Viewing cable 10BAKU127, AZERBAIJAN: WHO OWNS WHAT VOL. 2 - THE MINISTER OF

Viewing cable 10BAKU127, AZERBAIJAN: WHO OWNS WHAT VOL. 2 - THE MINISTER OF

 

Reference ID	Created	Released	Classification	Origin
10BAKU127	2010-02-25 05:05	2010-12-06 15:03	SECRET	Embassy Baku

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S E C R E T SECTION 01 OF 04 BAKU 000127 

SIPDIS 

COMMERCE FOR D.STARKS 
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DEPT PLEASE PASS TO USTR FOR C. MORROW AND P. BURKHEAD 

EO 12958 DECL: 02/24/2020 
TAGS ECON, EINV, EIND, ETRD, KCOR, PINR, PGOV, RS, KS, IR, 
TU, AJ 

SUBJECT: AZERBAIJAN: WHO OWNS WHAT VOL. 2 - THE MINISTER OF 
EMERGENCY SITUATIONS, BELUGA CAVIAR, AND FRUIT JUICE 

(C-RE9-02494; C-RE9-02493; C-RE9-02492)
REF: BAKU 54

Classified By: Charge d’Affaires Don Lu, a.i., for reasons

1.4(b) and ( d).

¶1. (S) SUMMARY: This cable is the second in a series that

profiles the most powerful families in Azerbaijan, both 

in terms of economic and political power. This issue 

features Minister of Emergency Situations Kamaladdin 

Heydarov and his family. Heydarov was previously Chairman

of the State Customs Committee, and his hand-picked successor

now operates that agency, one of the most corrupt operations

in Azerbaijan. The Heydarov family, which controls a business

empire in Azerbaijan ranging from fruit juice production to

real estate development, is the second most powerful commercial

family in Azerbaijan, after the Pashayev family (into which

President Aliyev married). End Summary.

The Man Behind the Power
------------------------ 

¶2. (S) Kamaladdin Heydarov is the most powerful member of 

this family, and some observers have said he might be even 

more powerful than the President himself. (COMMENT: Post does 

not believe this is true, although Heydarov controls more visible

assets and wealth within the country than the President. 

End Comment.) His father, Fattah Heydarov, is a Member of 

Parliament from the mountainous Qabala district, which serves

as a home base for the family outside Baku. Fattah was 

Secretary of the Ordubad (and later Julfa) District Party 

Committee during Soviet times, and served as Minister of 

the Welfare Service of Nakhchivan from 1976 to 1978 and later as Nakhchivan’s Minister of Culture from 1983 to 1995.

¶3. (S) Kamaladdin Heydarov was Chairman of the State

Customs Committee for nine years, and since 2006 has 

been head of the para-military Ministry of Emergency 

Situations (MES), which acts as a super-Federal Emergency 

Management Agency, Fire Marshall, health and safety 

inspector, and overall regulator of many aspects of the

economy. Born in 1961, he holds a degree in Geology and 

International Law from the Azerbaijan State University.

He held executive positions in a number of private and 

public enterprises prior to his appointment at the ripe 

old age of 35 as Chairman of the State Customs Committee

(SCC), an agency that is notoriously corrupt, even by

Azerbaijani standards. Heydarov’s rise to power was 

partly a result of the strong relationship between his

father Fattah and former President Heydar Aliyev 

(also from Nakhchivan), but also partly a result of 

Heydarov’s strong management skills. As he gained wealth

for the ruling party, Heydar Aliyev’s respect for him grew,

until finally he was entrusted with the valuable role of

Chairman of the SCC.

¶4. (S) The State Customs position allowed him to gain his

massive wealth, as significant illicit payments were paid 

“up the food chain” in an elaborate and well-orchestrated

system of payoff and patronage. Heydarov likely still

enjoys a sizeable income from the SCC, as it is 

controlled by his loyal successor. When President Ilham 

Aliyev appointed Heydarov as Minister of Emergency 

Situations in 2006, he was replaced at the SCC by his

Deputy Aydin Aliyev. Aydin Aliyev is not related to

President Aliyev, and Heydarov is Aydin Aliyev’s sole

benefactor, a symbiotic relationship in which Aliyev 

presumably gives undying loyalty (and a hefty cut) to

the powerful Heydarov in order to retain his position.

When Charge first met Heydarov in 2007, the Minister 

had been in office for less than a year but had a chest

full of military ribbons that would rival the U.S. 

Chairman of the Joint Chiefs. Presumably he transferred 

them directly from his old State Customs uniform.

The Ministry of Everything Significant (MES)
-------------------------------------------- 
BAKU 00000127 002 OF 004

¶5. (SBU) The Ministry of Emergency Situations (MES)

has consistently proven itself to be one of the most

powerful ministries in Azerbaijan. It is suspected to

have the largest revenue of any Ministry. It even has

its own para-military unit, consistent with other such

ministries in the CIS. Heydarov mentioned to a visiting

Washington VIP in 2008 that his ministry had recently taken

control of an anti-aircraft battery near Baku in which he

had served as a young conscript during Soviet times.

