Azerbaijan’s Most Nepotistic Minister
Are the companies that allegedly belong to Ziya Mammadov winning projects without submitting to a proper tender process?
In Azerbaijan, the violation of laws through the noncompliance of officials has become commonplace. At the international level, legal conventions are similarly ignored; according to the UN Convention on Corruption, nepotism is considered a kind of corruption, requiring punitive action. In Azerbaijan it is also considered an abuse of power to appoint one’s relatives to government positions, and is forbidden by law, yet government officials ignore this. There is one minister in particular who ignores this law, even beating President Ilham Aliyev in the number of relatives appointed to government positions. This minister is Ziya Mammadov, Minister of Transportation.
In August 2014, Meydan TV published an investigation on the business interests of Anar Mammadov, the son of Ziya Mammadov. This piece provides an overview of his family members in government.
You will probably have heard of these relatives in association with cases of lawlessness and outrage, and he is the minister who is mentioned most often because of his family. For example, during the Presidential Elections in 2013, Mahbuba Mammadova, Mammadov’s sister and the director of “Taraggi” Lyceum, drew media attention through her involvement in the falsification of elections in her polling station; she even threatened activists who were volunteering as observers. His other two relatives, his aunt and cousin, are heads of the executive power. Multiple complaints arrive from citizens living in Zardab, Goychay and Ujar. The name Mammadov is associated with cases of the deaths of directors of certain entities. The family causes problems for citizens, likely relying on the minister of transportation for immunity.
Recently, the family’s name has been associated with yet another death, this time of a Turkish bodyguard of the minister’s son.
This has been covered by the media but so far has not been taken up by law enforcement bodies.
So now we would like to present you with the facts and figures.
Billions “won” without tenders - exactly 7.3 billion manats
According to Azeri law, all state-based projects whose costs exceed AZN 50,000 should be realized through tenders. However, in reality there are perhaps hundreds of cases where this regulation has not been followed. In developed countries, at least half of budget resources are spent through open tenders, yet in Azerbaijan this does not even reach 15 per cent, even including informal agreements. According to the law there should be at least three bidders in an open tender. But government officials create artificial competition by engaging their “proxy” companies in the tender process. As a result the tender is won by entities that they own. Despite these efforts at deception, numerous tender projects are neither revealed to the public nor published on tender.gov.az.
As an example, let us review the information on all the projects executed by the Ministry of Transportation through Ziya Mammadov’s use of the state budget during the period between the time that Azerbaijan began to take in oil revenues, and today. The total cost between 2005 and 2013 was AZN 7.3 billion, not including international loans, which were used in the majority of large international projects. We have selected information on some of the largest of those projects . Some of the projects on this list have been used for continuous siphoning off of money. This is especially true for projects on road renovation, for which money is allocated on an annual basis.
1. Design and construction of a grade separation road junction on Galaba square (“Ganjlik” metro station): AZN 225 mln in 2010; AZN 80 mln in 2011; AZN 40 mln in 2012; AZN 62 mln in 2013; AZN 5 mln in 2014.
2. Design and construction of 6 underground passages in Neftchilar Avenue and 5 underpasses in other streets: AZN 37 mln in 2010; AZN 15 mln in 2011.
3. Construction of the Gusar-Enik-Laza-Suvar highway: AZN 10 mln in 2010; AZN 10 mln in 2011; AZN 19,650,000 in 2012; AZN 50 mln in 2013; AZN 20 mln in 2014.
4. Share of the Azerbaijan party in “Construction of Baku beltway” project (21.5km): AZN 1,773,000 in 2005; AZN 2,218,000 in 2006; AZN 12 mln in 2007; AZN 26,140,000 in 2008; AZN 45,600,000 in 2009; AZN 13,840,000 in 2010; AZN 9,068,000 in 2011; AZN 3,310,000 in 2012.
5. Share of Azerbaijan in the “Construction of additional 2 lines to broaden Baku-Shamakhı highway into a 4-line road” project: AZN 1 mln in 2010; AZN 15 mln in 2011; AZN 10 mln in 2012; AZN 20 mln in 2013; AZN 17 mln in 2014.
6. Azerbaijan’s share in the “Highway II” project (together with additional financing agreement): AZN 50 mln in 2009; AZN 60 mln in 2010; AZN 90 mln in 2011; AZN 70 mln in 2012; AZN 70 mln in 2013; AZN 15 mln in 2014.
These figures are only the amounts allocated by the Azeri party. The document below indicates that the World Bank had first allocated AZN 200 million, then AZN 300 million for the “Highway II” project. (Source)
Considering that all these resources are loans, it is hard to calculate how much these road projects cost Azerbaijan. Unfortunately we cannot acquire loan documents on the allocations for all projects.
7. “Construction and reconstruction of additional 2 lines in the two-line Hajıgabul-Kurdemir highway”: AZN 8,300,000 in 2011; AZN 20 mln in 2012; AZN 30 mln in 2013; AZN 6.4 mln in 2014.
8. Capital repairs of Ismayıllı-Lahıj highway (19 km): AZN 3 mln in 2008; AZN 2 mln in 2009; AZN 2 mln in 2010; AZN 3 mln in 2011; AZN 4 mln in 2012; AZN 5 mln in 2013; AZN 2.5 mln in 2014.
9. Construction of Bilgah-Novkhani- Sumgayit road and purchase of land and other objects under construction: AZN 59 mln in 2010; AZN 93 mln in 2011; AZN 80 mln in 2012; AZN 40 mln in 2013.
10. Design and construction of a new concrete-covered highway alongside the border with the Russian Federation: AZN 2.5 mln in 2010; AZN 90 mln in 2011; AZN 40 mln in 2012; AZN 100 mln in 2013; AZN 20 mln in 2014.
