Jonny Wrate
Some of the money that passed through the Azerbaijani Laundromat,
a secret money laundering scheme and slush fund that saw €2.5 billion
(US$ 2.9 billion) flow out of the country between 2012 and 2014, ended
up in the hands of a purportedly private Azerbaijani organization that
hired a Virginia firm to lobby the US government for more than a decade.
The Organized Crime and Corruption Reporting Project (OCCRP) has earlier reported
that other monies from the fund were used to advance the Azerbaijani
government’s political agenda, with some ending up in bank accounts
belonging to European politicians who spoke highly of President Ilham
Aliyev’s regime even as it arrested journalists and political activists.
The precise origins of the funds are unknown, hidden behind secretive
shell companies. But there is ample evidence that the authoritarian country’s ruling elite is behind them.
At the core of both the European and US lobbying efforts is the same
man – Elkhan Suleymanov, an Azerbaijani parliamentarian who Italian prosecutors say
is responsible for implementing an aggressive plan to improve the
country’s image called “Azerbaijan 2020: Smile Future,” initiated in
late 2011 by President Ilham Aliyev.
Suleymanov runs a pro-regime organization in Baku which appears to
work hand-in-hand with Renaissance, even using the same office space.
But since there is no formal connection between Renaissance and
Suleymanov, or anyone else in the Azerbaijani government, the scheme
allows the US lobbying firm it employs to avoid disclosing the
relationship under the Foreign Agents Registration Act (FARA), as those
representing the interests of foreign governments are required to do.
Other payments were made to an influential oil and gas consultant
with close ties to President Aliyev who presents himself as an
immigration success story and lives in Dayton Ohio — even as he also
lobbies the US government on his homeland’s behalf. (See: Baku’s Man in America)
An Azerbaijani Renaissance
According to records from the Azerbaijani Laundromat, two offshore
shell companies at the heart of the scheme — Metastar Invest and Hilux
Services — made 18 payments totaling US$ 1,655,649 to Renaissance
Associates S.A between September 2012 and December 2014.
Renaissance is allegedly a “consortium of businessmen, educators and
investors” based in Baku, Azerbaijan with offices in Zug, Switzerland.
Its purported goal is to help “promote [Azerbaijan’s] image in the
United States by publicizing its continuing commitment to democratic
principles and a more civil society since its independence in 1991.”
But further details about the organization are scant. It has no
website and no contact information, and its “consortium” has no publicly
disclosed membership. For the past 14 years, its only apparent activity
has been its relationship with Bob Lawrence & Associates
(BL&A), a lobbying firm in Alexandria, Virginia.
Renaissance is BL&A’s sole international client. Quarterly
lobbying reports filed by the firm show that, between July 2012 and
December 2015, its income from Renaissance totalled $1,533,000 — close
to the amount that Renaissance itself received from the Laundromat
around this time, according to available data.
Furthermore, the final four of the Laundromat payments to Renaissance
match closely with the sums the group spent on BL&A lobbying in
four of the five subsequent quarters (see infographic).
Four Laundromat transfers to
Renaissance closely match subsequent quarterly payments the organization
made to its Virginia-based lobbying partner, BL&A. Click to
enlarge.
Credit:
Edin Pasovic / OCCRP
Since first registering as a lobbyist for Renaissance in March 2004,
BL&A has worked steadily on issues of interest to the Azerbaijan
government. In 2006, the firm reportedly handled the logistics
of President Aliyev’s visit to the White House. Three years later, it
arranged for Obama’s former campaign manager, David Plouffe, to visit
Baku and speak to members of the Azerbaijani government.
According to its lobbying reports, BL&A’s specific lobbying
issues have included US defense appropriations in the region; the
territory of Nagorno-Karabakh, which is disputed between Azerbaijan and
Armenia; and a critical oil pipeline from Azerbaijan to Turkey that lies
nearby.
Between 2008 and 2016, BL&A’s president Bob Lawrence was annually
invited to recommend foreign aid budgets to Azerbaijan and Armenia
before the House Appropriations Subcommittee on State, Foreign
Operations and Related Matters.
His testimonies frequently emphasized Azerbaijan’s oil and gas
resources and infrastructure as “critical to the security and wellbeing
of the people of Europe” and have repeatedly called for the elimination
of Section 907 of the Freedom Support Act, which bans direct US aid to
the Azerbaijani government.
He also informed the subcommittee that Armenia, Azerbaijan’s regional
rival, is a “rogue nation […] clearly protecting criminals” and that it
commits human rights violations. He is much more forgiving of
Azerbaijan. Though admitting in his first testimony that “8 or 9
journalists have been beaten or jailed,” he asserts that “President
Aliyev pardoned most of these.”
