trying to influence U.S. policy.
SOCAR released a statement saying that its support of the conference was no secret and blaming the nonprofits for not filing the proper disclosures.
“At no time did SOCAR hide from the attendees of the conference our involvement,” the statement said. “SOCAR has never been under investigation in this matter because the responsibility for disclosing SOCAR’s financial support for the conference fell to those who were the trip’s sponsors.
“We have cooperated fully. We are therefore disappointed that the compliance procedures may not have been followed correctly by the trip’s sponsors and we are unclear why these disclosures were omitted.”
Tom Rust, chief counsel and staff director for the Ethics Committee, and Kelly Brewington, a spokeswoman for the Office of Congressional Ethics, declined to comment.
The conference, titled "U.S.-
Azerbaijan Convention: Vision for the Future," took place on May 28 and 29, 2013. During the previous year, SOCAR and several large energy companies sought exemptions for a $28 billion natural gas pipeline project in the Caspian Sea from U.S. economic sanctions being imposed on Iran.
The congressional investigators could not determine whether lawmakers used their official positions to benefit SOCAR or the pipeline project. They also found no evidence that the lawmakers or their staff members knew that the conference was being funded by a foreign government.
The investigators noted that the lawmakers relied on representations made to them by two Houston-based nonprofit corporations, the Turquoise Council of Americans and Eurasians (TCAE) and the Assembly of the Friends of Azerbaijan (AFAZ). The lawmakers told investigators that they had obtained approval for the trip from the Ethics Committee.
The report said members of the ethics panel wrote to the Office of Congressional Ethics requesting a halt to the investigation so that the matter could be taken up by their own committee. OCE officials declined the request. A government official who spoke on the condition of anonymity because of the sensitivity of the matter said OCE feared that the ethics panel, which has a reputation among watchdog groups for shielding lawmakers from embarrassing disclosures, would not take any meaningful action.
The pipeline has long been an important U.S. policy objective because it would bolster European security by offering an alternative to Russian gas.
One of SOCAR’s partners was the National Iranian Oil Company (NIOC), a relationship that had threatened to scuttle the deal if sanctions were approved without an exemption for the Shah Deniz Natural Gas Project. SOCAR and NIOC were partners with 10 percent of the project each, while BP and Norwegian-based Statoil each held 25.5 percent. Russian-based Lukoil also had a 10 percent share, and Turkish Petroleum Corp. had 9 percent.
Congress had approved two sanctions bills containing passages that exempted the project, which Obama signed into law in August 2012 and January 2013. On June 3, 2013, five days after the Baku conference, Obama signed an executive order assessing economic sanctions against Iran that also exempted the project.
The Post reported about the trip at the time, in an article noting that three former Obama political advisers — Robert Gibbs, Jim Messina and David Plouffe — spoke at the conference, which was attended by current and former members of Congress. Politico also wrote about the trip, and the Houston Chronicle reported that SOCAR had been a sponsor of the conference and raised questions about the nonprofits involved. Only one Western news organization covered the event, the Washington Diplomat, a monthly that writes about the diplomatic community in the nation's capital.
But no information surfaced at the time about the alleged $750,000 payment from SOCAR to the nonprofits. Ethics investigators obtained a wire transfer showing that SOCAR sent the $750,000 to AFAZ. SOCAR’s legal counsel told the investigators that the money was “dues” that were “intended to be used as funding for the Convention.”
The lawmakers who took the trip were Reps. Jim Bridenstine (R-Okla.), Yvette D. Clarke (D-N.Y.), Danny K. Davis (D-Ill.), Rubén Hinojosa (D-Tex.), Sheila Jackson Lee (D-Tex.), Leonard Lance (R-N.J.), Michelle Lujan Grisham (D-N.M.), Gregory W. Meeks (D-N.Y.) and Ted Poe (R-Tex.) and then-Rep. Steve Stockman (R-Tex.).
Clarke is a member of the Ethics Committee.
Another lawmaker, Rep. Michael R. Turner (R-Ohio), attended as part of a separate congressional delegation and his expenses were not paid by the conference, according to the report.