The Ministry now controls the fire departments and other

emergency services, fire code inspections, state grain 

reserves, and construction licensing. This last area of 

responsibility (perhaps the most important for foreign 

entities operating in Azerbaijan) also covers building

inspectors who can interfere with, delay, or stop any 

construction project they declare to be “unsafe.” In fact,

MES staff have previously warned American and other foreign

businessmen that their purview covers anything that is 

associated with temperature, pressure, or isotopes --

categories broadly interpreted to include just about

everything under the sun.

¶6. (SBU) It is often said mockingly that in Azerbaijan’s

judicial system, one can only win a case if one is

friends with the judge - or if introduced by Benjamin

Franklin (read: significant cash). Of course being known

to the judge as politically powerful is another path to

courtroom victory. The path to certifying a building’s 

safety is likely similar, and the true structural integrity

of Baku’s recent construction boom is suspect. In 2007,

a multi-story high-rise under construction crashed to the

ground, killing several workers. In January 2010, three 

workers were killed when they fell from a building under 

construction on high-rent Neftchiler Prospect (reftel).

Suspect construction is widespread in Baku, as new,

speculative real estate ventures in central Baku 

(including high-rise buildings) are largely vacant, 

while practical buyers bid up the prices of flats in 

“Stalin-ka” buildings that pre-date independence.

These older buildings, which tend to be low-rise, 

are thought to have had higher construction standards 

and generally be safer and more dependable.

¶7. (S) These types of market developments do not bode

well for the reputation of MES, which is widely viewed 

as a cash cow for Baku’s elite, and the Heydarov family 

in particular. If an event such as an earthquake led to 

widespread destruction of property, it is assumed that 

outrage would be private, rather than public, and would 

not boil over into attacks on contractors or corrupt bureaucrats,

as was the case after the 1999 earthquake in Istanbul. 

Some less powerful contractors would become easy targets, 

but the true architects of disaster such as Heydarov’s MES

would find a way to use its resources and the tools of the

state to escape any reprisal.

His Boys and Their Toys
----------------------- 

¶8. (S) Kamaladdin’s two sons, Nijat Heydarov and Tale Heydarov,

have recently expressed a desire to purchase two Gulfstream

jets, valued at $20 million each. The family also owns an

Airbus A319 corporate jet that is presently undergoing 

cabin completion in Basel, Switzerland. According to 

initial reports, ownership of the Gulfstreams would be

shared between “Shams al Sahra FZCO” (registered in

Dubai to Tale and Nijat) and Mr. Manouchehr Ahadpur 

Khangah, with Shams al Sahra and Kangah each holding 

50 percent of each jet. Khangah was not previously known

to the Embassy, but according to information from 

Gulfstream appears to be a citizen of both Iran and 

Azerbaijan (unclear if he also holds other passports).

Purportedly as part of Patriot Act compliance, Gulfstream

asked the Heydarovs for information that would confirm the

lawful sources of their wealth. The BAKU 00000127 003 OF 004
Heydarovs provided Gulfstream an overview of their family 

holdings, and it appears they own more businesses than any 

other Azerbaijani family, including companies in food canning,

construction materials, concrete, asphalt, chemicals, bricks,

textiles, CD and DVD production (since licensed CDs or DVDs

are generally unavailable on the local market, these are 

certainly all pirated), milk processing, tourism, gypsum

materials, leather, agriculture, pianos, alcohol and

spirits, juices, banking, insurance, and construction.

¶9. (C) One Embassy contact, XXXXXXXXXXXX referred to

Khangah as the Chief Executive Officer or “front man”

of a substantial portion of the Heydarov family 

conglomerate. This contact noted that while Khangah is

listed as the official owner of various businesses, they 

are very much Heydarov-owned operations in which Khangah 

functions more as a manager. This source added that Khangah’s

role was mirrored by an unnamed Turkish citizen who 

controls another segment of the family businesses.

¶10. (C) Many of the family,s operations are part of 

the “Gilan,” “Qabala,” “Jala,” or “United Enterprises 

International (UEI)” family of companies. Gilan Holdings

is omnipresent in Baku, as the company is one of several

major real estate developers and has been in the forefront

of Baku’s highly speculative real estate market. Observers

compare Gilan to Dubai World or Nakheel, although admittedly

on a smaller scale. The Heydarovs have largely cornered the

fruit juice market in Azerbaijan, maintaining extremely high

prices for locally produced juices and watered-down juice 

drinks, while making life difficult -- with the help of State

Customs -- for cheaper competitors from Turkey, Ukraine and

Russia. When USAID tried to support the production and 

distribution of pomegranate products in Azerbaijan, they 

quickly learned that no one sells pomegranate juice, concentrate,

or derivatives from Azerbaijan without Heydarov’s permission.

