Eurasia Press & News
The U.K.’s National Crime Agency successfully argued in a High Court case in London that accounts at the Banque Internationale à Luxembourg were used to move millions from a high profile embezzlement case in Azerbaijan into expensive properties.
Accounts at a major Luxembourg bank played a “central” role in moving funds from an embezzlement scheme that led to the imprisonment of the former chairman of the International Bank of Azerbaijan, Jahangir Hajiyev, according to the U.K.’s National Crime Agency (NCA).
The claim by the NCA sheds light on how tens of millions of dollars stolen from Azerbaijan’s most important state-owned bank ended up in the heart of Europe — and were used to fund a property-buying spree by Hajiyev and his family.
The evidence presented by the NCA was given in a sworn statement in June 2023 to support its claim for the forfeiture of high-value U.K. properties belonging to Hajiyev’s wife, including a luxury London townhouse and a golf club in Berkshire. The court “concluded that the properties were purchased as a result of criminal activity” in August, the NCA said in a statement, and Hajiyeva agreed to the forfeiture of the properties. The court did not make a ruling on the Luxembourg bank’s alleged role in the scheme.
A 242-page witness statement from an NCA investigator, obtained by OCCRP, lays out evidence that almost all the funds the Hajiyev family used to buy the golf club came from an account at Banque Internationale à Luxembourg. The account was held by VES Consultancy, a company owned by an Azerbaijan-born French citizen that was “at the heart of” large-scale laundering of funds stolen from the International Bank of Azerbaijan (IBA) and funneled into Europe, the NCA said.
The Baku Connection
This story is part of The Baku Connection, a collaborative journalistic effort led by the Paris-based Forbidden Stories. As part of the project, a group of media partners, including Abzas Media, D’Lëtzebuerger Land, and France 24, is following up on reporting done by jailed journalists from Azerbaijan-based outlet Abzas Media to ensure that their arrests do not put an end to their work.
Hajiyev has been jailed in Baku for embezzling over $3.5 billion from the bank he led. During his 14 years at the helm of the IBA, it also became a central part of a money-laundering scheme known as the Azerbaijani Laundromat, which moved huge sums of money from the South Caucasus state into Europe on behalf of Azerbaijani elites. (The bank has since been rebranded, and is now known as ABB.)
But while Hajiyev’s conduct has been heavily scrutinized, less attention has been paid to the people and institutions that made it possible for him to move so much stolen money around the world.
The NCA alleged that Khagani Bashirov, a French citizen and VES Consultancy’s owner, acted as a key enabler for Hajiyev, setting up a globe-spanning corporate network that handled money siphoned out of the bank.
At least $175 million moved through VES Consultancy’s accounts at Banque Internationale à Luxembourg from 2011 to 2015, including around $14 million that the NCA alleged originated from the International Bank of Azerbaijan. Another nearly $450 million moved through other VES Consultancy accounts between 2005 and 2015, the NCA claimed.
Bashirov has said in interviews that he is innocent of any crime and merely acted as a “fiduciary” for Hajiyev.
Although Bashirov controlled companies across the world, Luxembourg was at the heart of his business operations, with hundreds of bank accounts there, the NCA claimed. He even set up a fiduciary firm in Luxembourg, whose purpose, according to the agency, was to enable embezzlement out of Azerbaijan by making it easier to create shell companies and have full control over their accounting.
In an interview for this story, he told journalists that he opened accounts with Banque Internationale à Luxembourg because it was “one of the best banks” in the country and blamed the bank for accepting his transactions without raising concerns.
“Listen, if a banker forbids a transaction, I won’t do it. If a lawyer, an accountant, tells me, ‘Mr. Bashirov, you’re wrong.’ I won’t do it. And when everyone was telling me everything was fine for 15 years and suddenly in 2019 a criminal case is brought against me … that’s not right.”
"
Listen, if a banker forbids a transaction, I won't do it.... [E]veryone was telling me everything was fine for 15 years.
"
Khagani BashirovEka Rostomashvili, corrupt money flows campaigns lead at Transparency International, said the NCA’s evidence raised questions about the regulatory oversight of Luxembourg’s often-criticized banking sector.
Banque Internationale à Luxembourg was fined 4.6 million euros ($4.95 million) by Luxembourg’s financial regulator in 2020 after inspections in 2017 and 2018 found weaknesses in its anti-money laundering procedures for high-risk clients from the Commonwealth of Independent States — a grouping that includes Azerbaijan and other former Soviet republics.
But no actual money laundering was identified, the bank said in a press release published at the time, adding that it had improved its anti-money laundering protocols since then.
Rostomashvili said the NCA evidence should prompt a closer look at the bank’s internal controls. “If a bank is found to have weaknesses in its anti-money laundering processes, promises to strengthen compliance going forward are not enough”, she said.
