Azerbaijani ministers topple in wide-ranging administration purge

Azerbaijani ministers topple in wide-ranging administration purge
By bne IntelliNews November 20, 2015

The saga of the sacking of former security minister Eldar Mahmudov, whom Azerbaijani President Ilham Aliyev removed without explanation on October 17, has continued with the arrests of 15 high-ranking security officials in the last month.

The ensuing investigation has taken down officials from other ministries as well, namely former communications minister Ali Abbasov, who was dismissed on November 11, and at least nine employees of the communications ministry and public telecommunications companies, who were fired between November 15-17.

The government has refrained from making public the reasons behind the purge in its ministries, leading the media and public to speculate heavily about the scandal. Baku is not exactly open about the goings on in its public administration at the best of times, but on this occasion it went so far so as to threaten "adequate measures" against journalists who "spread false information and mislead society". If past experience is anything to go by, that means hefty jail terms.

The corruption investigations are an Achilles heel for the Aliyev regime, which is why it has been shrouded in such secrecy. That a criminal operation of such a scale remained undetected or was allowed to take place for so long speaks volumes about the level of corruption in the public administration. Secondly, it makes the incumbent himself look weak and not in control of the cabinet, if his subordinates can go about unpunished extorting regular Azerbaijanis. Thirdly, Mahmudov's actions affect Aliyev's image as a man of the people who is dedicated to his people's welfare.

So what is happening to Baku's bloated public administration; how are the purges at the two ministries related; and what is Aliyev trying to achieve by removing an unprecedented number of public officials in such a short period of time?

A different kind of minister

Communications Minister Ali Abbasov was a different kind of minister, according to Arastun Orujlu, director at the Baku-based East West Research Centre and former employee of the security ministry. "He is genuinely an intelligent person, he comes from an academic background, and he is the director of the Institute of Information Technologies," Orujlu told bne Intellinews in an interview. "He is not a typical minister turned oligarch, like others in Azerbaijan," he added.

Abbasov was indeed respected in Azerbaijan. After receiving his PhD in microelectronics from the Academy of Sciences of Ukraine in 2000, he authored 160 scientific and technical works. Not only was he well spoken and erudite, but he oversaw the Ministry of Communications and High Technologies (MCHT) through a period when the administration placed telecommunications at the centre of its economic diversification strategy, successfully implementing fibre-optic projects, an extensive e-government platform, and the country's first-ever space programme. The fact that Azerbaijanis are now so tech-savvy and well connected is in part owed to Abbasov's good stewardship of the ministry.

So how did a man like Abbasov end up under house arrest and entangled in the octopus of corruption in the Azerbaijani state apparatus?

Abbasov might have been clean by Azerbaijani standards, but he had his secrets. Just like other ministers in Azerbaijan, he had at least one business on the side, a venture capital firm called InfiPro, which his son Eldar Abbasov managed and which invested in tech start-ups. In his Linkedin profile, Abbasov junior boasts that he has been investing in technology since 2007, when he was still a university student. How a university student like Abbasov could afford to invest in technology companies does not require a great deal of imagination.

Abbasov senior might not have owned as many properties and holdings as other ministers, but, as the InfiPro open secret shows, he held private interests in parallel to his public office, some of which might have been more secretive than others.

And Mahmudov perhaps took advantage of that. "Maybe they (the Ministry of National Security) had some intelligence about him, and they blackmailed him with it. I am sure he is not the only one to have been blackmailed like this," Orujlu speculates regarding Abbasov's involvement in the scandal.

A government within the government

Baku did not directly link the sackings at the two ministries. In fact, the accusations that the communications officials are facing relate to embezzlement of €84.5mn in some fiber optic contracts.  Meanwhile, the security officials were accused of abuse of power, forgery and embezzlement.

But the two incidents are most certainly linked. For the Ministry of National Security (MNS) could not have gone about its day-to-day business of intercepting private telephone conversations of local entrepreneurs – and then using that information for blackmailing – without at least the knowledge, and likely the complicity of some communications officials.

According to Arif Mammadov, former ambassador of the Organisation of Islamic States (OIC) at the EU, and now government critic, extortion based on illegally obtained information was Mahmudov's modus operandi. And his frequent abuse of office had got him into trouble with Aliyev in the past.

"Once, he (Mahmudov) blackmailed a business for a large sum of money [as a loan], and did not pay it back, and he came close to being fired when Aliyev found out," Mammadov wrote in a Facebook post. According to Turan news agency, which claims to have interviewed 30 lawyers in Azerbaijan, the MNS demanded between $300,000 and $350,000 to revoke arrest warrants. MNS could reportedly intervene in most criminal investigations, except for the politically-motivated ones.  

