What are the sources of Azerbaijani investments in the Czech Republic?
Czech property of the Azerbaijani elite
Wealthy and well-connected Azerbaijani investors are willing to put billions of Czech crowns into luxury real estate in the famous resorts of the Czech Republic although the Azerbaijani community is far smaller than those of other foreigners living in this country.
This investigation has been conducted by the Czech investigace.cz (full Russian version on the Meydan TV website).
The father of the vice-president of Azerbaijan owns a large hotel near the center of the resort town of Karlovy Vary, and Aliyev’s daughter used to have a villa there which she later re-registered to a loyal deputy. Azerbaijani investments of unknown origin have also made their way to other Czech cities, including the capital – Prague.
Reporters have recently found another community of wealthy Azerbaijanis in the region of South Bohemia.
In Azerbaijani society, the family is perceived as a building material and this implies that if one of the family members occupies a high position, it becomes a springboard for the entire clan. This family solidarity literally knows no boundaries. “For example, if a certain reliable and qualified person lives in the Czech Republic, then it is only natural that his skills quickly reach potential investors or anyone in need of help”, explains Slavomir Horak, an expert on Central Asian countries and researcher at the Institute of International Studies at Charles University in Prague.
Therefore, if one investor buys a hotel through this fixer, others will soon follow, regardless of where the money for these investments comes from.
Azerbaijani investments in South Bohemia are shrouded in mystery. It is important to note that any investment from Azerbaijan can be problematic, especially if it is of unclear origin. It is common for people associated with Azerbaijani politics to spend small fortunes on real estate or luxury items, even if their official salary would have never allowed them to afford such things.
The Azerbaijani authorities trample on human rights, persecute any form of opposition and usurp oil revenues, the profits from which are ultimately controlled by a select few. But the trap lies in the fact that even these chosen ones do not know when their luck will turn away from them and how long the regime itself will last. This forces them to hide their assets abroad – for example, in London or in a small resort town of the Czech Republic.
A 2019 report from the International Monetary Fund highlighted the rise in foreign-owned real estate in the Czech Republic and called for strict anti-money laundering measures in the real estate market. However, checking the background of all investors is not as simple as it seems, explains Libor Kazda, head of the Czech financial and analytical department under the Ministry of Finance:
“There are cases when a particular financial institution does not have the ability to verify the source of the money. If the bank only receives a written statement from its client, claiming that the money was obtained through legal means, what can it do?“, Kazda says. “But that doesn’t mean there will be no further verification. In fact, only receiving a written statement should raise suspicion”. However, Kazda also notes that in the Czech Republic, a written statement is usually a sufficient explanation of the source of the money.
South Bohemia is often associated with the picturesque town of Cesky Krumlov or the Lipno reservoir, nicknamed the Bohemian Sea – an ideal location for a restaurant or hotel. Apparently, this also occurred to several Azerbaijani investors, who trusted their business plans so much that they did not hesitate to invest hundreds of millions of Czech crowns [1 million CZK = approximately 48,000 USD]. But one of the plans turned into a bureaucratic nightmare and now stands in ruins on one of shores of the Lipno, while other projects have turned into closed, rather than open hotels and restaurants, after investors refused to finish them.
“Something very large-scale was being created here, they (the investors) came here every day, some celebrity from Prague made a construction plan. They even wanted to buy out our family business. Then suddenly they disappeared and everything stopped”, says a small businessman from the Lipno area. “I heard that the locals didn’t want them to be here, there was some problem with a lot of money involved”.
The mayor of the village, where instead of a luxury hotel in the shape of a ship, ruins now adorn, only shrugs:
“You can see for yourself what came out of these grandiose plans. A huge pile of rubbish and a pile of stones. It’s good that at least they have surrounded all this with a fence, and no one will accidentally break their arms and legs”.
This place called Gurka is one of several villages around Lipno, one of the main tourist destinations in South Bohemia. The lake is located near the border with Austria and is famous for attracting wealthy foreign and local investors.
The first thing that catches your eye here is the fence surrounding what looks like a construction site, although no work has been carried out here since the previous building was demolished in 2018.
By now, a luxurious health center made of glass and wood in the shape of a huge ship on this site should have been built here. But the project was put on hold due to bureaucratic delays and Covid-19 restrictions – at least that’s what investors say. The land belongs to ALPS s.r.o., which also owns another piece of land in the fast-growing satellite town near the regional capital, Ceske Budejovice. But nothing happens there either.
The second ambitious Azerbaijani project began with the purchase of two buildings in the famous tourist town of Cesky Krumlov and one building in Frymburg, a small town on the shores of Lipno. But this plan also remained only a plan. In Cesky Krumlov, one restaurant never reopened, and even after an expensive renovation and a second investment, a hotel which worked relatively well is now run by someone else. As for the restaurant in Frymburg, it worked for two seasons (two summers and one winter) and closed in 2018. The owner has disappeared.
“I haven’t seen him for over a year”, says one of the hoteliers in Cesky Krumlov. “He only appeared once and disappeared again”.
The owners – who are they?
ALPS is owned by Juma Ahmedzade, an Azerbaijani who lives in a luxurious apartment in London. Ahmadzade’s father was recently dismissed from his post in the government of Azerbaijan.
There is another company with the same Czech address, registered in the regional capital of Ceske Budejovice – LECO-CB. Its owner is Zamira Hajiyeva, the wife of the former chairman of the International Bank of Azerbaijan.
Hajiyev himself is now in an Azerbaijani prison convicted of financial crimes and serving a term of 15 years. Zamira Hajiyeva lives in London, in an apartment worth approximately £11.5 million, just across the street from the luxury department store Harrods, where she reportedly spent more than £16 million in ten years, about six million of which she spent using credit cards from a bank run by her husband. Currently, the British authorities are investigating the sources of the Hajiyevs’ family wealth and have temporarily frozen their accounts.
Corruption in Azerbaijan
“It is important to understand the mentality of the Azerbaijani elite. All state enterprises, including the national bank, are perceived by them as a piggy bank for the ruling class. Therefore, if someone with good connections needs money – for example, a relative of a bank CEO, there is always a way to get it”, explains Gorak. Although, in his opinion, this is not something unique to Azerbaijan only.
On the other hand, those who have no connections at the top have a hard time. In general, in any country where the ruling elite siphons money from the state treasury, there are also tangible inequalities in other areas – be it medicine, education or social protection. Corruption and mafia practices can also be seen in politics.
When Azerbaijan was hit by the economic crisis caused by decreasing oil prices in 2017, President Aliyev began to suppress any form of opposition even harder than before. In addition, he took steps to consolidate his power – for example, he appointed his wife as vice president, thus making her his successor.
Despite the well-known authoritarianism, corruption and undemocratic nature of the regime, Azerbaijan remains a major trading partner of the Czech Republic. Moreover, it is the most significant partner in the South Caucasus and the main supplier of oil to the Czech Republic. In 2020, a third of total oil imports of Czech Republic came from Azerbaijan. According to the Czech Ministry of Trade, dozens of Czech companies do business in Azerbaijan.