It is unclear whether Banque Internationale à Luxembourg ended its relationship with Bashirov’s VES Consultancy or alerted authorities to suspicious activity on the company’s accounts. Azerbaijan’s commercial registry shows that VES Consultancy is no longer active.
Bashirov was charged last month with money laundering, forgery, and abuse of professional obligations, according to Diane Klein, a spokesperson for Luxembourg’s judicial administration.
Bashirov called the case “absurd,” and insisted he would be absolved. “I’m very sorry I chose Luxembourg,” he told journalists. “I’d never have chosen it if I knew what awaited me… England has nothing against me, Belgium has nothing against me, Cyprus has nothing against me, Azerbaijan, Russia, others, and suddenly, Luxembourg, a little pimple like that sticks out.”
Stéphanie Tosato, the head of corporate communications for Banque Internationale à Luxembourg, did not respond directly to questions on the accounts Bashirov had used to funnel money to the disgraced Azerbaijani banker.
She said the bank was “a responsible member of the financial community” that was committed to “upholding the highest standards of compliance and transparency in all its processes,” and that it was serious about combating money laundering.
Hajiyev and the U.K.’s First ‘Unexplained Wealth Order’
The forfeiture of the golf course and a 14-million-pound ($18-million) house in the upscale London district Knightsbridge marked an end to years of proceedings surrounding the U.K.’s first-ever Unexplained Wealth Order, a tool allowing law enforcement to target assets suspected of being purchased with the proceeds of crime.
The National Crime Agency had challenged Hajiyev’s wife, Zamira Hajiyeva, in 2018 to prove that her costly U.K. properties were bought with legally earned funds.
Ultimately, in August, London’s High Court concluded that the golf course and London home were actually bought with money transferred from the International Bank of Azerbaijan, although it made no finding about Hajiyeva’s knowledge of how they were paid for.
Lawyers for Hajiyeva published a statement in August explaining that their client had settled the “unexplained wealth” proceedings “because it proved impossible to defend them.”
They argued that Azerbaijani authorities had denied Hajiyeva’s legal team access to her husband, who was therefore unable to review specific allegations and provide “information potentially crucial to the case.”
“I Suggested to Him That He Use Me”
Bashirov set up VES Consultancy in 1991, when Azerbaijan became an independent state for the first time in decades after the breakup of the Soviet Union. Armed with a degree in French and keen to make his mark, he thought his language skills might set him apart in the newly capitalist economy.
“I thought, ‘I need to create my own business,” Bashirov told Azerbaijani journalist Eynulla Fatullayev in an interview last year. “Since I didn’t have any money, the only business that would work for me was consulting — so that, using my intellect, I could make some money.”
He named his new company VneshExpertService — “vnesh” means “external” in Russian, a trendy prefix at the time for companies looking to capitalize on Azerbaijan’s newfound openness — and it marketed itself as a source of steady guidance for foreign businesses confounded by the turbulence of the post-Soviet ’90s.
A few years later, Bashirov met Hajiyev, who at the time was still a bureaucrat in Azerbaijan’s Ministry of Foreign Economic Relations, which shared an office building with VES Consultancy, and they became friends.
Bashirov moved to Europe around the turn of the century, and with Hajiyev now in a senior position at the IBA, the men decided to deepen their cooperation, he told the interviewer.
“Hajiyev and I had already established friendly relations… I suggested to him that he use me — why not, since I’m here — if there are any interests at all. And then the idea arose: Why not invest in foreign projects and lend them money, have IBA finance them through companies I would create abroad?”
This is exactly how billions were siphoned out of the bank, according to a 2018 indictment against the bank chairman: Hajiyev would allegedly channel bank funds towards supposed international projects by giving loans to dozens of companies registered in different jurisdictions across the world.
VneshExpertService Consulting was renamed VES Consultancy LLC in 2006 — not long after it appears to have become little more than a conduit for laundering “huge sums in dollars, euros, and sterling on behalf of Mr. Hajiyev,” according to the NCA.
In order to move the money out of Azerbaijan, the IBA’s Moscow branch would issue loans to companies set up by Bashirov, according to a statement he gave to Luxembourg police cited by the NCA.
These loans were ostensibly to make investments, but they were never repaid — and when the Azerbaijani government looked into them, it found that the money had not been kept track of, and that some of the investments didn’t exist at all.
Some of these companies then loaned money on to VES Consultancy, the company that banked at Banque Internationale à Luxembourg. VES justified this to the bank by proffering fake loan agreements.
“But there was no plan in place to repay the monies,” the NCA said.
Who Really Owned VES Consultancy?
By all accounts, Bashirov set up VES and was initially its sole owner, but both he and Hajiyev himself have claimed at various times that Hajiyev was also an owner of VES. (Azerbaijan does not make corporate records publicly available, making it difficult for journalists to determine who held shares in the company.)
Bashirov told the NCA that in 1999, he sold 40 percent of the company to Hajiyev and 40 percent to another individual, retaining just 20 percent for himself.