“My official visit was part of my House Armed Services and NATO responsibilities,” Turner told The Post in a statement. “The conference did not pay my expenses and I did not receive any gifts.”
Davis told The Post that the Ethics Committee approved the trip, which he took with his wife, and that he didn’t realize it had been funded by SOCAR. He said he saw the oil company’s logos in Baku, but “to be very honest about it, I didn’t pay them much attention, honestly.”
He also said that during the conference he received one rug, which was delivered to his hotel room and is in storage in his basement in Chicago. He said he is considering donating the rug to a museum or a charity.
Davis also said lawmakers should ask more questions about the source of funding for travel.
“Some of these things that we take sometimes for granted probably require a bit more investigation or more prudence,” he said. “So maybe we’ll exercise a bit more scrutiny. I will.”
Hinojosa, who attended the conference with his wife, said he was also unaware of SOCAR’s involvement.
“Prior to the trip to Azerbaijan and Turkey, I sought approval from the U.S. House Committee on Ethics to travel,” he said in a statement. “I believed the purpose of the trip was to strengthen U.S.-Turkey and U.S.-Azerbaijani relations. I received souvenirs of what I believed to be of minimal value and in compliance with the House Gift rule.”
The statement added: “Importantly, the report notes that there is no evidence to suggest that Members of Congress who went on the trip knew that impermissible sponsors and organizers may have been involved and that Members relied on the sponsors’ representations in good faith.”
Ladan Ahmadi, a spokeswoman for Meeks, said in a statement that the congressman “had no reason to believe that the trip was in any way inappropriate. He understood the rug to be a permissible courtesy gift.”
Glenn Rushing, the chief of staff for Jackson Lee, said in a statement: “Congresswoman Jackson Lee submitted to the House Ethics Committee all of the information available to her regarding sponsorship of this travel and received advance approval for this trip, in writing, from the House Ethics Committee, fully in accordance with House Ethics Rules. The congresswoman made this trip only because of the approval by the House Ethics Committee.”
Lance declined to comment, citing the ongoing ethics investigation. A senior staff member who spoke on the condition of anonymity said that the congressman was unaware SOCAR had sponsored the event and that he had returned the one rug he received after he got back to Washington. The staff member also said Lance received a pair of earrings and reimbursed the nonprofit group that helped organize the conference $100 immediately upon returning to New Jersey.
Clarke and Stockman did not respond to requests for comment.
Trip organized in plain sight
Although lawmakers told investigators that they were unaware that the Azerbaijani government had underwritten the trip through its oil company, investigators noted that SOCAR organized much of the conference in plain sight. The oil company issued invitations, sponsored visa entries for the lawmakers and staff members, and hung banners and placards emblazoned with SOCAR’s logo throughout the conference halls in Baku.
The investigators concluded in their report that “a person’s ignorance of the true source of travel expenses is not an absolute shield from liability for receipt of travel expenses from an improper source.”
Several members of the House Foreign Affairs Committee, which has oversight of U.S. relations with Iran and the economic sanctions, attended the conference. They included one of the panel’s most influential members, Poe, who chairs its subcommittee on terrorism, nonproliferation and trade.
The report said Poe was among those who did not fully cooperate with the Office of Congressional Ethics or did not acknowledge receipt of their request for information.
In a statement to The Post, Shaylyn Hynes, Poe's spokeswoman said, "Congressman Poe did cooperate," providing investigators with documents and answers to their questions.
“The House Committee on Ethics then requested that the OCE cease its review because it was conducting its own investigation,” Hynes’s statement said. “As a result, we alerted OCE that we were communicating and cooperating directly with the House Committee on Ethics, the official arbiter of House ethics matters.”
Hynes’s statement added that the congressman thought the conference was being sponsored by the nonprofits.
