Editor's Note: This investigation was conducted by the Objective investigative reporting project in Ukraine, Belarus and Moldova. The program is financially supported by the Ministry of Foreign Affairs of Denmark, and implemented by a joint venture between NIRAS and BBC Media Action.
CEADIR-LUNGA,
Moldova – A vanity project started
by Azerbaijan to honor former President Heydar Aliyev, whose son is the current
president of the former Soviet republic, has turned into a huge scandal.
Critics see an international corruption scheme behind the planned construction
of Heydar
Aliyev Sports Complex in Moldova’s
Gagauziya region.
Three years ago, the Azerbaijani government vowed to
construct a sports complex in the small city of Ceadir-Lunga, with 22,000 residents. At first, Moldovans
liked the idea. But since then the project has been stained with charges of
unfair land allocation. A local governor turned out to have a special interest
in the project, which may not be as charitable as it looks at first glance.
Azeri gift to Moldovan city
The promised complex was said to have a soccer stadium of
5,000 seats, tennis courts, training football fields, weightlifting hall with
400 seats, a hotel with 200 rooms and more. For Ceadir-Lunga, the promise
seemed very generous.
Stepan
Marin, 48, lives in an apartment building where the Heydar Aliyev Sports
Complex is meant to be built. He remembers how happy he was when Gagauziya Governor
Mikhail Formuzal announced the deal with Azerbaijan
in 2011. It would be needed. The city has no sports complex. “I was very happy.
Everybody was happy in Gagauziya. We are brothers with Azerbaijani people, we
are Turkic and should help each other,” Marin said.
In recent years, the Azeri
government has installed statues of Heydar Aliyev – a former Soviet KGB top
official known as a terrible abuser of human rights — in many countries,
including Moldova.
In March 2011, a sports complex
opened in Georgia at the behest of the Heydar Aliyev Foundation. Next on the
list was a $5 million sports complex in Moldova’s Ceadir-Lunga to be named
after the late president.
The stadium was to become the property of an Azeri
construction company, linked to Formuzal, the regional governor, after construction
is completed. The company also got exclusive rights to buy and a large plot of
land. The city, it turned out, would have no share in the complex.
All
roads lead to Aliyev
The Azerbaijani government assigned construction of
the complex to JSC Ataholding, with $106 million in capital and specializing in financial,
information technology, industry and tourism projects. It is owned, through a chain
of companies, by the two daughters of the Azeri President Ilham Aliyev, Leyla and Arzu.
“The Azeri investor will bear all expenses. The company is
likely to invest its own financial resources, but might be also allocated from
the state budget of Azerbaijan. I do not know, I can’t tell you,” Formuzal
said in May. Neither the Moldovan nor Azerbaijan authorities would provide a
copy of the agreement.
Ceadir-Lunga deputy mayor Liubovi Zaharia said, however,
that problems soon emerged in finding a place to build the complex. “Nobody, however, could imagine back in
July 2011 that it will be so difficult to lease the land for the construction
of the sports complex,” Zaharia said.
Some
10 hectares of land identified for the construction of the complex was
considered agricultural land and had to be legally reclassified.
According to Moldovan law, the city is supposed to compensate the federal
government $87,000 per
hectare to compensate for the loss of farmland, according to Moldovan law.
The
City Council, rather than asking the Azeris for the money, sought an exemption
from parliament. The exemption was adopted on March 22, 2013 by a unanimous
vote of the lawmakers. The land was reclassified “for industry, transport,
telecommunications and other special purposes.”
A year
before the change in land status, Ceadir-Lunga municipal authorities held an
auction to award leasing rights for the 10 hectares of land.
Only
one company participated – Ataholding MD, a Moldovan company owned by Azeri JSC
Ataholding – and became the winner. But the city council canceled the lease
because the old land status was still in effect at the time that prohibited
construction. Once the agricultural designation was droped, a second auction
was held in November 2013. Once again, Ataholding MD was the winner and the
only participant.
Ceadir-Long
City Hall and Ataholding MD signed a lease agreement for 49 years. According to
the contract, the company pays annual rent of $20,470 (284,900 Moldovan lei)
for use of the land only for construction of the sports complex.
