State-Run Aerospace Giant in Israel Contributed to Azerbaijani Laundromat, Leaks Reveal

By Asbarez | Tuesday, 22 September 2020

The IAI's Harop drones, which were sold to Azerbaijan

The IAI’s Harop drones, which were sold to Azerbaijan

Israel Aerospace Industries Signed a $1.6 Billion Contract with Baku in 2012

Israel Aerospace Industries, Israel’s state-owned and largest aerospace manufacturer, which signed a $1.6 billion contract with Azerbaijan, transferred at least $155 million to two companies used as slush funds for Azerbaijan’s elite. The companies were identified in 2017 as part of the Azerbaijani Laundromat scheme, a secret money laundering scheme that saw $2.9 billion flow out of the country between 2012 and 2014.

The news of the payments to the opaque companies was revealed by the Times of Israel, which used the reporting of two local journalists who are part of an international consortium investigating a massive trove of financial documents that were leaked to BuzzFeed over the weekend.

The bank documents relating to Israel Aerospace Industries consist of more than a dozen suspicious activity reports, known as SARs, filed by Deutsche Bank with the Financial Crimes Enforcement Network of the United States Department of the Treasury (FinCEN) from 2012 to 2014.

The Deutsche Bank SARs reports center on two companies—Jetfield Networks and Larkstone Ltd.— as recipients of the $155 million in IAI payments.

Jetfield Networks was founded in 2009 in New Zealand and was incorporated in 2012 in the Marshall Islands, months after AIA announced a $1.6 billion contract with Azerbaijan. The documents show that the payments to Jetfield began in June 2012 with a transfer of close to $30 million. In October, an additional $6 million was wired to Jetfield, followed by additional transfers in the months that followed.

Under the $1.6 billion deal with IAI, Baku received the company’s Harop drones, anti-aircraft and missile defense systems. In 2019, IAI opened a manufacturing arm in Baku that is aimed to service and manufacture parts for the drones.

Jetfield and Larkstone were revealed in a 2017 expose by the Organized Crime and Corruption Reporting Project (OCCRP) to be central elements in what became known as The Azerbaijani Laundromat.

The OCCRP revealed that Jetfield and Larkstone paid money into companies that were used as a slush fund by Azeri elites and government officials to purchase luxury goods as well as to buy good PR for the regime.

For instance, more than 2 million euros that left Azerbaijan, with a portion going through Jetfield, reportedly ended up in 2012 in the bank account of Italian politician Luca Volontè, Rome’s representative to the Parliamentary Assembly of the Council of Europe (PACE). Italian police suspect that in exchange for the payment, Volontè tried to soften the European Council criticisms of human rights violations in Azerbaijan.The OCCRP investigation also revealed several European lawmakers as having received payments by Azerbaijan.

The Azerbaijani Laundromat scheme was also used to pay hush money to Hungarian officials ahead of Hungary’s extradition of ax-murderer Ramil Safarov.

“Israel Aerospace Industries is a government company that operates in strict compliance with the provisions of the law. As a defense company, and in keeping with company policy, it doesn’t address or respond to information about its business activities other than as required by law,” IAI said in response to the investigation, according to the Times of Israel report.