Like Rome, Leyla and Arzu Aliyeva’s empire wasn’t built in a day—it was gradually and carefully assembled over the course of more than two decades, beginning with the election of President Ilham Aliyev in 2003.

By looking at the Aliyeva sisters’ corporate network through various lenses—timing, industry, company type, and jurisdiction—it is possible to gain a deeper understanding of how the network was built and functions today.

 

Timing

The sisters’ corporate network was built in two main phases: the first, from 2003 to 2006, was when they initially accumulated assets and structured their corporate network; the second, principally post-2006, has been characterized by the offshoring of wealth and reinvesting of resources. The timing of this process, among other factors, suggests a link with Azerbaijan’s oil industry.

Accumulation and structuring (2003-2006)

In the first phase, several monopolistic business conglomerates were set up in the years immediately after Aliyev’s rise to office. These would all go on to be controlled by Leyla and Arzu Aliyeva, generating substantial income for the first family in Azerbaijan. In 2003, a tax office functionary named Fazil Mammadov set up AtaHolding, a financial conglomerate valued at 634 million manats ($600 million) in 2015.[534] [248] It was followed in 2005 by Gilan Holding , set up by the family of Azerbaijani oligarch Kamaladdin Heydarov.[665] [517] PASHA Holding was set up in 2006. A sprawling conglomerate originally owned by the family of the president’s wife, current Vice President Mehriban Aliyeva (neé Pashayeva),[525] [682] its subsidiaries allowed the first family to dominate several key sectors, including banking and construction.[527] [604] Over time, the combined value of these conglomerates skyrocketed to more than $13 billion.[1407] [1406] [521] [341] [517] [518] [511] [251] [536]

Between 2005 and 2006, the first family also secretly acquired lucrative stakes in mining and telecommunication, two strategically important industries.[680] [522] The stakes were held by Leyla and Arzu Aliyeva—using offshore shell companies—when the sisters were just 20 and 16 years old.[680] [855] [548]

Offshoring and Reinvesting (2006-present)

The second phase, starting in 2006, accelerated the offshoring of Leyla and Arzu Aliyeva’s wealth, as almost a billion dollars was deposited into luxury real estate, including villas and hotels in Dubai, apartments in London, dachas and development deals in Moscow and St Petersburg, and commercial properties in Romania and the Czech Republic. Some of these acquisitions were facilitated by lawyers in London and banks in Malta and the United Arab Emirates and would be subsequently described by investigators as showing tell-tale signs of money laundering.[516] [517] [11] [518] [519] [520] [521] [536] [1029] 

In addition to seeing the sisters invest in hard assets that function as a store of wealth, such as real estate, this period has also been characterized by their investment in soft power projects, such as media and films that have functioned to launder the international reputation of the first family.

Incorporation timing

There is good reason to believe that a significant portion of the Aliyev family’s wealth initially derived from the revenues of the Azerbaijani oil industry, which has been repeatedly dogged by corruption scandals.[1155] Before he was president, Ilham Aliyev served as the vice president of SOCAR, Azerbaijan’s state-owned oil company, from 1994 to 2003,[892] during which time he was implicated in a major corruption scheme. According to a 2005 US grand jury indictment, in the late 1990s, senior Azerbaijani officials conspired with foreign businessmen to privatize the state oil company in exchange for $300 million in shares in the newly privatized entity, as well as $11 million in cash paid to the officials and their family members, including Ilham Aliyev’s father and sister, President Heydar Aliyev and Sevil Aliyeva.[1208] Despite the bribe payments, the deal never went ahead because, in the words of an FBI official, “corrupt Azeri officials scammed the scammers.”[1211] Ilham Aliyev is not named in the grand jury indictment, which is anonymized, but he is named in subsequent affidavits filed by defendants in the case.[1210] He denies taking bribes.[1207] 

Meanwhile, Azerbaijan’s oil revenues are deposited into SOFAZ, the country’s sovereign wealth fund.[1393] SOFAZ has spent more than $100 billion during the two decades that Ilham Aliyev has been in power, largely via the direct financing of state budgets. These are in turn used to fund, among other things, state salaries and major construction and infrastructure projects, the latter of which have often been awarded to companies owned by political elites—including the first family—without a public tender.[1394] [1395] [906]

Comparing the timing and pace of when Leyla and Arzu Aliyeva’s shell companies were incorporated with the rise and fall of the global price of oil thus reveals an interesting pattern. When oil rises in price, the pace of incorporations tends to increase, and when it falls, the pace of incorporations tends to decrease.