Lobbying for Lobbyists
Lobbying disclosure reports also show that BL&A’s collaboration
with Renaissance included subcontracting other US lobbying firms on its
behalf. For example, between July 2012 and December 2015, BL&A paid
at least $250,000 to the Crane Group to lobby the US Senate and House of
Representatives on “state and foreign relations” and to provide
“assistance to Azerbaijan.”
Over the same period, BL&A spent $280,000 contracting former
Congressman Solomon Ortiz (D-TX) through his firm, Solomon P Ortiz
Holdings LLC, to lobby on “strategic relations” between the US and
Azerbaijan. Six weeks after this work began in 2012, he wrote a glowing
blog post on Azerbaijan in the Huffington Post. Ortiz also has a long
history of promoting Azerbaijan’s interests in Capitol Hill. In 2004 he
co-founded the Congressional Azerbaijan Caucus, a group of legislators
coordinated by Laundromat recipient Baguirov (See: Baku’s Man in America).
One of Ortiz’s long-time advisors, John McGregor, was also involved
in the caucus’s development. McGregor joined BL&A as a consultant in
2005 and lobbied the US government on behalf of Renaissance as recently
as 2016 through his own company, the McGregor Group.
Between 2012 and 2015, individuals registered as lobbyists acting
directly or indirectly on behalf of Renaissance made thousands of
dollars in donations to political candidates, including to Senators and
Representatives who were sitting on, or chaired, appropriations
subcommittees at the time.
“Not involved in that stuff”
The Foreign Agents Registration Act (FARA) is a US Department of
Justice statute which requires lobbyists representing foreign government
to register as such, and to provide some basic information about their
work.On its website, BL&A states that it “does not work for, report to, or take directions from the Azerbaijani government or any member of the Azerbaijani government.”
But in 2005 — a year after BL&A first began working with Renaissance — Azerbaijan’s independent Turan News Agency reported that it had received a letter identifying Renaissance as a lobbying firm representing the Azerbaijan government in Washington.
Despite its close collaboration with Renaissance — itself funded by the Azerbaijani Laundromat — BL&A has never registered its work for the organization under FARA.
This is because Renaissance is not technically a government entity, which allows BL&A to avoid disclosing any information about who controls or funds its client. By purporting to be a private sector group interested in trade, BL&A is only subject to the less stringent Lobbying Disclosure Act (LDA).
“The LDA exception swallows the FARA registration rule in many situations,” says Gabriel Gillett, a lawyer at Jenner & Block, “but the number of layers between a foreign government and the activity in the US doesn’t necessarily absolve someone of needing to register under FARA.”
“Image building or public relations services in the United States, which are non-commercial political activities aimed at influencing the US public … does trigger FARA,” says Josh Rosenstein, a lawyer at Sandler Reiff who specializes in FARA. “FARA’s applicability is much more broad than just traditional lobbying. It specifically includes, as listed in the statute, public relations and communications work.”
Contacted by reporters about his firm’s work for Renaissance, Bob Lawrence, its founder and president, said that he had not been “involved in that stuff” for three years. Yet the firm submitted lobbying reports for the work as recently as July 2017 and still lists Renaissance as a client on its website. Lawrence declined to comment further about Renaissance or the firm’s lack of FARA registration.
BL&A’s senior vice president, James Goldwater, denied ever having Renaissance on his personal portfolio.
Lobbying reports filed by the firm, however, state that he personally lobbied on behalf of Renaissance on a range of issues between 2004 and 2009, including the pipeline to Turkey and defense appropriations for the Caucasus. When asked if that meant the firm had provided false information to the US government, Goldwater only reiterated that he had never worked on these issues.
Similarly, McGregor told reporters that he had “no interaction with Renaissance” and was given directions directly from Bob Lawrence. But according to BL&A’s website, McGregor was “principally involved in the firm’s collaboration with Renaissance.” He did not explain why his work for the organization had not been registered under FARA.
Supporting and Nurturing
As part of its collaboration with Renaissance, BL&A states on its
website that it works “on a daily basis” with the Association for Civil
Society Development in Azerbaijan (ACSDA).
Based in Baku, ACSDA is a pro-regime non-profit organization
controlled by Elkhan Suleymanov, a member of Azerbaijan’s parliament and
former member of the Parliamentary Assembly of the Council of Europe
(PACE).
According to BL&A’s website, Renaissance “supports and nurtures”
ACSDA. But the relationship appears to be much closer than that; the two
organizations even share the same Baku apartment. And when, in April
2016, ASCDA signed a three-month contract with US lobbying firm
Greenberg Traurig, the firm’s FARA filing shows that the $25,000 per
month fees had been paid by Renaissance.
Furthermore, a former German politician, Eduard Lintner, who received
payments from the Azerbaijani Laundromat and subsequently praised the
country’s universally-panned elections as fair, described ACSDA as the
source of his payments. Some of the transfers were made from the same
shell company that had funneled money into Renaissance.
