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Azeri Banker under Indefinite Arrest for Politically Motivated Charges Faces Illness Alone

Azeri Banker under Indefinite Arrest for Politically Motivated Charges Faces Illness Alone Political and military events

One of Azerbaijan’s top bankers has been jailed indefinitely as part of what appears to be an attempt by the ruling family to take control of the bank he led for many years.

Jahangir Hajiyev, 54, isn’t a household name outside Azerbaijan, but he is known as a respected and powerful executive there. Or rather he was until March 2015 when he abruptly quit as Chairman of International Bank of Azerbaijan (IBA), the largest in the country. He was arrested in December and charged with a dizzying array of crimes, including misappropriation, abuse of office, causing significant damage by fraud, embezzlement through abuse of office and bribery.

Hajiyev’s detention pending trial has been extended three times for three months each time. He is still in prison even though a dozen other individuals associated with IBA were released and, remarkably, no investigation has been launched by the government against the bank itself. He also is said to be ill and in need of hospitalization.

The long list of charges against Hajiyev, the repeated extensions of his detention and the sudden fall from grace of this prominent, well-connected banker may have something to do with IBA’s loan portfolio for large infrastructure projects that carry a whiff of crony capitalism. But it smacks more of political score settling in a country known for its concentration of power and authoritarian rule. It is common for former communist countries in the Commonwealth of Independent States and Eastern Europe to have a mixed legislative and judicial system that criminalizes economic and business activities. Criminal charges are often leveled at political opponents or those who fall out of favor with the ruling elites.

Hajiyev had a stellar track record and had been with IBA for 14 years. He served as Chairman of the Baku Stock Exchange and was seen as a contender for a prized governorship at Azerbaijan’s Central Bank. His star was on the rise. The year prior to his arrest, IBA acquired an oil company, Bahar Energy, and a construction conglomerate, Azinshaat. The bank also made significant investments abroad, particularly in Russia and the United Arab Emirates.

Some of these forays went better than others and IBA’s loan portfolio took a big hit. A 34 percent drop in the local currency, the Manat, relative to the US dollar at the beginning of 2015 and low oil prices combined with the bank’s high exposure to foreign currency denominated loans triggered a rise in the cost of the bank’s credit portfolio by about 20 percent. Foreign investors in the bank sensed an impending crisis and started to pull out, compounding its already weakened position.

The State, which held a 50.2 percent stake in IBA, took full control and has poured about 2 billion Manat (USD 1.91 billion) into the bank to cover the losses caused by devaluation and nonperforming loans. Hundreds of jobs were axed and some bank managers and prominent local businessman were arrested in conjunction with these loans. High government officials were displeased with IBA’s performance and blamed Hajiyev for the ill fortunes. They used the financial crisis as an excuse to remove him as CEO of the bank in a manner that ensures that he will never return and challenge their positions of power.

Various media reports indicate that sources in the Azeri banking industry are afraid to discuss the situation for fear of retaliation and the possibility of joining Hajiyev in jail. Some of them speculate quietly that the Finance Minister, Samir Sharifov, may be paving the way for a new financial institution, Azturk, to become the country’s main bank, replacing IBA at the top of the sector. To that end, the former head of Capital bank and a close ally of Sharifov’s, Elmar Mammadov, was appointed chairman of Azturk. Finance Minister Sharifov is also related by marriage to Azerbaijan President Ilham Aliyev, whose family and close advisers are already significant shareholders in at least eight major Azerbaijan banks, according to the Organized Crime and Corruption Reporting Project. A close aide to Sharifov is now running IBA.

Another possible connection that points to political interference in the case is the fact that Hajiyev’s brother-in-law, National Security Minister Eldar Mahmudov, was dismissed just two months prior to the banker’s arrest.

In the meantime, according to his attorney, Agil Lajydžov, Hajiyev’s health is deteriorating. The banker was given first aid and is reportedly suffering from a heart condition, high blood pressure and a herniated disc. Repeated appeals to higher courts for his release were denied.

The fact that IBA has hit a rough patch is unfortunate. That the decline occurred as the country’s economy also dipped surely made those problems worse. In most functional market economies, if management mistakes cause financial losses, top executives are often punished by losing their jobs and not arrested on politically trumped up charges. If a legitimate investigation is ever to take place, it should be conducted transparently and without holding anyone under indefinite arrest. That is not the case with Hajiyev in Azerbaijan today.

 

 

source:http://georgiatoday.ge

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