In addition to extorting money from business people, Mahmudov allegedly had other means to amass money, which relied on his conveniently well-connected relatives. For instance, Mahmudov reportedly took out a large loan from the International Bank of Azerbaijan (IBA), the embattled public bank that faced a major corruption scandal this year precisely over bad loans, and was unable to repay it.  The former chairman of IBA, Jahangir Hajiyev, is Mahmudov's relative, and so is Chingiz Asadullayev, former owner of another bank, Azerigasbank.

While the investigation at the MNS has been underway for a month, the authorities have made no public announcements about their findings so far. However, according to information reportedly leaked by law enforcement agencies to, investigators found 30 cardboard boxes full of foreign currency and "kilograms of jewellery" at one of Mahmudov's properties, a villa in the Badamdar district of Baku. Opposition media agency Turan independently verified the account and the confiscations.

“The scale of the arrests and the serious charges imply that a real organised criminal group operated inside the system of national security. Remarkably, the group had ties with other similar but smaller organised criminal groups, which operate in state agencies as well,” Turan noted.

Orujlu concurs. "The MNS had created a government within the government. There were people in the government who depended entirely on their will and their decisions," he believes, while adding that Mahmudov and his allies had two main goals in infiltrating other ministries. "The first was to amass intelligence, and to use that information for money or other favours. The second goal was to expand their political influence in other ministries."

His political ambition was Mahmudov's doing, Orujlu opines, for the sackings are "a political process that has nothing to do with corruption, economic reforms, or cleansing the administration. The government is merely removing challenges to its established power. "

There are many officials in Baku with big private business interests. Minister of Transport Ziya Mammadov and Minister of Emergency Situations Kamaladdin Heydarov, for instance, are much more visible than Mahmudov through their private businesses Garant and Gilan Holdings. But unlike Mahmudov, these oligarchs "pursued their business interests without posing a threat to the power structure", according to Orujlu, which is why they will most likely not be involved in the current scandal.

Besides, in a country that Transparency International ranks 126 out of 175 countries for corruption (the higher the ranking, the less corrupt the country), seven positions below Belarus, an earnest corruption clean-up would have to start at the very helm of the country. Instead, the Aliyev administration has been throwing in jail those reporters, most notably award-winning journalist Khadija Ismayilova, who have snooped into the private businesses of public officials. That’s hardly a signal that Azerbaijan is ready for real change.

Many-headed hydra

Meanwhile, Orujlu believes that this is just the beginning, and that the full ramifications of the investigation will only be revealed in the months to come, as more arrests take place.

Other officials that have been drawn into the investigation are former IBA chairman Hajiyev, who was dismissed in May and who has been under investigation since. After Mahmudov's sacking, Hajiyev has reportedly been called for hour-long interrogations at the Main Directorate for Combating Organised Crime, according to information leaked to by sources in the Ministry of Internal Affairs. "Apparently, his arrest is inevitable," the sources concluded.

Bne Intellinews mistakenly reported on October 23 that Hajiyev was already under arrest; he is under investigation at the moment and banned from leaving Baku.

Meanwhile, Etibar Aliyev (no relation to the president), the former chairman of private bank Bank Technique, was reinstated on October 27 at the head of a bank. Aliyev had been dismissed three years ago and served time in custody, following an MNS investigation, which led to Bank Technique reportedly being placed under Hajiyev's control. At the time of Aliyev's arrest, the bank was severely underperforming, with a staggering 79% rate of non-performing loans (NPLs).

Given MNS' involvement in criminal prosecutions in Azerbaijan, some of the cases in which it was involved might be reinvestigated, and some of the institutions that it protected might come under fire in the coming months. One such institution, according to, could be one of the landmarks in Baku, the Carpet Museum. An ancient tradition in Azerbaijan, carpet weaving is central to the country's cultural heritage and tourism development strategy. However, it appears that the museum's collection of ancient carpets might have suffered falsifications and thefts that have remained uninvestigated, because no formal inventory has taken place at the museum in more than 32 years. The MNS might have had something to do with the apathy around the carpet collection.

Third ministerial sacking underway?

There are rumours about yet more sackings, giving the impression that the Azerbaijani public administration is careering out of control.

A media leak this week that has not been confirmed officially claims that Tax Minister Fazil Mammadov is about to be sacked after President Aliyev signed a decree dismissing him late last week.

However, that might not be the case, nor is Mammadov likely to have participated in the MNS extortion scheme, according to Orujlu, who believes that his political opponents are taking advantage of the timing to discredit him.

"Some groups are interested in discrediting Mammadov because the tax ministry is an instrument of oppression for oligarchs and their business interests. With the oil revenues declining in the country, tax revenues have become more important to the state budget, but how can we collect taxes if our biggest businesses are in the hands of public officials whose holdings evade taxes? Mammadov is therefore a target for oligarchs," Orujlu concluded.


Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.