Changing Lifestyles : A Little Banking ‘Magic’ Can Go a Long Way in Azerbaijan : Looking for a 30% monthly return? Welcome to the wild world of post-Soviet finance.

BAKU, Azerbaijan — Huseyinaga Hasimov is not a man of modesty, riding high on the kind of banking scheme that has captured the imagination of many people struggling to get by in the small trans-Caucasus state of Azerbaijan.

“I am 33, the same age as Jesus Christ. But I have no plans to die. My people still need me,” said the effusive Hasimov, chief of the Azerbaijani enterprise known as Vahid.

Western diplomats say his claims to have 1.6 million depositors in his bank, about one-quarter of the population, are exaggerated. But as one of the better-known of a new generation of licensed and unlicensed bankers, Hasimov and his free-wheeling activities have become a central subject of conversation in this former Soviet republic, where workers’ salaries are worth less than $100 a year.

Hasimov offers a cast-iron 30% a month return on deposits, which would bring a compound annual return of nearly 24 times the sum invested. Up until now, that was the only way to get anywhere close to matching the cost of living in Azerbaijan: four-digit hyper-inflation last year and an average 31% this year. But, as in the case of the MMM investment company whose bubble burst in Russia this summer, nobody knows quite how he does it.

“Human beings can discover things, you know. Newton discovered gravity. Here we discovered this, in Azerbaijan, and it works. But our deposits are a secret. No banker in the world says how much money he has. If I said it, we would be finished,” said Hasimov, a heavily built man whose only business training appears to have been as a Soviet-era artist and painter.

Two of his oil paintings hang in his office, but Hasimov is more interested these days in a bank of four closed-circuit video monitors that watch the cash registers downstairs and the entrances to his headquarters in a former oil refinery guest house in a suburb of Baku, the Azerbaijani capital.

On the cordoned-off street outside waited a crowd of 200 people. Some had come to withdraw their monthly interest or to make a new deposit. Others had come to buy goods from Hasimov--Turkish margarine from stacks of greasy cardboard boxes or indeterminate produce from jute sacks stacked up at the main entrance of his headquarters. He has 40 outlets like it in Azerbaijan.

There was, however, a certain tension in the air. A few days before, one of the big Azerbaijani banks had failed and closed its doors. Vahid has been under investigation. Everybody in the former Soviet Union still watches Russian television, and they know what happened to the now virtually worthless investment shares in MMM.

Superficially, at least, Hasimov’s system differs from MMM; his is a charmingly simple matter of money “earning its own interest,” as he put it. The enterprise buys goods from abroad and sells them in Azerbaijan for a profit. But to encourage even more deposits, Hasimov issues coupons in the amount of each deposit that allow his clients to spend that amount in his shops, and receive 80% of their value back at the end of the month.

“It’s my private system. I won’t say how I do it, because I don’t want any competition,” said Hasimov, flashing a confident smile. Anybody investigating further might be dissuaded by the tough guards outside, wielding the latest in Western walkie-talkies and said by local journalists to have been recruited from the Azerbaijani KGB.

Lest anyone suspect that this is just a scam, a pyramid scheme that pays old depositors’ interest out of the income of the new, Hasimov has wrapped up his enterprise in the guise of a charity. In the entrance hall to his headquarters, black-and-white photographs were pinned to a notice board showing him opening buildings, presenting plaques and stroking cows. And like other such deposit-takers in Azerbaijan, he issues his own daily broad sheet newspaper. The slogan: “The Humanitarian Newspaper.”

One of his rivals has even entered politics to protect its interests, forming the Democrat Enterprise Party. Hasimov said he has no such intentions, even though he claims to be one of Azerbaijan’s richest and most powerful men.

“If I was president, I’d be far from the people. Here I can talk to these people all the time,” he said.

One person unable to talk to Hasimov immediately was pensioner Lale Suleymanova. Although she had so far received interest that exceeded her original deposit, the former accountant wanted to complain that the food she bought from one of the enterprise’s shops was far beyond its “sell-by” date.

