Millions paid to an Italian politician through a bank in Estonia is but a fraction of the money that moved through Estonian banks in 2012-2014.
The trial of Italian MP Luca Volonte, who stands accused of corruption, is set to continue in the Milan courthouse in the coming weeks. Volonte is accused of being paid from Azerbaijan in exchange for which he pursued suitable policy and lobbied in the Parliamentary Assembly of the Council of Europe that concentrates on human rights.
Volonte's case has a direct link to Estonia. Charges speak of four transfers to the Novae Terra foundation that has ties to Volonte in the total volume of €2.17 million from Estonia. The transfers were made from accounts in the Estonian branch of Danske Bank.
Names of companies behind the transfers convey little meaning: Metastar Invest LLP, LCM Alliance LLP, Polux Management, and Hilux Services LP. All four are registered in the United Kingdom and the trail leading to their owners ends in tax havens in the Marshal Islands, Belize, and the British Virgin Islands.
Another interesting fact is that the companies are registered to addresses behind several companies that received a total of $1.6 billion in Moldova's „Laundromat“ scheme.
All are shell companies the common denominator behind which is probably a service provider who creates offshore companies to hide actual owners. Transfer descriptions are also similar to those in the Moldova case.
The prosecutor trying Volonte's case in Italy claims that sums moved through Estonian banks come to around a billion dollars. While the court has blocked any trial against Volonte as an MP, the prosecutor hopes to have the motion overturned in the coming weeks.
German publication Tagesspiegel published an article on the case toward the end of March. The article also reads that the bank account of Hilux Services LP in Estonia received nearly a billion dollars from a company called Baktelekom in Azerbaijan in 2013-2014.
Similar or even bigger cash flow is confirmed by Bank of Estonia statistics (graph). If in 2009 Estonian banks received a little over $42 million, sums grew considerably with each consecutive year, exceeding the $1.5 billion mark in 2013. Explosive growth came primarily in dollar transfers to non-residents as which all the aforementioned companies qualify. Transfers in other currencies didn't grow nearly as abruptly during the period.
Suspicious money is usually moved in the form of U.S. dollars. It was also the currency of choice in the Moldovan money laundering scheme that saw nearly $1.6 billion moved through Estonia. Dollar is the currency of bribes in the former Soviet Union.
The Azerbaijan case sparked the interest of Estonian anti-money laundering authorities.
„The Money Laundering Information Bureau discovered the suspicious transfers tied to this case while they were still being made. We started to piece together the puzzle,“ said head of the bureau Madis Reimand.
He added that in the Volonte case the bureau cooperated with foreign partners both in connection with the origin and destination of the money.
„The bureau looked at more companies than have been highlighted by the foreign press in this case. However, our confidentiality obligation makes it impossible to go into detail,“ Reimand said.
The case makes for the second scandal where billions are at play involving the Estonian branch of Danske Bank in recent months. The Financial Supervision Authority issued a precept to the bank in connection with anti-money laundering activities. The bank admitted problems in complying with the „know your client“ principle.
The watchdog refuses to say whether the precept also concerned transfers of colossal sums from Azerbaijan. The agency rather concentrates on monitoring compliance with anti-money laundering regulations than individual transfers. Monitoring specialist at the agency Matis Mäeker said it is their task to make sure processes and systems of financial and credit institutions are adequate and whether they have enough staff.
„The „know you client“ principle means the bank has a transparent and clear picture of its client and their activity,“ Mäeker explained. He added, however, that the four companies mentioned are no strangers to the inspectorate.
Danske Bank Estonia remained tight-lipped. „We have no right to comment on specific client relations or transactions, or communication with authorities concerning specific clients. However, we generally give relevant agencies all the necessary information and cooperate fully,“ said head of communications Tõnu Talinurm.
Baktelekom (that is not an Azerbaijani telecommunications giant but just a company with a similar name – J. V.) was the subject of a thorough article by local investigative journalist Khadija Ismayilova. The reporter claims the company is owned by tycoon Rasim Asadov. Ismayilova is in possession of documents that show that Asadov's business partner is the cousin of President Aliyev's wife.
Ismayilova, who had written critically about Baktelekom and other cases involving the president, was sentenced to seven and a half years in prison for tax evasion in 2015. She has been released on parole.
What was the money from Baktelekom used for? Luca Volonte's case suggests the money was used to pay off a politician. What did Azerbaijan receive in return? President Ilham Aliyev is a frequent guest of European heads of state and government. During these visits he must often answer questions concerning his country's human rights situation, which is less than rosy. That is clearly uncomfortable.
Because PACE is a human rights organization, its policy toward Azerbaijan matters to the country. That is why the Asers approached Volonte, who has visited Baku on several occasions only to sing its praises afterward. Several other PACE members have visited Azerbaijan and been treated to a royal welcome.
Descriptions by politicians from different countries mention fancy hotels, dinners, gifts of expensive Vertu phones, Macbook computers, jewels, and tapestries costing thousands of euros.
A similar scandal in connection with Azerbaijan erupted in the U.S. Congress members of which were met with a luxurious reception – they were also presented with precious carpets that they later returned. The Congress ethics committee has raised the issue.
An Estonian politician also returned from Azerbaijan with a scandal years ago. Member of the European Parliament at the time Kristiina Ojuland's trip to observe Azerbaijan's general election was, rather untraditionally, paid for by the country itself, which caused Ojuland to see the election in a less critical light than colleagues from the OECD. Ojuland stayed at a luxury hotel during her visit.
The Italian prosecution has found evidence that Volonte has lobbied directly to the benefit of Azerbaijan and tried to sway PACE's political decisions.