Azerbaijan case raises fears for oil supplies
By Isabel Gorst in Moscow
FT
May 15 2007 03:00
Two brothers – a former government minister and a prominent oilman –
go on trial today in Azerbaijan charged with corruption and plotting a
coup, in a case that has raised questions about the security of oil
supplies out of the Caspian region.
Farhad Aliyev, the former minister of the economy, is accused of tax
evasion, embezzlement, abuse of power and conspiring to overthrow
President Ilham Aliyev (no relation). His brother, Rafiq Aliyev, the
former chief executive of Azpetrol, the country’s main petrol
retailing and oil transport company, faces charges of tax evasion and
of an attempt to smuggle cash out of Azerbaijan.
The case has attracted concern in Europe and the US about government
abuse of human and property rights in Azerbaijan, which is growing
increasingly important both as a source of oil and as a transit route
for energy supplies to the west.
The US administration has in the past faced allegations that it has
turned a blind eye to human rights abuses in oil-rich countries.
Azpetrol became the subject of a tax investigation immediately after
the arrest of Rafiq Aliyev in 2005 – a move observers say has
parallels with Moscow’s dismantling of Yukos, the oil company
bankrupted by tax claims. Azpetrol has since been divided up among
investors who, local traders say, are loyal to the Azeri leadership.
In a further echo of Yukos’s case, Azpetrol’s former owners are taking
the Azeri government to international arbitration under the Energy
Charter Treaty, to which Azerbaijan is a signatory.
Foreign traders say the oil transit business in the Caucasus has
become more complex since Azpetrol changed hands.
The region houses strategic pipelines and railways transporting
growing volumes of Caspian oil exports to the west. Caspian producers
seeking new oil export outlets are concerned at Azpetrol’s
stranglehold on an oil terminal feeding into the Baku-Tbilisi-Ceyhan
pipeline to the Turkish Mediterranean.
Both men have been held in solitary confinement since October 2005 and
are denying all charges. They have been detained without trial for
longer than is allowed under Azerbaijan’s criminal code.
Supporters of Farhad Aliyev say the former minister’s outspoken
criticism of poverty and corruption in Azerbaijan posed a threat to
the government in the run-up to parliamentary elections in late 2005.
Elton Guliyev, a lawyer defending Farhad Aliyev, said: "This case is
political. Investigators are taking orders from above. The trial will
be unjust, prejudiced and one-sided."