Azeri Enclave in Czech Republic

They have come not just as high-end tourists to see its rich historical sites and natural beauty – but as investors as well. Officials of oil-rich Azerbaijan, including members of the Aliyev ruling family, have established companies in Prague, bought land, and built hotels and luxury villas most of them focused around in the famous spa city of Karlovy Vary (Carlsbad).

The problem is that some of these investments are illegal.

The full extent of their investment became clear after reporters for the Organized Crime and Corruption Reporting Project (OCCRP) examined the Czech property and company records of prominent Azeris.  The political elite, it appears, has been playing a real life game of Monopoly in a race to acquire properties in the heart of the European Union.

There is a historic precedent to the Azeri’s love of Karlovy Vary, famous for its natural springs, resorts, and high-quality glass. The picturesque  town close to the German border in the western part of the Czech Republic has been an exclusive hideaway for the Russian ruling clique since 1711 when Czar Peter the Great came for treatment in its healing waters. Powerful and wealthy Russians continue to rest and mend amidst its expensive golf courses and spectacular spa colonnades. Most services, especially the high end ones, are offered in the Russian language. The local Czech hockey team at one point considered joining Russia’s national hockey league, and for most Czechs, Karlovy Vary signifies close and friendly ties with Russia.

A Family Affair

“Azeris know Karlovy Vary well,” said Jan Hornik, a Czech Senator.  “Their [Azeri] Prime Minister told me once his trips to the town were more business than leisure because he met half the Azeri government there.”

The connections start with the first family. Arzu Aliyeva, one of Azeri President Ilham Aliyev’s two daughters has been the sole shareholder of a central Prague-based company called ZODIAC Immobilienbesitz since 2006.

A listing in the Czech land registry shows that the firm owns a €1 million villa in a luxury neighborhood in Karlovy Vary.{modal href="images/stories/CCWatch/zodiac2.jpg"}{/modal}The Azeri president’s daughter owns a luxury villa in the spa town of Karlovy Vary

When reporters visited the hilly and posh residential neighborhood, the villa looked well cared for, but empty. No one answered the doorbell.

The headquarters of Aliyeva's company are inside the Prague law offices of Alfery-Hrdina, a firm that does audit, tax and legal services according to a flyer. Pavel Alfery-Hrdina, a firm's representative, refused to talk about Aliyeva's company or any client’s business.

Arzu Aliyeva is not the only family member with ownership of Czech businesses either. Her maternal grandfather, Arif Pashayev, owns another Prague and Karlovy Vary-based company, RETRO-INTER. Pashayev officially runs the National Aviation Academy. According to US diplomatic cables made public by Wikileaks, however, the extended family plays important roles in the Azeri economy. The US cables list the Pashayev family as the "single most powerful family in Azerbaijan".

Pashayev controls PASHA Holding, an Azeri conglomerate involved in  insurance, banking, travel, construction and investment interests including PASHA Bank, according to the companies website and an Ernst and Young audit which lists him as the man with ultimate control.  The managing director is his nephew Mir Jamal Pashayev and the website brags it is one of the largest new companies in Azerbaijan.

RETRO-INTER owns a number of properties in the Karlovy Vary area including the newly erected Hotel Jeseter.{modal href="images/stories/CCWatch/zodiac3.jpg"}{/modal}Jeseter belongs to a company controlled by Arif Pashayev, the father of Azerbaijan's first lady

Hotel Jeseter, which is finishing construction, sits on a bank facing a dam 10 minutes from the town. A forest runs along one side and an exclusive, gated Russian village on the other. The Russian deco style building sits on the ruins of a former fishing house and plans call for 30 rooms, a restaurant and two quays. The area used to be popular with locals who came to relax and bathe, but after the only natural swimming pool was demolished in ´90, the area lost its attractiveness for family weekends. The hotel is controversial, with believers seeing its opening as a chance to resuscitate the area, while skeptics worry that its monumental and inappropriate design is out of place and its high prices preclude ordinary Czechs from visiting.

RETRO - INTER also owns a building site, a house and an apartment in the surrounding towns of Jenišov, Mezirolí and Doubí.

The Businessman

While Arif Pashayev is the sole shareholder of RETRO–INTER, its director is another Azeri-born Czech citizen, Fakhraddin Mirzoev who lives in Karlovy Vary. In addition to RETRO–INTER, he is director of Swiss-based TERMA TRAVEL GROUP. Although they operate in Karlovy Vary, the company has a subsidiary in Prague, GLOBAL-ACCOUNTING-SERVICES.COM which shared offices with RETRO–INTER until a few months ago. Mirzoev is involved directly or through the TERMA group in a half dozen other companies in the Czech Republic.

Mirzoev appears to be a successful and connected man in Azeri circles in the Czech Republic. He drives a Porsche, established a rally team sponsored by the TERMA TRAVEL RACING TEAM and knows important people like Hornik, according to his Facebook page.

"I know Mr. Mirzoev, because the Azeri ambassador is my friend and when we had dealings, the representative of TERMA TRAVEL was often present,” said Hornik.

OCCRP reporters contacted Mirzoev who did not comment but did say "My business is not connected to any other persons.”

Mirzoev, who was an official agent of Azerbaijan Airlines, gave the official welcome to the first Azerbaijan Airlines flight that landed at the Prague airport in July of 2010.

The non-stop flight between the two capitals regularly shuttles other major Azeri businessmen who have also chosen the Czech Republic.

{modal href="images/stories/CCWatch/INFOGRAFIC-Azerbaijan-cehia.jpg"}{/modal}

A Cleric in Business

Other important Azeri investors in the area are Javanshir Pashazade, a member of parliament in Baku and his brother, Allahshukur.  Allahshukur Pashazade is Sheikh-ul Islam, Grand Mufti of the Caucasus and the chairman of the Religious Council of the Caucasus. He was counted in 2009 among the 500 most influential Muslim figures in the world.