Azerbaijan’s economy is largely dominated by monopolistic 

interests, and observers suggest that the Heydarovs are at

the top of this mountain of non-competition. It is rumored 

that the Heydarovs also have interests in the local Pepsi

bottler, the local license for Red Bull, British American 

Tobacco, Japan Tobacco, and Imperial Tobacco. Heydarov has

readily admitted to visiting U.S. delegations that he owns 

and operates the Caspian Fish Company which controls the 

lucrative (and previously Russian Mafia-controlled) Beluga 

Caviar production in Azerbaijan.

¶11. (S) The Heydarovs are also active in cultural endeavors. 

Kamaladdin Heydarov is a composer and has written a song about

former President Heydar Aliyev that was sung by Azeri singer

Aghadadash Aghayev. His wife is ethnic Korean, and he himself 

is quite the Koreaphile; he is President of the Azerbaijan Taekwondo

Federation and owner of the recently opened high-end Korean 

restaurant “Shilla.” Korean diplomats have confirmed that 

Heydarov was the protector for several major business deals,

but have complained that many of these deals have gone awry 

after the Korean firms refused to pay adequate patronage to

Heydarov.

¶12. (C) Heydarov’s son Tale is the President of The European

Azerbaijan Society (TEAS), and has made rounds to U.S. 

embassies in European capitals from his London base. The

“society” purports to be an independent advocacy group, 

but its talking points very much reflect the goals and 

objectives of the GOAJ. In recent meetings, Tale and his

cohorts have raised “Armenian aggression” in Nagorno-Karabakh

and “double standards” of U.S. human rights and democracy

reporting in the region, and complained about efforts of 

the U.S. Congress to provide humanitarian assistance within

the Nagorno-Karabakh enclave. Tale and/or Nijat also own

the Qabala Football Club -- perhaps as a small-scale effort

to replicate the Chelsea antics of Russia’s Roman Abramovich.

The Qabala squad is a virtual United Nations team, with
BAKU 00000127 004 OF 004
players from across Europe, Latin America and Africa -- 

the best team money can buy, at least for central Azerbaijan.

Both sons were educated in London and presently live there.

Tale holds a B.A. in International Relations and History 

from the London School of Economics and an M.A. in Security 

and Global Governance from Birkbeck College, while Nijat holds

a B.A. in Politics and East European Studies from University

College London and an M.A. in Management, Organizations,

and Governance from the London School of Economics.

Some newspapers have reported that Tale might return to

Baku to become a Member of Parliament later this year.

It’s Good to Be King
-------------------- 

¶13. (C) The family’s influence is strongest in the regions

of Qabala, Masalli, and Lenkeran. Postsuspects that 

Heydarov continues to control the tate Customs Committee 

and wield influence over the Ministry of Taxes, the Ministry 

of Ecology and Natural Resources, and Ministry of Economic

Development, which is now led by a former Ministry of 

Taxes official. Additionally, of course, Heydarov profits

significantly from widespread activities of the Ministry

of Emergency Situations. That ministry, according to 

observers, may be the most sought after employer in official

Baku, as Heydarov has made a reputation for paying salaries

on time and in full. Employees benefit from perks of MES

employment, such as the ability to enroll children in one

of Baku’s best-looking and best-financed public schools.

Measures like these, contacts report, create a loyal 

following for the minister among his minions.

Turf Wars: Don’t Cross Kamaladdin
--------------------------------- 

¶14. (S) Embassy contacts note that Kamaladdin Heydarov

is currently in a “fight over grain” with Minister of

Agriculture Ismat Abbasov, and wants Abbasov replaced

by Member of Parliament Eldar Ibrahimov. Historically,

those who have fought with Heydarov have always fared

poorly: Farhad Aliyev and Heydar Babayev were (in succession)

driven out as Minister of Economic Development in part

after falling on Heydarov’s bad side. Both were billed

as reformers, and the economic reforms they were seen

to propose stood to hurt Heydarov’s interests at the State

Customs Committee and the Ministry of Emergency Situations.

In addition, some opposition newspapers had begun to call

them potential candidates for the position of Prime Minister.

Feeling threatened by their reform activity and growing

power, Heydarov allegedly put his foot down. Both were 

removed from government and their business interests were

seriously damaged. Rumors circulated in 2009 that Heydarov 

may have even been behind the assassination of Air Force

Chief and Deputy Defense Minister General Rail Rzayev.

The rumors point to the widely-reported forced landing

of Heydarov’s helicopter after it took off without 

obtaining flight clearance.

¶15. (U) The next issue of “Who Owns What” will profile

the family of Ziya Mammadov, the Minister of Transportation.

With so much of the nation’s oil wealth being poured into

road construction, the Mammadovs also control a significant

source of rent-seeking. His holdings extend to the buses

that run throughout Baku. A recent television report asked

if the Mammadovs controlled mysterious construction company

ZQAN Holding; the reporter pointed out the letters of ZQAN

matched the initials of father Ziya, mother Qanira, son Anar,

and daughter Nigar. A ZQAN representative brushed this 

aside as innuendo. LU