"In its report, the OCE clearly states it did not receive any evidence that the Congressman knew that TCAE was not the sole organizer or sponsor of the travel," Hynes's statement said. "The OCE further correctly found that 'Representative Poe acted in good faith reliance on information received from the purported trip sponsor and approval from the Committee on Ethics.' "
According to the report, three other lawmakers who took the trip also declined to cooperate with the ethics office or did not respond: Jackson Lee, a member of the Homeland Security Committee; Lance, a member of the Energy and Commerce Committee; and Meeks, a member of the Foreign Affairs Committee.
Lance’s staff member said the lawmaker had been ready to cooperate with the Office of Congressional Ethics when he was told by the House Ethics Committee that it would examine the case. Lance is now cooperating with that panel.
Meeks also provided documents to the OCE but did not give an interview to investigators after learning that the ethics panel was conducting its own investigation, his spokeswoman, Ahmadi, said in a statement.
“Congressman Meeks is committed to cooperate with the Ethics Committee in its review of this matter,” she said.
Several lawmakers said they thought they had properly reported their travel expenses on their disclosure forms. Several said they believed they did not need to disclose the gifts because their value did not exceed the $350 reporting threshold.
Lujan Grisham told ethics investigators that she did not disclose the rugs because she did not think they were particularly valuable. She also thought that they were unattractive.
“It’s not a carpet I would have purchased,” the congresswoman said.
A spokesman for Lujan Grisham told The Post that the congresswoman “takes House Ethics rules seriously” and sought approval for the trip by the House Ethics Committee.
“The Office of Congressional Ethics concluded, as reported by the news media, that Rep. Lujan Grisham was led to believe the travel was sponsored by a nonprofit organization, and not any other source,” Gilbert Gallegos, the spokesman, said in a statement. “Rep. Lujan Grisham acted in good faith as she relied on the approval by House Ethics Committee.”
In recent years, as relations between the United States and Iran have deteriorated over Iran’s nuclear ambitions, Congress and the Obama administration have stepped up economic sanctions. The government of Azerbaijan, which shares a border with Iran, hired several lobbying firms to build a better relationship with policymakers in Washington.
Considering new sanctions
As Congress weighed a new round of sanctions against Iran in 2012, SOCAR opened an office in Washington, buying a building in Dupont Circle for $12 million. On April 25 and 26, 2012, a conference called “U.S.-Azerbaijan Relations: Vision for Future” was held at the Willard InterContinental Hotel in downtown Washington.
Among the attendees were Poe, Meeks and Jackson Lee. Ethics investigators said it appeared that SOCAR was a “major funder” of the conference, citing interviews and photographs published on a Web site for the event that showed banners with SOCAR’s logos inside the hotel.
At the time, Congress was considering the Iran Threat Reduction and Syria Human Rights Act. The bill contained a provision that would exempt the gas pipeline project from Iranian sanctions. The provision said that “nothing” in the measure would apply to “the development of natural gas and the construction and operation of a pipeline to transport natural gas from Azerbaijan to Turkey and Europe.”
Three months later, on July 30, 2012, Obama signed an executive order authorizing additional sanctions against Iran and exempting the pipeline. On Aug. 1, Congress approved the sanctions legislation and the exemption. Obama signed it into law nine days later.
Before adjourning for Christmas, Congress approved another sanctions bill called the Iran Freedom and Counter-Proliferation Act, which was part of the National Defense Authorization Act of 2013. That bill also contained an exemption for the gas pipeline. On Jan. 2, 2013, Obama signed the legislation into law.
Soon, members of Congress began receiving invitations to attend a springtime conference in Baku, the Azerbaijani capital, known for its mix of medieval architecture and gleaming modern buildings along the shores of the Caspian Sea.
A month before the conference, the nonprofit AFAZ was set up in Houston, home to some of the world’s largest energy companies. “Evidence revealed that SOCAR founded AFAZ in the month prior to the Convention and transferred $750,000 to an AFAZ bank account prior to the Convention,” the OCE report said. AFAZ was created as an “educational, cultural, business, congressional advocacy and charitable organization” with the mission of building “bridges between the United States and Azerbaijan,” according to the nonprofit’s Web site.
The investigators for the Office of Congressional Ethics found that AFAZ and the other Houston-based nonprofit, TCAE, concealed the true source of the funding for travel and other expenses for the U.S. officials.
