Bidding Secrets of the Armed Forces Part 3: AZENCO’s Share in our Military Budget

During our investigation we discovered that AZENCO trucks were working at the site where the new Marine Forces base is being built.

“Over the last ten years, our military expenses have increased twenty-fold, and our expenditure on the Army and the Armed Forces is twice the size of Armenia’s whole state budget.”

– President Ilham Aliyev

In 2014 the budget of the Armed Forces grew by AZN 57,000,000, reaching AZN 2,967,831,000 (approx. 2.5 billion EUR).

The increased spending, however, has had little impact on the well-being of Azerbaijani servicemen – for example, nutrition quotas and rations have not been improved.

An ex-conscript who returned from military service in June 2014, Elchin Alizada, said that soldiers were often provided with low quality food during his time in the army. “We were mostly served canned food which was sometimes mixed with cooked meals. On duty service, butter was the only thing that was doubled. In general, our food was pretty bad.”

Another soldier who served on the frontline in the Fuzuli district said that sometimes conscripts would get nothing at all. He recalls; “Our military base was in Harami plain. The food there was terrible and during some winter months we would not even get lunch.”

Reserve Colonel-Lieutenant Uzeyir Jafarov says these unregulated actions are the result of corruption. “Lawlessness in the army is a complex issue. Many things must be taken into consideration when evaluating the current situation, from the psychological state of commanders to the issue of corruption. The deaths of our soldiers in non-combat situations; corruption; poor provisions for officers; breaches of military regulations – these are widespread problems, and blame is spread across many people.”

According to “Doktrina” Journalists’ Center for Military Investigations, 19 military servicemen in Azerbaijan died in non-combat situations between January and June 2014.

This is third in a series of articles exposing corruption in the Azerbaijani military.

Heavy construction work is taking place on the shore of the Caspian Sea on the Silk Road route. Large excavators are destroying the mountain where a lighthouse stands. The broken pieces are loaded onto trucks. These mountain rocks are then emptied into the sea to create space for a new port on one side and a military barracks on the other. It is in this beautifully decorated large yard that the gleaming new barracks for the Marine Forces of Azerbaijan will stand.

At the moment, the construction of the new military base for the Marine Forces is one of the Ministry of Defence’s largest projects; yet the website of the State Procurement Agency offers no information on the bid. The only available data is the bidding registration for 2013, which indicates that Simurq Inshaat Ltd. won the order for the purchase of construction materials by the Marine Forces – worth 34419.3 AZN.

The former base of the Marine Forces was destroyed in preparation for the Eurovision Song Contest held in Baku in 2012. In its place. Flag Square, shore-line park and Baku Crystal Hall were built. AZENCO OJSC managed the construction of the Flag Square and Baku Crystal Hall.

During our investigation we discovered that AZENCO trucks were working on site of the new Marine Forces base. We also discovered an AZENCO concrete producing station near the marine base. PHOTO

According to the information published on the official website of the Ministry of Defence, on November 28, 2013 Minister of Defence Zakir Hasanov and Chief of Staff Najmaddin Sadigov visited the base to see the ongoing construction work. Although there is no information on the company building the base, in the photographs accompanying the article, the Chairman of Azerenerji OJSC Etibar Pirverdiyev was spotted standing next to the Minister of Defence.

AZENCO OJSC was founded by Azernerji OJSC, and headed for a long time by Pirverdiyev An


 carried out by the Radio Liberty and the Organized Crime and Corruption Reporting Project revealed that AZENCO OJSC was subsequently privatized by the Interenerji Company, owned byAdor Ltd. A check of company registration files indicates that Ador Ltd is registered at the physical address of President Ilham Aliyev’s daughters. AZENCO OJSC executes multi-million state orders. The value of the Marine Force base construction to this company is unclear.

The Ministry of Defence and the AZENCO OJSC did not respond to our enquiries.

Large construction projects are excluded from bidding lists

The bidding procedure for the construction of the Marine Forces base wasn’t the only thing missing from the State Procurement Agency registry. Further investigation revealed that there was no mention of any large construction projects undertaken at the order of the Armed Forces and conducted by the Ministry of Defence between 2012 and 2014.

The only available information on existing tenders is the following:

–       construction of dormitories in Taghiyev military camp (1,454,289 AZN);

–       construction of military storage space (4,903,705 AZN);

–       construction of the Ujtapa-1 military camp (11,125,069 AZN)

The company behind these construction projects is Shans Konstruktion Ltd, which according to the Ministry of Tax was registered in April 2011. One of the founders of the company is a Turkish citizen.


A large number of new soldier barracks and buildings for officers have been constructed for the Armed Forces, Ministry of Defence and Internal Troops yet there is no information on this in the procurement registry.

For example, on April 12, 2013, 182 families of soldiers were given residential apartments; similarly, on November 16, 25 officers’ families received housing. According to information provided by the Ministry of Defence, over the past few years 300 officers’ families have been provided with permanent housing, while 400 more received service housing. But there is no information on the companies that constructed these houses, or amount that was spent on the projects.

Economicist Natig Jafarli says, “The law openly demands conduct of tenders for state orders above 50,000 AZN. If the bid is not registered it is in violation of state law.”

The Ministry of Defence did not respond to our enquiries on housing.

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