Following last year’s scandal that some EU countries have been involved in $230 billion money-laundering operations for Russian and Azerbaijani officials, the EU is taking a harder line against financial crimes and corruption. New tighter EU policies to be introduced soon are mostly targeting the banking system. However, recently European freeports – a particular type of tax-free zones in which high-end assets such as fine arts, rare wines, and even gold bullions are stored – were also put under scrutiny.
According to the European Parliament’s Research Service (EPRS), owing to their opacity and secrecy freeports are often used as offshore bank accounts. They allow to keep anonymity behind the shell companies and execute financial transactions with no traces enabling money laundering. In March European Parliament urged to phase out all EU freeports as a part of the broader move to crack down on money laundering.
The latest revelations shedding light on the links between freeports and individuals involved in Azerbaijani laundromat add to freeport’s woes.
In September 2017, an investigation of the Organized Crime and Corruption Reporting Project (OCCRP) exposed a 3 billion US dollars slush fund used by the Azerbaijani elite to finance a lavish lifestyle and to bribe European politicians. The bribes were to get PACE participants to provide Azerbaijan positive reviews on the human rights situation, as well as to highlight it as a great place to invest.
“You had an entire chorus of the people who voted in the Council of Europe to declare Azerbaijan had free as well as honest elections and also obtained $50,000 for it,” says Burke Files, President of American Anti-Corruption Institute. “We are aware of this because we’ve seen the wire transfers.”
A couple of years ago, an Italian member of the European Parliament (MEP) Luca Volonte was examined for accepting 2 million euros from Azerbaijan through four shell firms owned by Azeris. Money laundering charges against Volonte were dropped, but he still faces bribery assessments.
PACE President Pedro Agramunt was enforced away from the office in 2017 after an utterly independent commission of 3 retired American judges investigated the Azerbaijan scandal as well as found him negligent. The independent commissions’ report as well as cited two other Spanish MEPs.
In March, Transparency International submitted a complaint in Germany against a retired MEP Eduard Lintner as well as Bundestag politician Karin Strenz for a personal election tracking outing in the region exactly where Azerbaijan’s election was given high marks. Belgium is also seeking out 2 PACE members, Alain Destexhe and also Stef Goris, as per TI legal advisor in Berlin, Adam Foldes.
Doubts of unchecked money laundering and bribes by overseas companies led to the October 2018 study by the European Union Parliament to examine precisely how freeports can be used in fraudulent exercises.
The 48-page statement by the EPRS, given to European Commission president Jean-Claude Juncker last fall, reasoned that freeports “could allow money laundering simply because they circumvent the standard international rules on transparency.” To provide a perception of the scale, the Geneva Freeport alone is believed to hold over $100 billion value of the artwork.
Yves Bouvier’s freeport empire
Geneva Freeport, as well as Le Freeport in Luxemburg, were the two warehouses mentioned in the statement. Questionable Swiss-Singaporean art seller Yves Bouvier partially possesses each of them. Yves Bouvier was once the largest private shareholder of the Geneva Freeport. In 2017 he was forced to sell his stake after the Swiss government tightened regulation on freeports, demanding more oversight.
Le Freeport’s other shareholders are Jean-Marc Peretti and Olivier Thomas. Peretti’s reputation has questionable by white-collar crime and corruption research. The police arrested Bouvier himself on scams as well as money laundering charges in 2015. Moreover, also Thomas was imposed with snatching artworks which belongs to a Picasso’s stepdaughter.
The Luxemburg Indirect Income-tax Office (AED) considered Le Freeport a “high risk” for laundering money, according to the EPRS research.
Portugal MEP Ana Gomes informed the BBC in March that she came up away from her first trip to Le Free-port apprehensive. She stated, that it’s not possible to understand who owns the assets worth billions of euros stored in the Freeport. Austrian MEP Evelyn Regner dubbed Le Freeport a “black hole.”
With the dirt and dust still settling on Danske Bank’s Russian and Azeri laundromat scandal, a direct connection between Azerbaijani laundromat and Le Freeport can put it under additional scrutiny.
Freeport links to Azerbaijani laundromat
Le Freeport’s Chief executive officer Philippe Dauvergne has a long-term business relationship with Azeri businessman Khagani Bashirov. Between 2008 and also 2014, Philippe Dauvergne was a board member of at least ten firms in the UK, Cyprus, and Luxemburg associated with Khagani Bashirov. Khagani Bashirov is a close link of Jahangir Hajiev, ex-president of International Bank of Azerbaijan ( IBA), a key figure in the Azerbaijani laundromat. IBA was the primary source of money for laundry.
Bashirov’s organizations obtained a minimum of $200 mln in financial loans from the IBA. These loans were by no means repaid thanks to Bashirov’s personal relationship to Hajiev, according to independent Azerbaijani journalist Khadija Ismayilova. Instead, numerous organizations Bashirov controlled delivered and also obtained funds from the UK-based shell companies which were the core part of the Azerbaijani laundromat.
In 2016, Hajiev was sentenced to Fifteen years in jail for fraud and misappropriation of public funds.
EU Reporter’s online newspaper lately revealed that Belgian authorities were investigating Dauvergne’s connection with organizations trapped in the Azerbaijani laundromat.
Latest developments are not helpful for Luxemburg Freeport that has become already affected by the dubious status of its major shareholder Yves Bouvier.
His former clients are suing him around the globe for stated art scams totaling over $1 bln. Among them are Canadian art collector Lorette Shefner, Russian car magnate Vladimir Scherbakov, the owner of Monaco football club Dmitry Rybolovlev as well as some other prominent persons. Additionally, Picasso’s step-daughter, Catherine Hutin-Blay, once accused him of stealing artwork she claimed Bouvier and Thomas were supposed to transport as well as store. Bouvier was charged and paid out around $30 million in bail.
Yves Bouvier faces criminal charges in France, Monaco as well as Switzerland. Swiss authorities are investigating tax evasion of approx. $165 million.
Freeport Singapore – similar queries?
Similar critics of freeports can be heard in Asia, particularly in Singapore. The Financial Action Task Force (FATF) – a multi-country advisory which fights money-laundering – assessed the risks of money laundering and even terrorist funding at Freeport Singapore as medium-to-high. It is interesting that Freeport Singapore is also owned…by Yves Bouvier. As noticed by FATF, it may not be possible for local authorities to find out what is stored in the Freeport, who the real owners are, and it’s challenging to trace financial transactions that may amount to many millions and millions inside the Freeport Singapore. Worth mentioning that Freeport Singapore CEO Tony Reynard recently had to step down without any explanation.
Apparently, freeports are heavily contributing to some €800 billion laundered each year globally, and international watch-dogs should tackle this issue. The question is will there be enough political will in the EU and Asia to phase them out?