 

 

Timeline of Incorcorations
Figure 1: Timeline of incorporations with global price of Brent Crude, U.S. Dollars per Barrel, Monthly, Not Seasonally Adjusted, Federal Reserve Bank of St. Louis[1386]

 

Industries

Azerbaijan’s first family holds stakes in businesses spanning several industries, principally via Azerbaijani conglomerates majority owned by Leyla and Arzu Aliyeva. Chief among these is PASHA Holding, which employs more than 20,000 people.[527] The sisters’ corporate network spans numerous sectors: hospitality, construction, real estate, finance, media, telecommunication, and the extractive industries.

Hospitality

Leyla and Arzu Aliyeva dominate Baku’s luxury hotel market, owning the Four Seasons, the JW Marriott Absheron, and The Ritz-Carlton.[1215] They also have holdings in numerous other hotels in Azerbaijan, Turkey, and the UAE, mainly via the sisters’ PASHA Holdings conglomerate.[1215]

Construction

PASHA Holding’s construction wing is PASHA Construction, a company behind at least 47 large-scale real estate developments in Azerbaijan.[1212] The company has received preferential treatment and lucrative funding from the state, with its projects being built faster and facing fewer bureaucratic obstacles than other developers’ projects.[604] [1260] [1225] [1273] [1274] [1226]

Real Estate

Leyla and Arzu Aliyeva and their close associates are linked to a sprawling portfolio of overseas real estate acquisitions worth almost $1 billion. These properties include mansions in Dubai,[556] luxury real estate in London worth $700 million in total,[521] dachas and development land in Moscow worth approximately $40 million,[1029] and real estate in the Czech Republic and Romania.[518]

Finance

The sisters own stakes in several Azerbaijani banks, including PASHA Bank, AtaBank, Kapital Bank, Xalq Bank, and Bank Avrasiya. Cumulatively, these banks now hold almost half of the country’s banking assets.[1152] The first family also owns an insurance wing, PASHA Insurance,[1238] and a private equity arm, PASHA Investments, which invests in Azerbaijan, Georgia, and Turkey.[1235] [1236]

Media

Two films, “Ali and Nino” and “Uletnaya Progulka” (“A Mindblowing Walk”), were produced with the backing of Inshaat Services LLC,[235] [444] an Azerbaijani company associated with the sisters’ PASHA Holding. Leyla Aliyeva has also been linked with an Azerbaijani magazine, Baku,[761] and a Russian news website, Caucasus Gazette.[187] [135] [341] These media endeavors are part of much wider and well-resourced soft power initiative.

Telecommunication

In 2011, Leyla and Arzu Aliyeva were found to have secretly acquired a majority stake in Azerfon,[522] an Azerbaijani telecom company that operates the Nar mobile phone network. If the sisters continue to own or control a significant stake in Azerfon, this raises concerns that they may be in a position to monitor phone calls and internet activity in Azerbaijan.[1258] [1259]

Azerfon told The Sentry that Leyla Aliyeva, Arzu Aliyeva, and the three Panama companies, Hughson Management Inc., Gladwyn Management Inc., and Grinell Management Inc., do not currently hold stakes in Azerfon: “Our management approach is based on integration of highest standards into everything we do. In particular, our corporate governance is built upon a set of internal regulations and policies that allows the management to mitigate potential non-compliances and subsequent risks which could ultimately affect our reputation as a reliable partner and service provider.”[1402]

Extractives

In 2012, reporters found that the sisters had secretly obtained a majority share in the AIMROC mining consortium, which the government had granted a near-monopoly to mine gold and silver in western Azerbaijan.[680] [952] [953] [954] [955] [956] [680] [855] Shortly after the sisters’ stakes were exposed, however, mining operations came to an abrupt halt, and the concessions were acquired by a government mining company.[818]

 

Companies

The companies in Leyla and Arzu Aliyeva’s corporate network can be divided into two categories: operating companies, which are roughly 25% of the total, and shell companies, which are roughly 75% of the total.

