Arms Shipment from Israel to Azerbaijan: Suspicious Deals and Offshore Intermediaries

At the end of last week, Armenia recalled its ambassador from Israel. The reason was Israel's arms supply to Azerbaijan, which was being used in Nagorno-Karabakh. Hetq.am has reported on the secret details of the arms supply from Israel to Azerbaijan, including suspicious deals and offshore intermediaries.

For many years, Israel has been supplying arms to Ilham Aliyev's regime, but documents related to these transactions have only recently become available to journalists. On September 20 of this year, over 400 journalists from more than 90 countries published a joint investigation into suspicious transactions exceeding two trillion dollars that had passed through American banks. This project was based on secret documents from the U.S. Financial Crimes Enforcement Network (FinCEN).

Istories discovered secret financial details regarding the supply of munitions from Israel to Azerbaijan within the FinCEN archives. Russian journalists have established that the Israeli state companies supplying munitions to Azerbaijan have paid millions of dollars to offshore intermediaries connected to President Ilham Aliyev. Israeli arms sellers transferred funds intended for offshore intermediaries to the Russian bank "Международный финансовый клуб," whose shareholder is the wife of Sergey Chemezov, the head of the Russian state company "Ростех." Chemezov was previously a colleague of Vladimir Putin in the KGB.

In December 2017, employees of The Bank of New York submitted a report to FinCEN about potential money laundering involving more than 100 million dollars. In particular, the transactions of the Israeli state company Israel Military Industries Ltd (IMI Systems Ltd) with the offshore company Jetfield Network, registered in the British Virgin Islands, attracted the attention of American bank employees. Between January and June 2017, IMI Systems Ltd paid approximately five million dollars to Jetfield Network.

IMI Systems Ltd is entirely owned by the State of Israel. According to reports from American diplomats published by WikiLeaks, this company has been providing Azerbaijan with multiple rocket launchers, including Grad and Lynx systems, which are actively used in the ongoing fighting in Nagorno-Karabakh.

Despite being registered in the British Virgin Islands, Jetfield Network has utilized the services of the Russian bank "Международный финансовый клуб." The main shareholder is businessman Mikhail Prokhorov, who owns 47.8 percent of the shares. Another 6.5 percent of the shares belong to Ekaterina Ignatova, the wife of "Ростех's" head Sergey Chemezov.

Employees of The Bank of New York had previously sent inquiries in 2016 to "Международный финансовый клуб" to understand why the British Virgin Islands-registered company was utilizing the services of a Russian bank and received funds from the Israeli arms supplier to Azerbaijan. American partners were informed by "Международный финансовый клуб" that Jetfield Network had been using their services since August 2015, and the company's primary activity was providing consulting and marketing services; its sole owner is a citizen of Azerbaijan named Javid Huseynov. Given the nature of Jetfield Network's operations, Huseynov might merely be acting as a nominal owner.

The Organized Crime and Corruption Reporting Project (OCCRP) was able to determine that Jetfield Network is directly linked to Azerbaijani authorities and has been used by them to bribe European politicians. In particular, as revealed by the Italian prosecution, Jetfield Network made payments in 2013 to companies associated with Luca Volontè, the former president of the European People's Party and a member of the Parliamentary Assembly of the Council of Europe (PACE). Volontè is accused of corruption in connection with these payments. According to the prosecution, he attempted to deny facts presented in a PACE report that criticized Azerbaijani authorities for political prisoners and other human rights violations.

Italian prosecutor confiscated letters indicate that Ilham Suleymanov, the representative of Azerbaijan to PACE, was behind the payments made on behalf of Jetfield Network. Payments to Volontè were part of a large-scale initiative titled "Azerbaijan-2020: Smiling Towards the Future." As reported by OCCRP, citing confiscated letters from the Italian prosecutor, the project's goal was to improve Azerbaijan's international image, which had severely declined due to the persecution of independent journalists, repression of the opposition, and human rights violations. This plan was a personal initiative of Azerbaijan's President Ilham Aliyev.

It became clear from the secret documents of U.S. financial investigations that Jetfield Network was used by Aliyev's regime not only to bribe European politicians but also to receive suspicious payments from the Israeli arms supplier. A significant role in this was played by the Russian bank owned by Chemezov's wife.

Jetfield Network received money not only from the Israeli multiple rocket launcher supplier but also from another weapons manufacturer, Israel Aerospace Industries Ltd. Azerbaijan actively uses IAI's combat UAVs in the battles in Nagorno-Karabakh. A few days ago, in an interview with the Israeli Walla news site, Azerbaijan's presidential advisor Hikmet Hajiyev praised the combat quality of these drones. "If the Armenians are afraid of these drones, they should stop the invasion," he said.

As reported by The Times of Israel, IAI has paid a total of 155 million dollars to Jetfield Network and another offshore company connected to Azerbaijani authorities. Notably, these suspicious payments began after IAI signed a contract with Azerbaijan for the supply of munitions totaling 1.6 billion dollars in 2012. Istories has uncovered other transactions related to Azerbaijan that IAI conducted with other companies, which had not been previously reported. From June 2016 to May 2017, IAI paid 2.8 million dollars to a company named Bakinshaat Group Ltd, registered in the British Virgin Islands. The company specializes in construction and participates in several state projects in Azerbaijan.

Moreover, reports of suspicious transactions indicate that Bakinshaat Group Ltd was serviced by the same "Международный финансовый клуб" bank to which payments were also made by the Israeli rocket systems supplier to Azerbaijan. As also noted by The Times of Israel, Israel joined the OECD Convention on Combating Bribery of Foreign Public Officials in 2009. Therefore, if Israeli law enforcement authorities prove that payments from Israeli state companies to offshore companies connected with Aliyev's regime could serve as kickbacks for arms supply, it could lead to a criminal case being initiated.

What role could the Russian bank play in this chain of arms sales involving Israeli state companies, offshore intermediaries, and Azerbaijani authorities? In an interview with Istories, the owner of one Russian bank—who preferred to remain anonymous for security reasons—speculated that the leadership of "Международный финансовый клуб" and individuals who could be behind the offshore intermediaries might have close relations since in such "delicate transactions,” where arms supplies and payments to offshore intermediaries are involved, it is crucial to establish reliable relationships with bankers to prevent immediate seizures of transfers. The "Международный финансовый клуб" bank could make sense as a choice for companies engaged in arms supply schemes because one of its shareholders, Ekaterina Ignatova, is the wife of the head of the state company "Ростех." It should be noted that "Ростех" includes "Рособоронэкспорт," the main exporter of Russian arms.

"Рособоронэкспорт" has also used "Международный финансовый клуб" bank for transactions that raised suspicions among American banks. For instance, "Рособоронэкспорт" paid someone close to the President of Indonesia, a country purchasing Russian fighter jets and other military technology.

"Международный финансовый клуб" bank has not responded to Istories' inquiries.

The story of arms supply from Israel to Azerbaijan best illustrates the thesis that corruption kills. If arms are sold to dictators, allowing offshore intermediaries connected to these dictators to profit, and these funds are then used to "buy" politicians worldwide to improve their image, sooner or later, the dictators will start killing with that very weaponry. In this case, the focus is not only on Azerbaijan.