Israeli company B.S.D. Crown has placed a request to withdraw its $13.6mn worth of deposits in Azerbaijan's largest bank, International Bank of Azerbaijan (IBA), according to Meydan TV. IBA reportedly offered the Israeli management an option to retrieve its assets in instalments in the next 12 months, but the depositor rejected the option, citing the fact that IBA is owned by the Azerbaijani government and can tap into state funds if it has liquidity problems.
Bne IntelliNews has learned about the case of another foreign company, an European investor, that was also unable to retrieve its deposits at IBA. Foreign companies that work with the Azerbaijani government have little resort when it comes to accessing their funds at state-owned banks. If they file official complaints, they run the risk of losing lucrative contracts.
IBA defaulted in 2015 in what became the largest banking scandal in Azerbaijan, revealing questionable practices and the uncomfortably close relations between politics and finance. The bank's former chairman Jihangir Hajivev has since been detained and is on trial for embezzlement, and dozens of managers from the bank have been dismissed. Baku injected some AZN2bn (€1.7bn) into the bank in 2015, but it appears that the institution is still not able to meet some of its financial obligations.
Conversely, the Israeli depositor has been accused of using Azerbaijani and Austrian banks to evade taxes in Israel. A subsidiary of investment company BGI, B.S.D. Crown used to be owned by the Odessa-based oligarch Alexander Granovsky, who ostensibly sold it to its new owner Grigori Gurotovoy. The two businessman are reportedly business partners.
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