And in a 2011 document declaring where Hajiyev’s personal wealth came from, the ex-state banker’s family wealth manager wrote that he had earned it through his “founding stake” in VES Consultancy.
Whoever really owns the company, it seems clear that by the 2010s, VES was used as a way for Hajiyev to move money.
“The funds received for VES Consultancy LLC were never its funds. It was money coming from various companies with direct or indirect relation either to the IBA or to Hajiyev,” Bashirov told the NCA.
Bashirov also opened another firm of a similar name in the British Virgin Islands, which was presented as a consulting company. But in fact, it had zero employees and “very few” clients other than IBA and also functioned “as a payment instrument” for the bank, he admitted to Luxembourg police in an interview quoted by the NCA.
VES Consulting BVI frequently served as an intermediary point for funds moving out of Azerbaijan before sending them on to VES Consultancy in Luxembourg.
As the money was allegedly being laundered through Luxembourg, Bashirov was carving out a niche as Azerbaijan’s go-to man in the duchy, according to interviews with people who knew him there.
He co-founded the Luxembourg-Azerbaijan Chamber of Commerce in 2007 and created an Azerbaijani cultural association, Karabagh. Photos and videos posted online show him hobnobbing with VIPs at a 2016 art exhibition and hosting a delegation of Azerbaijani members of parliament in 2019.
“It was a way for him to meet and invite personalities, deputies, ministers, etc,” said Jacques-Yves Henckes, a former member of parliament and Bashirov’s partner in founding the Chamber of Commerce.
He was also putting down business roots, setting up a Luxembourg fiduciary firm called Fortrust Global. The NCA claims he used Fortrust to create even more new companies — and provide them with in-house accounting services, “thereby avoiding any independent oversight.”
Bashirov integrated well. He became a regular at the Casa del Habano, a cigar bar favored by top politicians, Henckes said, and was known for his love of “wine and good food,” according to local chef and media personality Lea Linster.
But in 2019, with Hajiyev jailed in Azerbaijan and the NCA investigating his wife’s assets in the U.K., Luxembourg launched its own investigation into whether Bashirov had laundered funds. He told OCCRP last year that his business and personal bank accounts had been shut down, and he had been forced to leave the duchy and move to Turkey.
“Bankers everywhere are bothering me with questions about articles that have been published,” he said.
From a Luxembourg Bank to a Berkshire Golf Club
After IBA money arrived in Luxembourg, Bashirov helped use portions of it to purchase properties on behalf of Hajiyev and his family, according to the NCA.
The agency’s court evidence said at least 12 million British pounds and 11 million euros that passed through VES Consultancy’s accounts in Luxembourg were ultimately used to buy high-end properties for the Hajiyev family, including others in the U.K. that were not part of the Unexplained Wealth Order because they had already been sold.
Tracing the money back to its origin was not simple. It often zipped around the world, through multiple jurisdictions, and passing through many different companies, before ending up in the U.K.
For example, the Mill Ride Golf Club in Berkshire was purchased for 10.7 million British pounds in 2013, using what the NCA described as “a complex structure of Luxembourg and Guernsey-registered companies,” as well as offshore trusts in Guernsey and Cyprus.
The ownership structure of the golf club was made so complex that, after Hajiyev’s arrest, the people administering the trusts became “unable to deal with this high-value asset,” the NCA said.
“Mill Ride Golf Club was purchased in a manner designed to create maximum distance between Mr. and Mrs. Hajiyev and the property,” the NCA said.
The court evidence alleged the money moved around the world in multiple steps:
First, the Luxembourg company that directly bought the club, Semfra, sent the vast majority of the funds to the U.K. in three tranches in 2013.
Semfra had just received nearly the exact same amounts, also in three tranches, from another Luxembourg company, Solaz Energy, which had received the funds from VES Consultancy’s accounts at the Banque Internationale à Luxembourg.
This money, in turn, had been sent from the similarly named VES Consulting in the British Virgin Islands.
The NCA alleged that the money had moved to VES Consulting in the British Virgin Islands from Azerbaijan in four parts, via multiple shell companies in other jurisdictions. These companies, the NCA said, were all “associated” with Bashirov.
A portion also came from a U.S. company that loaned money to a U.K. subsidiary of a Luxembourg company 90-percent owned by Bashirov. The loan was then repaid by VES Consulting BVI and other conduits for stolen funds, according to the NCA.Bashirov has acknowledged setting up many of the companies through which IBA funds flowed but insists that he did not play any role in stealing the money. His actions were all dictated by Hajiyev, he has repeatedly insisted.
But although the two men’s friendship had endured for two decades, it ended in November 2015, Bashirov has said — the month before Hajiyev was arrested for embezzlement.
“Our part was only this: To organize companies, to arrange for investments to go through these companies. This is not a withdrawal of money, these are real investments that went into real projects,” he told the Azerbaijani interviewer last year.
“What happened to this money after it went into the project? That’s not my department.”
