Azerbaijan coup charges raise oil supply doubts

Farhad Aliyev, the ex-minister of economy, is accused of tax evasion, embezzlement, abuse of power and conspiring to overthrow President Ilham Aliyev (no relation). His brother, Rafiq Aliyev, the former chief executive of Azpetrol, the country's main petrol retailing and oil transport company, faces charges of tax evasion and an attempt to smuggle cash out of Azerbaijan.

The case has attracted concern in Europe and the US about government abuse of human and property rights in Azerbaijan, which is growing increasingly important both as a source of oil and as a transit route for energy supplies to the west. The US administration has in the past faced allegations that it has turned a blind eye to human rights abuses in oil-rich countries.

Azpetrol became the subject of a tax probe immediately after the arrest of Rafiq Aliyev in 2005 – a move observers say has parallels with Moscow's dismantling of Yukos, the oil company bankrupted by tax claims. Azpetrol has since been divided up among investors who, local traders say, are loyal to the Azeri leadership.

In a further echo of Yukos' case, Azpetrol's former owners are taking the Azeri government to international arbitration under the Energy Charter Treaty, to which Azerbaijan is a signatory.

Foreign traders say the oil transit business in the Caucasus has become more complex since Azpetrol changed hands. The region houses strategic pipelines and railways transporting growing volumes of Caspian oil exports to the west. Caspian producers seeking a new oil export outlets are concerned at Azpetrol's stranglehold on an oil terminal feeding into the Baku-Tbilisi-Ceyhan pipeline to the Turkish Mediterranean.

Both men have been held in solitary confinement since October 2005 and are pleading innocent on all counts. They have been detained without trial for longer than is allowed under Azerbaijan's criminal code.

Supporters of Farhad Aliyev say the former minister's outspoken criticism of poverty and corruption in Azerbaijan posed a threat to the government in the run-up to parliamentary elections in late 2005.

Elton Guliyev, a lawyer defending Farhad Aliyev, said, "This case is political. Investigators are taking orders from above."

By Isabel Gorst, The Financial Times

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