Operating companies

The sisters’ operating companies do business in the hospitality, construction, real estate, finance, media, telecommunication, and extractive sectors. In addition, the three conglomerates linked to the sisters—PASHA Holding, AtaHolding, and Gilan Holding—have numerous Azerbaijani subsidiaries that operate businesses in these sectors.[595] [1152] [665] However, because Azerbaijan no longer publishes director or shareholder information, the extent of the sisters’ ownership or control over the conglomerates’ subsidiaries cannot be confirmed.

Shell companies

The majority of Leyla and Arzu Aliyeva’s shell companies appear to have functioned, as the term might suggest, simply as shields to obfuscate their true owners. They have no discernible commercial purposes, no websites, no online presences, and no traces in import-export databases or publicly accessible real estate registers. About 20% of the shell companies have functioned to acquire and hold stakes in other companies, including six high-level holding companies that hold the sisters’ stakes in major Azerbaijan conglomerates and other revenue generating businesses.[528] Similarly, about 15% of the shell companies have functioned to acquire or hold real estate worth almost $1 billion in the Czech Republic,[518] Romania,[536] Russia,[1029] [341] the UK,[521] and the UAE.[556]

 

Jurisdictions

The 10 principal jurisdictions in Leyla and Arzu Aliyeva’s corporate network can be categorized as those with operating companies, those with shell companies, and those with both operating companies and shell companies.

Juridictions with operating companies

Georgia, Turkey, Russia, and the UK are jurisdictions in which the Aliyeva sisters primarily have operating businesses. In Georgia and Turkey, for instance, the sisters own subsidiaries of their banking group, PASHA Bank.[1380] [429] In Russia and the UK, the sisters own real estate and media companies, most of which have a clear commercial purpose. Some of the sisters’ Russian real estate companies, however, are behind stalled development deals,[326] [323] [324] [189] [322] [817] [482] [346] in some cases having adverse court judgments against them,[323] raising questions as to how much legitimate income they are actually generating.

Jurisdictions with shell companies

The majority of the Aliyeva sisters’ identified shell companies are housed in four countries: the British Virgin Islands, Panama, the Isle of Man, and Switzerland. These jurisdictions are characterized either as tax havens or secrecy jurisdictions because of their limited corporate transparency and financial oversight,[1049] [1179] and they all have significant gaps in the detection, enforcement, and prosecution of financial crimes, which makes them appealing to politically exposed persons (PEPs) with suspicious fortunes to conceal.

Jurisdictions with operating companies and shell companies

About 13% of the sisters’ identified companies have been registered in Azerbaijan, where the sisters are linked to large conglomerates and banks. Two shell companies—Bless LLC and Reveri LLC—are particularly significant, as they are used by Leyla and Arzu Aliyeva to hold their majority stake in the PASHA Holding conglomerate and its PASHA Bank subsidiary.[341] [13] [11] When it comes to the subsidiaries of their conglomerates, however, the sisters’ stakes in particular operating companies remain difficult to confirm due to a law enacted in 2012 that effectively conceals director and shareholder information about Azerbaijani companies.[1172]

Nearly 10% of Leyla and Arzu Aliyeva’s identified companies are registered in the UAE, including several shell companies that appear to have been set up for the sole purpose of opening bank accounts and moving funds—arrangements that have been questioned by money laundering investigators, although no charges have been brought.[341] The UAE is a “major money laundering jurisdiction,” according to the US Department of State.[1049] Sahra FZCO, a shell company registered in the UAE’s Jebel Ali Free Zone, has been used to hold the sisters’ majority state in the Gilan Holding conglomerate in Azerbaijan.[5] The sisters also have stakes in Dubai hotels and luxury villas.[665]