“The OCE found that the disclosed nonprofit sponsors contributed virtually no money towards congressional travel to Azerbaijan and played a very limited role in organizing the Convention,” the report said.
On April 16, 2013, Kemal Oksuz, an executive in charge of the nonprofits, wrote to the president of SOCAR, requesting $750,000 to underwrite the conference, according to the report. In return, Oksuz pledged that SOCAR’s “logo will be used on all printed materials, banners and website, and that SOCAR will be recognized as the Main Sponsor of the Convention.”
On May 13, SOCAR transferred $750,000 into the Wells Fargo account of AFAZ, according to the report. Three days later, AFAZ made its first money transfer to pay for the plane tickets for the conference attendees.
“SOCAR and AFAZ provided gifts in the form of impermissible travel expenses to congressional travelers in violation of House rules, regulations and federal law,” the ethics investigators said.
Oksuz did not respond to requests for comment.
No funding from ‘sponsors’
Last summer, the Houston Chronicle published an examination of the Baku conference and interviewed Oksuz. He told the newspaper that he was not required to disclose corporate sponsorships because “those contributions always came after the conventions.”
The investigators said five nonprofits affiliated with the Azerbaijani government said they sponsored the conference, filing sworn statements with the Ethics Committee in April and May 2013.
“The five sponsoring organizations contributed no funding for the congressional travel in spite of false affirmations on the forms they submitted to the Committee on Ethics,” the investigators wrote in the report.
SOCAR assembled a list of lawmakers, other U.S. officials and private individuals it wanted to attend the three-day conference. The oil company invited more than 30 people to speak in Baku, according to the report, including Gibbs, Messina and Plouffe. SOCAR also invited Richard G. Lugar (R-Ind.), a former chairman of the Senate Foreign Relations Committee, who had lost his reelection campaign in 2012.
In addition to SOCAR, BP, ConocoPhillips and KBR also helped to underwrite the costs of the conference, estimated at $1.5 million. Those costs included $100,000 for hotel accommodations, $75,000 for food and entertainment, and $1.2 million for travel and other expenses.
Several members of Congress and their staff members also took side trips to Turkey, traveling to Istanbul, Ankara or both, the investigators found. They included Clarke, Hinojosa, Lance and Lujan Grisham.
The Bosphorus Atlantic Cultural Association of Friendship and Cooperation, a Turkish nonprofit organization, covered the expenses, the report said. The lawmakers did not disclose the role of that nonprofit.
“Members of Congress who traveled to Turkey accepted payment of travel expenses from impermissible sources, resulting in an impermissible gift, in violation of House rules and regulations,” the report found.
Investigators also said lawmakers received a number of gifts, including crystal tea sets, briefcases, silk scarves, turquoise earrings, gold-painted plates and Azerbaijani rugs. Some congressional staff members told the investigators they thought that the rugs were worth about $300 — $50 below the reporting threshold — and that they didn’t need to disclose them on their forms filed with the Ethics Committee.
The report said “evidence suggests” that all lawmakers received at least one rug and some got two, one prayer-size and one area rug. Many staff members also received rugs.
Only one lawmaker, Bridenstine, disclosed the rugs on his financial forms. He had them appraised: the smaller rug at $2,500 and the larger at $3,500. In a July 2013 letter to the Ethics Committee, he said he wanted to donate the larger rug to the House Clerk’s Office.
Bridenstine was the only lawmaker to offer to pay for the rugs out of his own pocket, telling the committee that he would like to purchase the smaller rug “at fair market value.”
But, ultimately, he decided not to keep the rugs.
“Having sought advice from the Committee on Ethics, I determined the best course of action was to return the rugs and I did so,” he said in a statement to The Post. “I also received a porcelain tea set which was valued at $87, well under the Foreign Gifts Disclosure Act rules, and an educational book and four local traditional music CDs.”
Amy Brittain, Kimbriell Kelly, Robert O’Harrow Jr. and Steven Mufson contributed to this report.