Corruption Stifles Azeri Business

Thursday, 12 May, 2005

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Gulnaz Gulieva

Azerbaijan’s first congress of its Confederation of Entrepreneurs last month was dominated by angry calls for a fight against growing corruption in the country – but there is widespread pessimism that the deep-rooted culture of bribe-taking can be changed.

Confederation chairman Alekper Mamedov told IWPR that the congress, which was held on April 22 and attended by more than 300 businessmen, had adopted an action plan to encourage the growth of small business in Azerbaijan. He said they wanted to pay special attention to improving relations between business and the government and parliament.

However, Aslan Ismailov, president of the lawyers’ firm VIZA, voiced the biggest concern. He asked the conference whether it was possible to do business in Azerbaijan without giving bribes and received the answer in a loud chorus - “No”.

Nuraddin Zulfugarly, head of the Bakelektromash company, which produces machine parts, said that the cost of “unforeseen expenses” is borne by the consumer as prices go up when bribe-taking is factored into the equation.

“Corruption has become one of the main reasons for price rises in the country,” he told the congress.

“The level of bribes being extorted by officials is rising all the time. We are not opposing bribes as such as we are used to them - but not on a scale like this.”

Vusal Gasymly, head of Azerbaijan’s independent Institute of Economic Technologies, echoed this, saying that Azerbaijan’s high inflation rate of 15 per cent could in part be contributed to corruption.

Gasymly said, “Despite the implementation of a law on fighting corruption and the formation of a state commission on corruption, we are seeing a reverse effect – official bribe taking has increased. They believe it has become more risky to do so and so they are asking for extra payment.”

For example, said Gasymly, the bribe required to receive a driver’s license was between 150 and 200 US dollars before the anti-corruption law, and is now 500 dollars.

Azerbaijan’s recently formed state commission on corruption, which is headed by presidential administration chief Ramiz Mekhtiev, a political veteran, has also been criticised.

On May 3, Mekhtiev said his commission had already taken a series of important measures to fight corruption and had begun an investigation into energy and gas ownership in Azerbaijan.

But he conceded that while his commission had received many complaints, 90 per cent of these were anonymous and “the legislation does not allow us to consider anonymous appeals”.

Azerbaijan is widely regarded as one of the most venal nations in the world - judged the seventh most corrupt of the 146 countries surveyed by the non-governmental organisation Transparency International in October 2004.

On April 25, Azerbaijan’s Anti-Corruption Foundation NGO published the results of a survey of 1,100 small- and medium-sized businessmen in the capital Baku, where 80 per cent of the country’s business is located.

The poll indicates that 45 per cent of those questioned believe that the level of corruption in Azerbaijan is catastrophically high, while 48.5 per cent said that corruption is widespread in the government. They identified the traffic police, security forces, tax services and regional authorities as amongst the biggest culprits.

“In normal countries a businessman can defend himself and his business in court from the interference of bureaucrats and competitors,” said Ingilab Akhmedov, a prominent economist.

“In Azerbaijan there is a vacuum, which is occupied by administrative mechanisms. The state and businessmen suffer from this. Everyone understands that you have to work by the law of the jungle and give bribes.”

Congress chairman Alekper Mamedov said that politicians were monopolising business, especially in the regions. “In many areas their main spheres of interest are bazaars and bakeries,” he said of regional leaders. “If there are other profitable areas, you will also find their relatives there.”

The country’s customs committee is a frequent target of complaints, with many people alleging corruption.

One businessman, who asked to remain anonymous, told IWPR, “The customs committee detained a shipment of our caviar and without any explanation did not allow it to be exported. In the end we were able to reach a deal with them by giving up part of our profits.”

And VIZA’s Ismailov noted that, according to Chinese statistics, 100 million dollars’ worth of goods was sent from China to Azerbaijan last year - but Azerbaijani customs registered only half that amount.

Khesabat magazine recently published a list of people it said were the 30 richest citizens of Azerbaijan. Only one fifth of those on the list were businessmen - the rest were officials and their allies. At the top of the list was customs committee chairman Kemaletdin Heidarov.

However, Heidarov has dismissed all charges against him and his committee as politically motivated. Meeting businessmen on May 3, he said, “Certain forces are actually trying to create discontent artificially by exaggerating problems in the customs service.

“No one can doubt the economic achievements of Azerbaijan. There may be obstacles, and there are negative cases, which we have to solve together.”

The customs service is to become more transparent, he added, as a new electronic system of declaration was being created, and duties would soon be payable by bank transfer.

But Ismailov noted that the problem was so deep-rooted in Azerbaijan that there has not been a single major court case on corruption in the last five years. “Recently the number of people - chiefly businessmen - who cannot accept this is growing,” he said.

“Our businessmen want to see improvements in the business climate and the situation in the country as a whole, but the bureaucrats are getting in their way. There is a need for President Ilham Aliev to intervene directly.”

Gulnaz Gulieva is a freelance journalist and Rufat Abbasov is a Reuters correspondent based in Baku.