11. Reconstruction of the existing Heydar Aliyev Airport – Mardakan Circle – Bilgah highway (19 km) for 6-line traffic: AZN 70 mln in 2009; AZN 180 mln in 2010; AZN 120 mln in 2011; AZN 3,837,900 in 2012; AZN 70 mln in 2014.
12. Design and development of TEJ and Project and Budget Documents as well as construction of the New Baku International Sea Trade Port: AZN 5 mln in 2009; AZN 10 mln in 2010; AZN 50 mln in 2011; AZN 50 mln in 2012; AZN 40 mln in 2013.
13. Azerbaijan’s share in the “Rail Trade and Transportation Facilitation” project: AZN 17 mln in 2008; AZN 1 mln in 2009; AZN 10 mln in 2010; AZN 20 mln in 2011; AZN 20 mln in 2012; AZN 30 mln in 2013; AZN 13 mln in 2014. (Source)
14. Creation of Information Management Systems of Transport Operations in Baku city: AZN 26 mln in 2008; AZN 10 mln in 2010; AZN 37 mln in 2011; AZN 23 mln in 2012.
The job of managing this system was also given to a close relative of the Minister of Transportation, Elnur Abdullayev, the son of the Minister's sister-in-law. This is an appointment of a relative to a position under the Minister’s direct supervision, which entails a violation of the Law on Civil Service.
15. Construction of Buzovna-Mardakan-Gala road and purchase of land and other objects under construction: AZN 10 mln in 2011; AZN 18,000 in 2012; AZN 38,180,900 in 2013.
16. Reconstruction of the road infrastructure on Ziya Bunyadov Avenue: AZN 25 mln in 2011; AZN 100 mln in 2012; AZN 42,145,500 in 2013.
17. Share of Azerbaijan in the “Construction of Kurdemir-Yevlakh Highway” project: AZN 64,900,000 in 2013; AZN 40 mln in 2014.
18. Share of Azerbaijan in “Reconstruction of Mughanly-Yevlakh Fragment of Baku-Shamakhı-Yevlakh Road”: AZN 40 mln in 2011; AZN 24 mln in 2012; AZN 25 mln in 2013; AZN 10.2 mln in 2014.
Even though Azerbaijan’s share in the construction of this road is AZN 99,200,000, the total budget is AZN 404 mln. The rest of the resources consist of loans.
For example, AZN 3,400,000 was spent on the construction of an on-road passage next to “Shafa” Stadium on Heydar Aliyev Avenue in 2012 – 2013. There is no explanation for why the construction of a single passage is so expensive.
Another example would be the creation of an information management system for transport operations in the city of Baku: AZN 26 mln in 2008; AZN 10 mln in 2010; AZN 37 mln in 2011; AZN 23 mln in 2012.
Everyone knows how poorly designed and dysfunctional Baku’s Information Management is. So why was it necessary to throw away that much money?
Why are figures hidden?
According to experts, the most likely reason why the tenders are not included on official lists is that these tenders are only intended to pay lip service to the law, and are allocated to the companies based on personal interests. Our conversations with people working for road projects revealed that these projects were mainly allocated to the following companies: “MEN-trans”, “M trans”, “AZ-M.TRANS”, “AzerInshaatservis”, “Azpod” and “POLAT YOL YAPI SAN VE TİC”. Below is information on these companies found in official databases.
It has been suggested that “MEN trans” company informally belongs to Namig Mammadov, and that the abbreviation in the company’s name stands for Mammadov Elgun Namig oghlu. The second company that took part in road construction projects with precurement of asphalt-pressing machines, sand, gravel and other material-carrying vehicles is an “Azpod” company.
The most interesting discovery is that two companies - “Azerinshaatservis” and “POLAT YOL YAPI SAN VE TIC” - have placed information on the execution of the abovementioned high-value projects on their websites. Both companies have claimed their management of the same projects. There is no official information on the website of the State Procurement Agency of the Republic of Azerbaijan about either of these two companies winning a tender. The included document is proof of this. This is despite the fact that the company has presented all projects executed within the last 6-7 months in a list of its successes. We searched for the name “Azerinshaatservis” company in all the databases on tender.gov.az, but we found nothing.
Similarly, while there is information on “Polat” Company on the Tax Ministry’s website, there is no information about “Azerinshaatservis” in the Ministry’s database. The company’s state registration number remains unknown. However, there are media reports indicating that “Azerinshaatservis” belongs to Ziya Mammadov, the Minister of Transportation.
Moreover, there are allegations in the local media on the abovementioned “Polat” Company being a “proxy”, that passes the acquired projects to “Azerinshaatservis”. For this reason we contacted Mr. Abdulaziz Gulluce, who, according to official records, is the legal representative of “Polat” Company, through his Facebook profile and asked him to answer the following questions:
1. You have been presented as the legal representative of “Polat” Company in the database of the Ministry of Taxes. However, you introduce yourself as the Financial and Administrative Director. Why is this?
2. The list of the projects you have implemented in Azerbaijan is on your website. “Azerinshaatservis” has also mentioned the same projects as their achievements. What can you say about this?
3. The projects you have mentioned on your website are funded by the state budget of Azerbaijan and allocated through tender processes. However, there is no official information about your company being given responsibility for execution of any of the projects on the website of the State Procurement Agency of the Republic of Azerbaijan. Can you comment on this?
If Mr. Gulluce responds to our questions we will share his responses with you. So far, it has not been possible to acquire any information on this issue from the opposite party. We are ready to publish the responses of the Mammadovs as well as the companies detailed above.
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