Bloomberg News

Azeri, Syrian Central Bankers Got Kickbacks, Prosecutors Say (1)

June 14, 2013

Central bank governors in Azerbaijan and Syria received kickbacks from the Austrian central bank’s mint and money-printer in exchange for contracts, Vienna prosecutors said.

The prosecutors yesterday charged nine people, including the vice-governor of the Alpine republic’s central bank, with a criminal conspiracy that saw them pay at least 14 million euros ($19 million) in bribes for contracts from 2005 to 2011. Azerbaijan’s central bank governor, Elman Rustamov, and Syria’s governor, Adib Mayaleh, are among the officials who received kickbacks, according to the 83-page indictment obtained by Bloomberg News. Neither man was charged with a crime.

“There’s no truth whatsoever to this,” Mayaleh said today when reached by telephone. “It’s the first time I hear of it. We don’t need to print in Austria. We have contracts with Russia.” Namiq Aliyev, a spokesman at Azerbaijan’s central bank, declined to comment when reached today by telephone. He said he didn’t have Rustamov’s mobile-phone number.

The allegations follow an 18-month investigation into Oesterreichische Banknoten- und Sicherheitsdruck GmbH, or OeBS, the money-printing press owned by the central bank, and Muenze Oesterreich AG, the country’s mint. Authorities arrested four people in November 2011 after the kickbacks were discovered. The Austrian press has been printing money since 1816 and produces bills for African, Asian and Latin American countries.

‘Exotic Countries’

Wolfgang Duchatczek, 63, the vice-governor of Austria’s central bank, chaired the supervisory board of the OeBS when the alleged crimes were committed. He took up the role along with new executives in 2004 after the previous management ran up losses with a contract in Singapore that went awry, according to the indictment.

“Immediate measures were taken to balance the losses from the Singapore deal,” prosecutor Volkert Sackmann said in the document. “For that reason, lucrative money-printing deals were sought in exotic countries.”

An Romanian-born OeBS employee, who was also indicted, led the search. She identified Azerbaijan as a target after learning that the country’s deal with U.K.’s De La Rue Plc (DLAR) was about to run out, according to the indictment. She gained Azeri officials’ interest by highlighting that the notes would be designed by Robert Kalina, the Austrian currency designer who also created the euro bills.

‘Built on Sand’

She didn’t win the contract until promising to add an amount equivalent to 20 percent of the order volume to Azerbaijan’s bill and to pass this on to the officials, according to the document. That plan was approved by the OeBS board and Duchatczek in 2005, prosecutors said in the document. Follow-up contracts included bribes of the same percentage, labeled internally as “fee” or “commission.”

The purpose of the conspiracy was to “generate orders from Azerbaijan’s central bank for as long as possible, not the least to avoid that the OeBS has to fire employees,” according to the indictment.

Austrian officials used shell companies incorporated in Beirut, Panama, Abu Dhabi, the British Virgin Islands and elsewhere, using bank accounts in countries including Latvia, Dubai, Slovakia and the U.K., prosecutors said in the document.

“The entire case against Dr. Duchatczek is built on sand,” Duchatczek’s lawyer, Gabriel Lansky said yesterday in a statement. He said in a subsequent phone interview that his client will be found not guilty in court.

Austrian officials also agreed with Syria’s Mayaleh and other Syrian central bank officials to inflate prices on Syrian pound orders by 14 percent, according to the indictment. The agreements also included the minting of coins.

The Vienna prosecutors didn’t immediately return calls seeking comment as to whether they notified Syrian and Azerbaijani officials about the allegations.

To contact the reporters on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Alexander Weber in Vienna at aweber45@bloomberg.net; Boris Groendahl in Vienna at bgroendahl@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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