Azerbaijan Moves to Restrict Access to Corporate Data

25 June 2012

The Azerbaijan parliament has voted to “considerably” restrict access to corporate information, in the words of one transparency activist there.

Parliament June 12 adopted amendments that will curtail public access to information about the ownership of commercial entities, the amount of their charter capital, ownership structure, and other similar data, according to  reports on the development.

The amendments to a 2005 law on commercial information that will bar government officials from distributing information about companies if doing so “contradicts the national interests of Azerbaijan in political, economic, and monetary policy, the defense of public order, the health and moral values of the people, or harms the commercial or other interests of individuals.”

The reforms also would make release contingent on permission of all individuals named in the records.

Data on corporate ownership and shareholders has been available on the website of the Tax Ministry and is available upon request. Such information now will be accessible only to law-enforcement bodies.

The president has yet to sign the law which supporters say will help businesses grow.

In a June 6 statement, civil society opponents of the amendments said in part: “Preventing public access to information about commercial legal entities cannot be justified with the public-interest argument. This level of secrecy will cause mistrust and lack of confidence among participants in what purports to be a free market economy, and will probably increase organised crime.”

“This law goes against the commitment to open governance. I am disappointed by it,” said Fidan Najafova, deputy director of Open Society Institute Azerbaijan and director of the OSI’s Transparency of Oil Revenues and Public Finance Programme in an article by Shahla Sultanova on the Institute for War and Peace Reporting website. “It also restricts journalists’ access to commercial information. From now on, journalists can be charged just for using the names of shareholders in their stories.”

Defense for Amendments

The same article quoted Chingiz Genizade, who sits on parliament’s committee for legal policy and state building, defending the changes.

“The public knows everything about the president’s family. There is no need to conceal it,” he said. “This law was passed to offer entrepreneurs a chance to build their businesses in safety. Of course, it will slightly limit access to information, but it will help businesses to develop rapidly.”

In another report, on Radio Free Europe, Arife Kazimova included remarks from the committee chairman, Chairman Ali Huseynli: The report states:

“The amendments we are making to the law do not restrict obtaining information, as some in the media allege, unfortunately,” Huseynli says. “On the contrary, they define a broader framework for providing information. It defines restrictions for bodies that refuse to provide information, not for those who seek to obtain it.”

Deputy Fezail Agamali, head of the pro-government Ana Vatan party, also defended the initiative.

“Journalists should be satisfied with the information about a company provided by its owner,” Agamali says. “Otherwise, the release of information could create financial problems for businesses.”

More on the debate is included in a report by ABC.AZ.

Azerbaijan’s parliament also granted wide-ranging immunity from arrest and prosecution to Ilham Aliyev and his wife for any crime committed during his presidency or while acting in his capacity as president.

International Concerns

The Organisation for Security and Co-Operation in Europe OSCE Representative on Freedom of the Media, Dunja Mijatovi?, has expressed her concern about the legislation.

Azerbaijan is a member of the 55-member Open Government Partnership, but was one of a handful of countries that missed the April deadline for submitting a national action plan.

The OGP was a topic when activists concerned about governance issues met for an hour in Baku June 6 with U.S. Secretary of State Hillary Clinton

.RevenueWatch’s description said:

During her official one day visit to Azerbaijan, Mrs. Clinton met with several groups working on transparency and accountability issues. Ingilab Ahmedov (Eurasia EI Knowledge Director), Vugar Bayramov (Center for Economic and Social development), Fidan Bagirova (Open Society Institute), Galib Abbaszade (National Budget Group) and Rena Safaraliyeva (Transparency International) participated in a meeting that lasted around one hour.

The main topic of discussion was Open Government Partnership, in which Azerbaijan became a member last year. After a review of the general challenges for Azerbaijan (huge dependence on oil revenues, sustainable development, economic diversification, lack of CSO representatives in the State Oil Fund Supervisory Board), OGP was presented as promising tool for the country and for civil society.

The concerns raised about OGP included a need for more active involvement of civil society in order to make the OGP process truly beneficial, rather than just a formality. Participants also cited EITI as a good tool for achieving transparency in oil, gas and mining revenues; however the local groups emphasized an equal need for transparency and accountability in the management and spending of those revenues. The group also described the local CSO Forum on OGP. Mrs. Clinton mentioned the current work by OGP to develop its own accountability system.

