Armenia calls for investigation into alleged abuses by Russian company running railway
Aram Sargsyan, leader of the Republic Party, has called on Armenia’s prosecutor general to investigate the activities of South Caucasus Railway. If the investigation uncovers any abuses, the politician insists that prosecutors open a criminal case.
Armenia’s railways operate under a concession agreement with South Caucasus Railway. The company is a wholly owned subsidiary of Russian Railways. Armenia signed a 30-year concession agreement in 2008, handing the management of Armenian Railways CJSC to Russian Railways. However, freight traffic has since halved, some routes have stopped operating, and the company has yet to fulfil its mandatory investment commitments.
Sargsyan says the authorities need to examine:
- the efficiency of the company’s operations;
- its compliance with its contractual management obligations;
- the protection of the state’s property interests.
“I ask you to accept this statement and consider it a report of a suspected criminal offence under the procedure established by the Criminal Procedure Code of the Republic of Armenia,” he said.
The politician’s appeal to the prosecutor general comes amid talks between Armenia and Russia over the railway concession.
Yerevan has long called for changes to the concession arrangement. It argues that a new format would make Armenia’s railway more competitive. In particular, the Armenian authorities have proposed transferring the concession to a third party. Moscow, however, has yet to accept the proposal.
Two weeks ago, Russian Railways CEO Oleg Belozyorov visited Yerevan. Following their meeting, Armenia’s prime minister announced that the two sides had agreed to set up a joint working group. According to Nikol Pashinyan, the group has three months to examine specific questions from the Armenian government and provide answers. The key issue is whether Russia is prepared to invest in the railway. Yerevan will decide on its next steps after receiving the group’s findings.
The Prosecutor General’s Office issued a brief statement, offering no further comment. It said that it had accepted Aram Sargsyan’s application for consideration.
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From dismantling infrastructure to declining freight volumes
In his appeal, the leader of the Republic Party recalled an interview that Armenian Prime Minister Nikol Pashinyan gave to the Russian newspaper Kommersant on 10 September 2018. Discussing South Caucasus Railway, Pashinyan said the company’s alleged abuses amounted to approximately $60 million. He also said law enforcement agencies were investigating the matter and that the public would soon learn the findings.
“I believe it is necessary to clarify how the investigation conducted at the time concluded, what results it produced and whether the state received compensation for any damage it may have suffered,” Sargsyan wrote.
Following Pashinyan’s statement in 2018, the authorities launched criminal proceedings. However, they discontinued the case in March 2021. No further developments have emerged since then. Nor has anyone reported whether the company compensated the state for the alleged damage.
The politician identified five issues in his appeal to the prosecutor general:
1. Dismantling railway infrastructure
“It is necessary to establish the circumstances surrounding the dismantling of railway infrastructure along the Meghri–Kapan section, which stretches for approximately 40km. The investigation should also establish the legal grounds for the work, determine what happened to the dismantled assets, assess whether the company lawfully disposed of the property and examine how it used the proceeds from any sale.”
2. The Ijevan–Aghstafa railway line
“It is necessary to examine the circumstances surrounding the dismantling or deterioration of railway infrastructure along a section of approximately 17km within Armenia. The investigation should assess whether the decisions taken in this regard were lawful and determine whether they caused damage to the state.”
3. Declining freight volumes
“According to published data, railway freight volumes fell significantly during South Caucasus Railway’s management of the network. It is necessary to compare the figures for 2008 with those from subsequent years, identify the reasons for the decline and establish whether poor management, failure to meet contractual obligations or other violations caused it.”
4. Reduction in the workforce
“It is necessary to examine the reasons behind the significant reduction in the number of employees, assess whether the company fulfilled its commitments and identify any possible violations during this process.”
5. Implementation of the concession agreement
“It is necessary to analyse the concession agreement signed in 2008, including its investment and other obligations, assess how the company has fulfilled them in practice, examine the effectiveness of state oversight and determine whether the company has lawfully maintained and used railway assets owned by Armenia.”
Aram Sargsyan stressed that the competent authorities must conduct a comprehensive and impartial investigation.
“The potential damage was inflicted on Armenia and, consequently, its citizens”
The politician believes the issue he has raised with law enforcement agencies is of critical importance. He says the authorities must first and foremost protect state property. He also stresses that the matter concerns Armenia’s economic security, the restoration of railway links and the country’s ability to realise its transit potential.
“The potential damage was inflicted on Armenia and, consequently, its citizens,” Sargsyan argues.
He has therefore asked the authorities to verify the facts that the prime minister presented in 2018 and report the findings of the investigation conducted at the time. He also expects law enforcement agencies to assess the five issues he has raised. If they uncover evidence of a criminal offence, he demands that they open a new criminal case.
Sargsyan says the authorities must establish the scale of the financial damage the state may have suffered and identify those responsible.
“If the authorities establish that a crime took place and caused damage to the state, they must take the measures required by law to secure compensation, recover property that was unlawfully disposed of or reclaim its value,” Sargsyan stressed.
He expects the prosecutor’s office to provide a written response outlining the investigation’s findings and the decisions it has taken.
Investigation into South Caucasus Railway: Aram Sargsyan’s appeal