According to registration records, the brothers own a Czech company called Aynur KV that is also based in Karlovy Vary. The firm owns an apartment complex in the center of Karlovy Vary.

Through his driver, Javanshir Pashazade denied any ownership of Czech businesses.{modal href="images/stories/CCWatch/zodiac6.jpg"}{/modal}Allahshukur Pashazade, the Grand Mufti of the Caucasus, owns an apartment complex in the Czech Republic

Allahshukur Pashazade is a controversial figure in the Azeri media. The government-friendly religious leader, who frequently pledges Muslim loyalty to Ilham Aliyev, is known in Azerbaijan for his connection to Ali Evsen, a Turkish businessman currently under arrest in Spain for his alleged involvement in a money laundering operation for Hussein Salem, a confidante of former Egyptian leader Hosni Mubarak. Evsen's businesses have been previously investigated here by OCCRP . Pashazade’s son is married to Evsen’s daughter.

Azer Rashidoghlu, chairman of the "Tolerant" Center for Social Studies said the Grand Mufti should step down if the information is true.

"There were lots of talks about a lack of transparency in The Board of Caucasus Muslims and the business activity of Sheikh-ul Islam. He always denied his involvement in business. He denied, because he knew that it is not appropriate. It is indeed not appropriate.”

Rashidoghlu said such ownership sets up a fundamental conflict of interest.

“If religious figure is dealing with business, especially in the countries like Azerbaijan, he is risking facing a choice between his business interests and the interests of Muslims.”

Rashidoghlu says that may have already happened.  The Grand Mufti has not defended Muslim rights against the President such as a ban on hijab in schools and the shutdown of mosques, he said.

“Instead, he always pledged support to president and his family in order to be able to continue his business and to invest abroad."

Javanshir Pashazade’s ownership is illegal under Azeri law according to one expert.{modal href="images/stories/CCWatch/zodiac4.jpg"}{/modal}Brothers Javanshir and Allahshukur Pashazade, one a Parlamentarian and the other the Grand Mufti of the Caucasus, own an apartment complex in Karlovy Vary

“Parliament members must not run businesses. It is prohibited by law. So if they own the business, they violate the law,” said Vasif Movsumov, executive director of the Anti-Corruption Foundation, a Baku based civil society organization.  “The law restricts business activity - no matter, if it is inside or outside the country - of the parliament members.”

They are not the only ones. OCCRP previously reported that Arzu Aliyeva along with her sister, Leyla and their mother Mehriban Aliyeva, own a slew of Panama-based companies through which they secretly control gold fields, a mobile phone company, a construction company and other high stake investments back in Azerbaijan. Mehriban Aliyeva is also a member of parliament. Calls and emails to the government seeking comment were not returned.

“They are supposed to submit declarations and declare that they stopped their business activity. Since that was not the case, it is a clear indication of corruption.”  Movsumov said.

The apartment complex the Pashazades own through their firm is set in the hills overseeing the center of Karlovy Vary and sits near one of the most famous hotels in the region, the Hotel Imperial. This hotel, built in the early 20th Century hosted many celebrities including famous composers, dignitaries and Hollywood stars. The complex is surrounded by narrow streets with old houses and the original tessellated pavement.

The permitting and construction of the modern apartment complex right in the middle of the historic center of Karlovy Vary was controversial. The modern architecture contrasts with the unique and picturesque surrounding buildings.  The original building design was a story higher, but was lowered in the face of local protests says a local journalist, Jaroslav Dolina, who has followed the case for his newspaper Karlovarsky Denik. The complex is still partially empty and banners offering luxury apartments hang outside. Most of the names on the doorbells appear to be Russian.

Other MPs in Business

Another member of the Azerbaijani Parliament, Adil Aliyev and his brother Allahverdi Aliyev, also do business in the Czech Republic. Adil Aliyev is a shareholder in a company called West End Centre. This company owns land in the western outskirts of Karlovy Vary. Allahverdi Aliyev’s family started a company called RAN Ltd in 2003 at the same Karlovy Vary address where two TERMA TRAVEL GROUP companies were based.{modal href="images/stories/CCWatch/zodiac5.jpg"}{/modal}A number of Azeri connected companies are located at a downtown building in Karlovy Vary

Back in Azerbaijan, the brothers built their career in the police forces under the leadership of a third older brother, Maharram Aliyev, a former chief of the Baku police department and currently the ambassador of Azerbaijan in Tajikistan. Adil Aliyev, who is also president of the Kickboxing and Muai-Tai Federation, entered Parliament in 2005 after leaving his job as a district police chief.

Allahverdi Aliyev, who used to also be a mid-level official in the Ministry of Interior, shares ownership of his businesses, RAN Ltd. together with his wife, Tamara and son, Ruslan Aliyev. The son, according to an interview he gave to Azeri media, is the director of the Ateshgah Insurance group, owned by the State Oil Company of Azerbaijan. Adil Aliyev did not deny ownership of the businesses.

"I can't say anything in this regard. I have lots of relatives in Czech Republic and they have many companies in Czech Republic. That is not a secret".

He said he is aware of the legislation that prohibits Members of Parliament to run businesses but refused to comment further on the issue.

Their RAN Ltd owns a house in the city center of Cheb, an old Czech town with a long Czech–German history about 43 km from Karlovy Vary. It also owns shares in an apartment complex in Doubi.

This story is has been edited to reflect the correct relationship between Arif Pashayev and Mir Jamal Pashayev.  Mir Jamal Pashayev is his nephew.  The story also incorrectly identified persons who stayed at the Imperial Hotel.  OCCRP regrets the two mistakes.