By Dumitru Lazur, Irina Codrean
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. The story can be freely republished with proper credits.
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.
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.
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