As we know, the succesful reforms carried out in Azerbaijan in recent years, modernization of legislation, etc. increased the interest in financial institutions in Azerbaijan. The steps taken by the state of Azerbaijan in this direction, including the increased income of people in the background of the fixed exchange rate of the manat, started to seem attractive especially for foreign companies. However, as we know, the intentions of these companies are not good in all cases. One of such companies is Freedom Holding Corp. (FRHC) Freedom Finance, established in the United States.
7NEWS.az presents an independent journalistic investigation.
Recently, we have heard more and more people around us who received services from Freedom Finance, a foreign company called Freedom Finance Azerbaijan, which is not subject to Azerbaijani laws, and were dissatisfied with the service, had difficulty in receiving their funds, and complained about unreasonable costs and fees charged to them in connection with the company's service. Recently, we heard a lot of complaints from the people around us that they received services from Freedom Finance company, its foreign company called Freedom Finance Azerbaijan, which is not subject to Azerbaijani laws, and they were dissatisfied with the service, they had difficulty in receiving their funds, and about unreasonable costs and fees charged to them in connection with the company's service. We did some research to clarify the issue. After researching, it became known that Freedom Finance Azerbaijan Open Joint Stock Company operates under the TIN number 2006592471 and presents itself on its website as a capital markets training company. As can be seen from the company's website, the company is a subsidiary of the Freedom Holding Corp. (FRHC), established in the United States is a subsidiary of the company. On the website of the holding company, the address of the Azerbaijan office and the legal and actual address of Freedom Finance Azerbaijan are the same. This gives us a reason to determine that this company belongs to the holding company.
First, it should be noted that many of the company's online and offline advertisements do not call for training at all. Anyone who understands advertising strategy can understand that these marketing moves are more about promoting a brand and selling a basic investment service. As can be seen from the company's audited financial statements for 2022, the company's advertising expenses for 2022 totaled AZN 64,537. Our research shows that the company has increased these costs at least twice in 2023. On the other hand, when analyzing the same financial statements, it can be seen that the company's salary expenses have increased by almost 4 times compared to 2021 and have exceeded 300,000 manats. According to the information we obtained from open sources, the company has about 40 employees. However, it does not seem reasonable for a teaching company to bear such costs, and its economic nature is questionable. From our research, it became clear that the company Freedom Finance Azerbaijan, founded in Azerbaijan, provides mediation and investment consulting services in the securities market, which are actually investment services to clients under the name of training. These services are provided by Freedom Finance Europe Ltd. Company, established in Cyprus. Thus, after seeing the advertisement of investment services, the client contacts the company and is offered to open an account in the company and conduct transactions. After that, the client is given an e-contract and an invoice and directed to transfer through the bank. After the client transfers the funds, the work with him begins. In parallel, additional costs are deducted from the client for receiving investment advice from the company, and advice is given to him by non-professional employees. It is important to remind that the investment activity in Azerbaijan is regulated by the Law on the Securities Market, it is a type of licensed activity, and the service employees of the company must be ratified by the Central Bank and operate on the basis of the relevant certificate. It is illegal for the company, including its employees, to operate without a license or certificate. This violation of the law is considered a criminal act and may be punished with imprisonment from 1 to 5 years if committed by obtaining a large amount of income according to Article 192 of the Criminal Code of the Republic of Azerbaijan.
According to the information available in open sources, the legal representative of the company is Mammadov Vusal Rafayil. A few days ago, the company increased its registered capital by 1.5 million US dollars to 2.35 million US dollars, i.e. 4 million manats. We believe that the increase in registered capital is related to the expenses incurred by the company last year at the expense of unofficial revenues, which created an official loss. So, although the company's official income is around 16,000 manats, its expenses are close to 700,000 manats. This fact in itself raises questions about the mysterious activity of the company. Why should the shareholder of the company who spent 700,000 manats and received only 16,000 manats in return increase his investment in the Company? This allows us to come to the conclusion that the shareholder Freedom Holding Corp. Company (FRHC) is also aware of the illegal activities of Freedom Finance Azerbaijan OJSC and is financing this illegal activity. The goal is clear. To transfer the money of Azerbaijani citizens abroad through Freedom Finance Europe Ltd., a Cypriot company. The reason why operations are organized through this company is also clear. Capital markets regulation in this country is weak and the protection of investors' rights is very low.
Freedom Holding Corp. is a holding company established in the United States. The company is traded on the Nasdaq under the symbol FRHC. The company's website states that the company operates in 11 countries. It is interesting that the company listed the Republic of Armenia as one of the countries of operation along with the Azerbaijan office. Who is to say that the company providing financial services in Armenia did not transfer the information of the citizens of the Republic of Azerbaijan to the Armenian fascists?
Another subsidiary of Freedom Holding Corp. Company, Freedom Finance Kazakhstan Bank has been found to illegally provide VISA and Mastercard payment cards to Russian citizens despite the sanctions. So, recently Mukhtar Ablyazov (Kazakh businessman) in his interview claimed that the Freedom Finance Kazakhstan Bank belonging to this holding had such actions. In particular, he said that Timur Turlov, the founder and main shareholder of Freedom Holding Corp. Company, renounced his Russian citizenship and accepted Kazakhstan citizenship in June 2022 in order to cover up these actions and to hide their relations with Russia.
When reading the reviews of customers from other countries about the company, it becomes clear that the company applies high commissions for withdrawing funds, currency exchange is carried out significantly more expensive than the global exchange rate, and very high commissions are also charged during the initial placement of company shares. On the other hand, company employees may, at their sole discretion, close trades without the customer's consent, regardless of the outcome of the trade that exposes the customer to large losses.
Finally, in the latest news about the increase of the registered capital of Freedom Finance Azerbaijan OJSC, it was mentioned that the Company organizes corporate trainings for big companies like "National Deposit Center", "Mega Insurance", "Azpetrol", "Pasha Kapital", "ABB Invest", "Baker Tilly". One wonders what kind of training this company provides to professional participants such as "Mega Insurance", "Pasha Kapital", "ABB Investment", as well as the National Depository Center, which is the most established infrastructure participant of Azerbaijan and is affiliated to the Central Bank.
As we can see, Freedom Holding Corp., which operates in low-quality and illegally with the companies it founded in Azerbaijan and other parts of the world. (FRHC) intends to expand its activities in Azerbaijan.As we can see, Freedom Holding Corp. (FRHC), which operates in low-quality and illegally with the companies it founded in Azerbaijan and elsewhere in the World, plans to expand its activities in Azerbaijan. It is interesting what the Securities Exchange Commission (SEC), which is the US regulatory body, thinks about Freedom Holding Corp. Have such activities been investigated? Does the illegal activity of the holding company in another country bother SEC at all? Are the state authorities aware of the illegal activities of this company in Azerbaijan? What measures are to be taken in this regard? These questions are still unanswered.
We will continue to inform the public about our research and findings. We are ready to publish the opposing party's position.
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