(The scandal was part of a separate Azerbaijani lobbying effort led by Suleymanov in Europe, and previously reported by OCCRP, which also involved two other PACE members who also received payments from the shell company.)
When OCCRP reporters called Suleymanov’s office, his secretary told
them that they could not speak to him directly as he does not speak
English. His profile on the Council of Europe website, however, lists
English as his working language. Neither Suleymanov nor his office
responded to questions about Renaissance.
“If the NGO, that is itself controlled by the government, is actually
controlling, giving direction or funding to this opaque company
[Renaissance], then it would seem that FARA would likely be required,”
says Rosenstein, the Sandler Reiff lawyer. “This middle-man is
essentially a shell being used to either intentionally avoid FARA
registration, or otherwise to pass the funds through to the US actor.”
“I think you’ve got several issues here that at the very least raise
the real specter of FARA requirements which are not being followed,”
says Rosenstein.
Lending Electoral Legitimacy
In his 2013 testimony to the House Appropriations Subcommittee,
BL&A’s Lawrence questioned the veracity of Armenia’s presidential
election results that year by reading out a press release quoting
Suleymanov. In almost a decade of testifying on behalf of a company that
publicizes Azerbaijan’s “continuing commitment to democratic
principles,” he has remained silent on the country’s own elections.
International observers, including the US Department of State, noted
intimidation of the opposition and independent media during the
country’s presidential election that October. In one embarrassing gaffe,
Azerbaijan’s election commission accidentally released a set of results
on its official smartphone app before the vote was even held. A
subsequent report released by Freedom House,
a human rights and democracy watchdog, described President Aliyev’s
landslide reelection as “predictable” and noted “significant evidence of
massive electoral fraud.”
As previously reported by OCCRP, two PACE members who received money
from the Laundromat took part in official monitoring delegations to
Azerbaijan and subsequently praised the elections.
In the US, Renaissance was orchestrating a similar scheme.
In an op-ed in The Hill,
former Congressman Michael McMahon (D-NY) described the 2013 elections
as “fair, well-organized and transparent.” He had taken part in a team
set up and coordinated by BL&A on behalf of Renaissance called the
American Observers Group. The group, which has included BL&A
employees, ex-Congressmen, prominent political analysts, and attorneys,
has consistently praised Azerbaijan’s presidential elections.
This was McMahon’s second trip to Azerbaijan that year. In May, he
had attended a controversial conference in Baku organized by Baguirov,
another recipient of Laundromat funds, (See: Baku’s Man in America] and
secretly funded by Azerbaijan’s state oil company. While in office,
McMahon had also received several campaign donations from BL&A
staff.
McMahon did not respond to requests for comment, but reporters were able to track down some of the delegation’s former members.
“It was a very distinguished delegation,” said former Congressman
Sherwood Boehlert (R-NY), who had been invited by Lawrence to join the
group in 2008. “Several people [in the group] I knew by reputation,
including [TV journalist] Lawrence O’Donnell.”
Two other members of the group’s 2008 trip were Cathy Travis, who had
retired from Capitol Hill as Congressman Ortiz’s senior advisor earlier
that year, and lobbyist Mark Veith, who took part while subcontracted
by BL&A to lobby on behalf of Renaissance. All three told reporters
that they saw no irregularities, but emphasized that it was a very fast
trip focusing only on the events at, as Travis described, “the most
basic level.”
Boehlert added that all the expenses for the trip were paid for by BL&A.
Congressman Ortiz joined the delegation in 2013, at the same time as
he was lobbying on strategic US-Azerbaijan relations. He told
Azerbaijani media that the elections had been “free, fair and
transparent.” Accompanying him in 2015 was his Congressional Azerbaijan
Caucus co-founder, Curt Weldon (R-PA). Neither former Congressmen
responded to repeated requests for comment.
Renaissance may have been inspired to create its own monitoring group
after its previous experience hiring two seasoned US survey research
firms for Azerbaijan’s 2005 president elections. Warren Mitofsky and Joe
Lenski, the two firms’ presidents, later wrote
about how Renaissance had advised them to hire ACSDA to conduct the
exit polls, but then pressured them to withhold publication of their
results, claiming it could lead to civil unrest.
Lenski told OCCRP reporters that it was Lawrence who had first
contacted them on behalf of Renaissance. After they published their
results anyway, he said that Suleymanov – who had invited them to his
home during the trip – contacted them to express his displeasure.
“I don’t think I’m welcome in Azerbaijan anymore,” he said.
This April, after calling a snap election that several opposition parties boycotted,
President Aliyev secured a fourth term. International observers
reported widespread disregard for mandatory procedures and numerous
serious irregularities.
OCCRP, May 22, 2018 (www.occrp.org/en/azerbaijanilaundromat/us-lobbying-firm-launders-azerbaijans-reputation)
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