Promoting ”Family Values” in Baku: Swedish telecom company TeliaSonera’s alleged involvement in another corruption scandal Reviewed by Momizat on . [caption id="attachment_5497" align="alignnone" width="615"] In the Azerbaijan instance, it is alleged that TeliaSonera financed and aided the Azeri President's [caption id="attachment_5497" align="alignnone" width="615"] In the Azerbaijan instance, it is alleged that TeliaSonera financed and aided the Azeri President's Rating: 0

Promoting ”Family Values” in Baku: Swedish telecom company TeliaSonera’s alleged involvement in another corruption scandal

In the Azerbaijan instance, it is alleged that TeliaSonera financed and aided the Azeri President's family in taking over the state's stake in Azerbaijan's largest telecoms company and received preferential treatment in return. According to TeliaSonera`s website, after the oil sector, the telecommunication industry is the largest in Azerbaijan.

In the Azerbaijan instance, it is alleged that TeliaSonera financed and aided the Azeri President’s family in taking over the state’s stake in Azerbaijan’s largest telecoms company and received preferential treatment in return. According to TeliaSonera`s website, after the oil sector, the telecommunication industry is the largest in Azerbaijan.

TeliaSonera, the Swedish multinational mobile telecoms operator, currently embroiled in bribery and corruption allegations involving the Uzbekistan leader`s daughter, is also being scrutinised over its activities in another Eurasian market, this time, Azerbaijan.

The importance to TeliaSonera of the Eurasian market, which includes, inter alia, Azerbaijan, Kazakhstan and Uzbekistan, can be gleaned from a perusal of the operator`s half year accounts for 30 June 2015.

This segment accounted for 20.6 percent of Group revenues for 1H 2015 (1H 2014 – 19.1 percent), 33.6 percent of EBITDA (1H 2014 – 30.7 percent), and 36.9 percent of operating income (1H 2014 – 28.2 percent). Thus, not only is this market an important contributor to the Group`s results but it appears to be increasing in its importance as other markets, in Sweden and Europe, falter.

The allegation over TeliaSonera`s activities in Azerbaijan interestingly mirror some elements of the scheme noted in Uzbekistan.

In the Azerbaijan instance, it is alleged that TeliaSonera financed and aided the Azeri President’s family in taking over the state’s stake in Azerbaijan’s largest telecoms company and received preferential treatment in return. According to TeliaSonera`s website, after the oil sector, the telecommunication industry is the largest in Azerbaijan.

Azercell, with nearly half of the market, was established in 1996 by the government of Azerbaijan and its parent company Azertel, which at that time was a subsidiary of Turkcell in Turkey.

Since then, TeliaSonera has bought shares in Azercell through an offshore subsidiary called Fintur Holdings. TeliaSonera directly owns 38.1 percent of Azercell, but through other entities, actually owns 69.5 percent.

It is understood that one of TeliaSonera’s holding companies bought the Azeri state stake in the local telecoms company Azercell in 2008 at a heavy discount and arranged its transfer to the Aliyev family, as follows:

  • In 2008, the government of Azerbaijan sold its 35.7 percent share of Azercell to its Turkish-Swedish-Panamanian partner, Azertel for USD 180 mln.
  • After the Azertel partners each raised their investment stakes by varying amounts, Fintur Holdings owned 51.3 percent, Cenay Iletisim owned 42.2 percent, and Cenay Insaat owned 6.5 percent.
  • As a result, TeliaSonera entity forfeited the stake in a complex web of transactions, handing it to its partner Cenay Iletisim, which it is reported had close ties to the Azeri President’s daughters, Leyla and Arzu Aliyeva.
  • According to Azertel financial reports listed in the Turkish Official Business Gazette, from 2006 to 2012 Cenay Iletisim received dividends worth at least  USD 249 mln while investing only USD 95 mln, for a profit of USD 154 mln.
  • It is alleged that, in total, Cenay Iletisim may have made at least 6 bln Swedish crowns (USD 711 mln) from the deal.
  • Cenay Iletism itself had been acquired for just USD 6.6 mln in 2005 by two Panama-based companies; their representative is an individual who has served as a financial advisor to the ruling Aliyev family.
  • Another entity linked to the above transaction, Cenay Insaat, was acquired by a Maltese based entity, whose ownership structure was considered opaque. However, a representative of this Maltese company was later identified as an Azeri citizen, –  a person by the same name is a major in  the Special State Guard Service, responsible for the President Aliyev’s personal security.

Records appear to indicate that the Aliyev daughters are linked, via offshore entities, some of which are located in the British Virgin Islands, to two of the three largest telecom providers in Azerbaijan, which means the government potentially controls nearly three-quarters of the mobile market.

An investigation by the Swedish authorities into TeliaSonera`s Eurasian activities is said to be still ongoing.

Photo courtesy of TeliaSonera.

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