Israel’s largest aerospace and aviation manufacturer transferred at least $155 million to two companies that were reportedly used as a secret slush fund for Azerbaijan’s kleptocratic elite, according to bank documents included in a massive new leak of US financial material.
The bank documents relating to Israel’s state-owned Israel Aerospace Industries consist of more than a dozen suspicious activity reports (or SARs) filed by Deutsche Bank with the Financial Crimes Enforcement Network of the United States Department of the Treasury (FinCEN) in the years 2012-2014. They became public this weekend as part of a leak of FinCEN documents that the BuzzFeed news site shared with the International Consortium of Investigative Journalists (ICIJ) and with 108 other media outlets and some some 400 journalists around the world, including Israeli reporter Uri Blau and Shomrim, the Center for Media and Democracy.
It is not clear why the state-owned Israel Aerospace Industries paid money to the two companies, Blau and Shomrim reported on Sunday, but the payments aroused the suspicions of Deutsche Bank officials charged with monitoring transactions they suspected may have been linked to money laundering or terror financing.
The FinCEN leak comprises thousands of documents, including over 2,000 SARs, “detailing $2 trillion of potentially corrupt transactions that were washed through the US financial system,” the Guardian reported.
As reported in The Times of Israel on Sunday, other documents in the leak indicate that the Jordan-headquartered Arab Bank facilitated payments to organizations and bodies suspected to be connected to terrorism even after it had agreed to pay massive amounts in compensation to terror victims. The leaked material also includes additional reports on Israeli businessmen, companies and banks.
The Deutsche Bank reports describe two companies — Jetfield Networks and Larkstone Ltd. — as recipients of the $155 million in IAI payments.
Jetfield Networks was founded in New Zealand in 2009 and became incorporated in the Marshall Islands in February 2012. It originally described itself as engaged in commerce, including the buying and selling of construction equipment, but later branched out into “consulting services.”
The company’s beneficiary, Blau and Shomrim reported, is Javid Huseynov, an Azeri man born in 1961. Huseynov is also the beneficiary of Larkstone Ltd., a company incorporated in Estonia, according to Blau and Shomrim.
At the same time as its incorporation in the Marshall Islands, Israeli and international media reported the signing of a $1.4 billion contract between IAI and the Azerbaijani government. The two countries have had a close but discreet relationship, Shomrim reported, with Israel buying oil from Azerbaijan and the Azeris purchasing arms and agricultural equipment from Israel.
Shomrim’s investigation revealed that IAI transferred the funds shortly after the signing of its massive 2012 deal with the Azerbaijani government. A source familiar with the deal told Shomrim that to the best of his knowledge, it did not include an agreement regarding payment to any intermediary.
In 2009, Israel became a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which criminalizes bribery of foreign government officials.
The submission of a suspicious activity report to FinCEN does not mean that the individual or company mentioned in the document has done anything illegal. The transactions described in such reports can be part of entirely legitimate business activities that happened to conform to patterns that aroused the suspicion of the financial institution reporting them.
Documents that the ICIJ provided to Shomrim show that payments to Jetfield began in June 2012, just months after the deal with Azerbaijan was signed, 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.
Deutsche Bank’s reports to FinCEN show that by 2014, more than $116 million had been transferred to Jetfield, while Larkstone Ltd. received around $39 million during the same period.
In one such instance, IAI transferred about $8 million to Jetfield for the stated purpose of purchasing helicopter rotor blades. “Deutsche Bank wasn’t able to independently confirm the purpose of the transfer of funds,” the report notes.
Jetfield and Larkstone were revealed in a 2017 expose by the Organized Crime and Corruption Reporting Project (OCCRP) to be central nodes 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 investigation, launched in 2015, is ongoing.
In its 2020 report, Human Rights Watch describes Azerbaijan as a country with a poor human rights record: “Azerbaijan’s authorities continued to maintain rigid control, severely curtailing freedoms of association, expression, and assembly. “
In response to Shomrim’s article, IAI did not offer details as to the nature of the payments to Jetfield Networks and Larkstone Ltd.
It said: “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.”