EuroasiaNet Report

The corporate secrecy amendment was added to parliament’s agenda only after the conclusion of the May 22-26 Eurovision Song Contest, according to a EuroasiaNet report by Shahin Abbasov.

The Euroasia report continued:

The pop-music festival, which brought unprecedented international attention to Azerbaijan, was preceded by a series of articles by RFE/RL investigative journalist Khadija Ismayilova, who highlighted alleged conflicts of interest involving mining rights granted to a gold-mining company owned by President Aliyev’s two daughters, Leyla and Arzu, and Eurovision construction work by a company linked to the two Aliyevas and First Lady Mehriban Aliyeva, the head of Eurovision’s organizing committee. [Editor’s Note: Islamyilova also contributes to EurasiaNet].

In public statements, government officials have asserted that such investigative coverage violated the presidential family’s right to privacy. The articles followed earlier pieces that examined the Aliyeva daughters’ investments in telecommunications, airport operations and banking.

Under the terms of the secrecy amendment, obtaining information about such investments now could prove more difficult. The government will release information about the registrations of for-profit companies only upon request by a court, law-enforcement agency or Central Bank monitors investigating suspected money-laundering or the financing of terrorist groups.

Journalists and the general public would be denied such information if its distribution “contradicts the national interests of Azerbaijan in political, economic and monetary policy, the defense of public order, the health and moral values of the people and harms the commercial and other interests of individuals.”

In addition, corporate records will be provided only if the petitioner has the consent of those individuals named in the data.

Information about registered Azerbaijani companies’ ownership and shareholders previously had been publicly available on the Ministry of Taxes’ website. The ministry was required to provide registry details to citizens within a week of receipt of a written request.

All but four of the 103 members of parliament present voted in favor of the restrictions. Another two MPs did not vote; First Lady Aliyeva was not present.

Government officials have not commented on the amendments, but one senior Yeni Azerbaijani Party MP who backed the new restrictions claimed the measure does not limit Azerbaijanis’ right to information. In June 6 comments to the Azeri-language service of Radio Free Europe/Radio Liberty, Ali Huseynly, chair of the parliament’s Committee on Legal Policy and State Building, claimed that the amendment “clarifies the frameworks for the right to receive information.” The lack of such “frameworks” often leads to “violations,” Huseynly added.

Parliamentarian Fazail Agamaly, a member of the pro-government Ana Vatan (Motherland) Party, asserted that “[j]ournalists should be satisfied with the information about a company provided by its owner.”

“Otherwise, the release of some information could create financial problems for businesses,” Agamaly reasoned.

Civil society and media-rights watchdogs counter that the secrecy amendment, indeed, is designed to prevent problems – namely, for Aliyev’s friends and family members.

Lawyer Intigam Aliyev [no relation to the presidential family], director of the Legal Education Society, a Baku non-governmental organization that monitors legislation implementation, asserted the amendment is “a response of corrupt authorities to a number of articles in local and foreign media about the large business assets of the ruling family in Azerbaijan and oligarchs.”

Opposition MP Igbal Aghazade, a member of the Umid (Hope) Party, who voted against the amendment, said the measure only “serves the idea of keeping information about the commercial interests of a group of high-ranking government officials a secret.”

Restricting the availability of company data from the public can harm the country’s ability to fight corruption, noted Media Rights Institute Director Rashid Hajily. In 2011, Azerbaijan ranked 143rd out of 183 countries in a corruption index compiled by the international watchdog group Transparency International.

“Citizens will be deprived of public [oversight] over officials’ links with businesses,” Hajily said. “It creates a strong foundation for the proliferation of conflicts of interest.”

Meanwhile, activists who tried to highlight Azerbaijan’s spotty civil-rights record during the Eurovision contest say that they will fight back against the “business secrets” amendment. “We will campaign both locally and internationally, will demand in public debates the annulment of this legislation, will raise the issue at related international conferences and in interviews with foreign media,” pledged Rasul Jafarov, head of the Human Rights Club, a Baku-based non-governmental organization.

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