Barmek-Azerbaijan to stand a trial

An investigation into the activities of Barmek Azerbaijan electricity network Ltd., carried out by the Department for Corruption Fighting at the Azerbaijani Prosecutor Generals Office in close cooperation with the specialists of the Ministries of Taxes, Finances, Economic Development, Industry and Energy, an the Chamber of Audit, is complete, the Azerbaijani Prosecutor Generals Office announced.

The investigation revealed that in compliance with agreement concluded between the Azerbaijani Ministry of Economic Development and Turkish company Barmek Holding A.S, dated 13 October 2001, the company was awarded a right of management and exploitation of Bakielektrikshebeke joints-tock company for 25 years. In accordance with the terms of the agreement, on behalf of Azerbaijan the Ministry of Economic Development was charged in full and exact execution of liabilities.

While fulfilling the obligations linked with the implementation of the agreement, former Minister for Economic Development, Farhad Aliyev, deliberately using his office duties entered a deal with the chairman of Barmek Holding A.S. company, Huseyn Arabul, on illegal admission of the company to a UK company Swadcrest Ltd, represented by Sehni Sinkch Taranjit, who carried out private commercial activities, as equal companion of a would be daughter company to be established in accordance with Article 9.1.1.13 of the agreement, and reached agreement on establishment of cooperation.

With this respect Arabul in the contrary to the terms of agreement, established on 11 December 2001 a mediatory Barmek Azerbaijan electricity network Ltd., the shares of which were equally distributed between the companies Barmek Holding A.S. and Swadcrest Ltd, though this daughter company was planned as an enterprise under the direct or indirect control of Barmek Holding A.S.

Although Taranjit was a member of Barmek Azerbaijan electricity network Ltd., neither nor he, nor another representative of Swadcrest Ltd, carried out any activities for execution of obligations of the company, while on 20 April 2005 Taranjit conveyed to Arabul a post of Director of Swadcrest Ltd, that he officially represented.

Nevertheless, in 2002-2004 and in the 1st quarter of 2005 false documentation was carried out without any grounds, as though $2.8bn was remitted to Swadcrest Ltd for consultation services and the big funds were misappropriate in the enterprise.

Besides, Aliyev, despite direct note in the agreement, he actually pushed aside the relevant bodies of the Ministry from the control over the implementation of obligation of the agreement by counteragent, including an investment program on reorganization of assets, creation of new assets, development of network, improvement of management. In this conditions Barmek Azerbaijan electricity network Ltd. did not carry out fully or partially the obligations of the agreement, while some senior ranking officials of the company committed acts of criminal character, abused their office duties in mercenary purposes, through including in the property balance of the company the abandoned or wrecked devices as new ones after the refurbishment, as well as falsification of documents on conduct of work, misappropriated big money. Serious financial frauds and corruption were fixed in the process of purchase, connection to internet and realization of electricity.

Despite its commitment under the investment program on investing US $52m over the first 5 years - US $8,444m in management and US $42,560m in network, Barmek Azerbaijan electricity network Ltd. did not carried out any foreign investment activities in fact, whereas US $3bn paid by the founders were spent on payment of concession envisaged for acquisition of a right for management and those indicated in the reports were considerably lower than it was set, investment financing was carried out at the expense of money collected by Barmek Azerbaijan electricity network Ltd from consumers, the document reads.

In come cases when no work has been done, while there were cases when unnecessary work which fell short of standards was carried out, the reports on investing indicated distorted figures. Though in 2004 a report on investing in the Sumgayit network indicated the figure as US $2m, actually no work has been done in this respect. This, in the beginning of 2004, 7 cables each with the length of 800m and total cost of US $170,000 were not connected to the Ahmadli substation, and distribution structural device 290, to which the cable was to be connected was not repaired. 1km-cable of a 2-coutour 35KW- electricity transmission line between Binagadi substation and substation 120 from Azadlyg Ave to Istanbul cafГ© was unnecessarily replaced with a cable line. The work which contradicted the technical norms and took $1m was also part of an investment report.

As a result of investigation conducted by the Prosecutor Generals Office with participation of the specialists of the financial and energy control bodies, it was revealed that during its activities Barmek Azerbaijan electricity network Ltd. the prices of electricity devices and materials, as well as the construction-assembly work were indicated in exaggerated prices, which resulted in misappropriation of money, serious financial breaks in the registration and collection of payments for realized electricity, energy expenses of big power-consuming facilities were willfully decreased on the base of illegal deals, while additional funds were collected from subscribers and assimilated.

The Azerbaijani Prosecutor Generals Office filed a lawsuit in accordance with Articles 308.1, 313 and 179.3.2 of the Criminal Code of Azerbaijan, which set up responsibility for misappropriation by high ranking officers, official forgery and embezzlement of property belonging to others. The Department for Corruption Fighting at the Azerbaijani Prosecutor Generals Office is charged in conduct of investigation into the case.

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