She was tackled by a fellow-depositor, a lady with many gold teeth and a believer’s faith in Hasimov’s system.

“What do you mean, rotten food? Don’t say such things,” the tackler said. “People like you always spoil things. Anyone who can do as much as the boss of this bank should be president.”

Hasimov’s name has indeed been proposed for president of Azerbaijan from the floor of the national Parliament. From top to bottom, many in Azerbaijani society are ready to believe it is easy to join up with those few entrepreneurs making fast fortunes in these raw capitalist days.

“You can earn a lot of money quickly, (but) this can’t go on for long,” observed Isa Gambar, a leading figure in the Azerbaijani opposition. “A man may run away from his debts in Moscow, but he cannot run away here. They’d get his family.”

In many ways, Hasimov’s offer of cheap food and guaranteed income is appealing to a people brought up to expect everything from the state and suddenly abandoned by the collapse of the Soviet Union.

“Our people are ill now with their problems. They can’t get salaries. They sell everything and put it in the bank and get their money that way. But it is very dangerous. After the Soviet Union, we could not establish strict government controls, we had three presidents. We need another three or four years to establish our institutions,” said a young aide at the Azerbaijani presidential quarters, a building still clad in Soviet-era white marble but where the ashtrays are made from unused caviar tins.

A senior government official saw the whole phenomenon as a natural part of post-Soviet development.

“There was no banking system. All was cash. It’s a kind of revolution,” he said. Indeed, government banks now offer at least 10% interest a month, and the Azerbaijani Central Bank has been forced to set its currency exchange rates at those on the Azerbaijani free market.

Some Azerbaijanis say they trust the new banks precisely because they are outside the state system. But for the about 120 bankers, any competition for funds may be a bad thing. Their cast-iron promises of 30% returns each month is also likely to founder on the fact that the Azerbaijani currency and inflation have stabilized considerably.

“Nobody can quite explain why this has happened. It’s partly because the government has stopped cheap credits to state industries. But it’s also because the government has just not been able to get money printed fast enough in Europe,” one Western ambassador said.

The first deposit-taker to stop paying out interest and to be forced to close was Alex Co. In late summer, a small crowd could be seen at the gates to its offices in Baku. The company’s nameplate was plastered with announcements that the closure was temporary “due to unpleasant incidents.” It made no mention of the fact that the chief executive was behind bars.

“I sort of knew this would happen. I never got a penny of interest,” said local television producer Rahim Sadikbeyli, who had deposited 100,000 manat ($1,000), about 10 months’ wages. He and other depositors might have been well advised to study the Latin motto of the company, “Per Aspera ad Astra.” Loosely translated, it means, “A Rough Passage to the Stars.”

A Look at Azerbaijan

KEY FACTS

* Capitol: Baku

* Population: 7,590,000

* Official Language: Azeri

* Monetary Unit: Manat

* Economy: The Baku area is one of the world’s oldest oil-producing regions, and mineral resources include iron, zinc, copper and cobalt. A variety of crops are also grown.

* Government: Multi-party system.

HISTORY

Azerbaijan, home of the Scythian tribes in ancient times, was overrun by Turks in the 11th Century, conquered by Russia in the early 19th Century and became part of the former Union of Soviet Socialist Republics in 1922. With the Soviet Union collapsing, the republic, which lies west of the Caspian Sea, declared its independence from Moscow in August, 1991, and became fully independent four months later.

The current leader is Gaidar Aliyev, formerly head of the Communist Party, who assumed power in 1993 when elected President Abulfez Elchibey fled Baku during a period of rebellion.

Politics in the country has been unsettled since independence as the Shiite Muslim majority clashed with Christian forces of neighboring Armenia, and tension boiled around the mostly Armenian enclave of Nagorno-Karabakh within Azerbaijan’s borders. A cease-fire last July is still holding, but the dispute has not been settled. The fighting has claimed more than 15,000 lives. Source: Political Handbook of the World, 1993; World Almanac, 1994; and Times staff and wire reports. Compiled by Times researcher LAURA A. GALLOWAY