But
the contract turned out to have a clause that allowed Ataholding MD the right
to take ownership of the complex from the state after construction is 80 percent
complete. In addition, the company obtained the exclusive right to purchase the
10-hectare plot.
Deputy
Mayor Liubovi Zaharia said the decision to allow the company to buy the complex
and the land was made at public hearings, where some 100 people participated,
including representatives of local authorities, citizens and employees of local
sports and education institutions. “The population voted in support,” Zaharia
said.
This
could not be confirmed independently, since the only available information
about the public hearings is an official notice about its results on the city council’s
website.
On
March 4, the Territorial Office of the State
Chancellery in Comrat,
the capital of Gagauziya, asked Ceadir-Lunga Town Council to cancel the lease
decision as illegal.
The argument
is that the exemption on payments to the Moldovan government granted by parliament
for the land-use change can only be made to serve public interests, not private
commercial ones – as ownership by Ataholding MD would do.
Olga
Cirma, Head of Comrat Territorial Office of the State Chancellery, believes
that central government was misled. “The Ceadir-Lunga City Council did not
inform the parliament and the government that it plans to privatize the land
and that the interested party and the future owner is Ataholding MD. These
details would have played an important role in the adoption of the law on
compensation for losses,” Cirma said.
In
April, the note of protest was rejected by Ceadir-Lunga City Council.
Immediately, the Comrat Territorial Office of the State Chancellery went to
court. Hearings began on May 25.
Hidden
interests
According
to the Registration Chamber, Ataholding MD was registered on May 7, 2012. The
company’s sole founder – JSC Ataholding – listed $553 in capital and Zeinalov
Teimur Agababa, a citizen of Azerbaijan, as manager.
JSC
Ataholding is owned by three offshore companies. One of them, Hughson
Management Inc., registered in Panama, owns 51 percent of the shares. According
to the Register of Companies of Panama, the Hugson Management Inc. was founded
on July 12, 2006, and is owned by Leyla and Arzu Aliyeva, the daughters of
President Ilham Aliyev.
The
director of the company, Teimur Zeinalov, refused to comment about investments
plans in Gagauziya.
But
the company’s Moldovan subsidiary, Ataholding MD, is even more controversial.
The official records show that Ataholding MD is registered
in Ceadir-Lunga, on 12 Mikhail Lomonosov St., apt. 13. There is no office
building at this address, but a Soviet two-story apartment building with tiny
rooms. Moreover, it turned out to only have 12 apartments.
According to official records, there is an apartment no. 13,
but it is a non-residential premise of 13.7 square meters. The owner is not
Ataholding MD, but Liubov and Mikhail Fomuzal, the governor of Gagauziya who
negotiated the deal with Azerbaijan, and his wife.
In May 2014 in a phone interview, Formuzal refused to answer
why the Azeri investor lists its headquarters as his home.
In a public statement in October 2011, Formuzal said construction
of the sports complex will be done by Gagauziya-based construction companies.
Several owners of the local construction companies are the members of the
political party, Yedinaya Gagauzia, founded and lead by the governor.
Anticorruption
expert Ianina Spinei said to that the deal clearly poses a conflict of interest,
at minimum, in denying the Moldovan government compensation for the land-use
change.
“First,
two officials – Ilham Aliyev and Mihail Formuzal – are linked with the company
which will build the sports complex, apparently using public funds of
Azerbaijan. They might both make profit. Second, the owner of the sports
complex will be the company,
not the Ceadir-Lunga City Hall. The Moldovan parliament and government decided
to exempt the authorities from compensating losses of $870,000, but they didn’t
do it for the sake of the Azeri-owned company,” Spinei said.
In any
case, the sports complex is not built as litigation continues over the land
deal.
Marin, the resident of Ceadir-Lunga,
recalls two years ago that bulldozers
were clearing a construction site where he thought the sports complex would be
built. “I said to my wife that we were the witnesses of a historic event – the start
of construction works of the greatest sports complex,” he recalls.
But
the work stopped almost as fast as it started. The works stopped almost
immediately, to Marin’s disappointment. He still hopes the complex will be
constructed one day.
“But
it is pity that it will not belong to the city, to the people. It is all about
business again,” said Marin.
The Azerbaijan government, meanwhile, has not
responded to a freedom of information request for information in June.
