The basic corruption scheme is possible to explain by this way:
- Top managers of big company (in this case SOCAR) found (usually indirectly, through their relatives etc.) their own private enterprises.
- SOCAR submits some orders to the subcontractor firms, which are owned by SOCAR managers or by their relatives.
- The invoiced price of works is much higher then market price, usually more then two times. Very often no work is carried out (or the real work is in much lesser scope), although “in the papers” everything is OK.
- SOCAR pays full contract price to subcontractor, then SOCAR manager (the real owner of subcontractor or its relative) gets back usually 50% of the sum for himself in cash, the rest of money keeps the subcontractor. As the result, budget of the State Oil Company and its subdivisions is under systematically larceny.
Report on corruption in Azerbaijan oil industry
Source: http://www.bicusa.org/Legacy/BTC_corruption_claim_COIWRP.pdf
