Armenia's fight against corruption: a JAMnews series on the first steps of the new Armenia

A revolution took place earlier this year in Armenia which resulted in a change in power. This was the first such instance in the history of independent Armenia. The prolonged mass protests were headed by opposition MP Nikol Pashinyan, who was elected by the parliament as prime minister on 8 May.

JAMnews presents a series of articles dedicated to the first steps taken by the new Armenian government. In this article: the fight against corruption in Armenia.

The first article in the series dealt with the composition of the new government

 T

he Armenian authorities have spoken much on the ‘fight against corruption’ throughout the country’s independence, claiming it a high priority. However, corruption just seems to have grown throughout the years. The country’s new government has also announced its fight against corruption, but has taken serious measures to put an end to it.

First off are their announcements and the content thereof.

Nikol Pashinyan on the anti-corruption campaign

Nikol Pashinyan spoke several times about the need to battle corruption, even in parliament, long before being elected as prime minister, and openly called the Armenian authorities ‘corrupt’. On 7 June, while presenting his government programme, he stated:

“We will eradicate corruption and the corrupt mechanisms of decision making. I am sure that we will do this easily; when the head of state is not involved in corruption and not limited by corrupt schemes, it is already the most important prerequisite to destroying corruption.”

The new anti-corruption commission

Every new government in Armenia has created an anti-corruption body, spending vast amounts on the creation of so-called ‘anti-corruption centres’ and the organisation of discussions and conferences. The new Minister of Justice, Artak Zeynalyan, immediately stated the same after his appointment on 18 May:

“The state plans to create an anti-corruption body that will be endowed with the necessary … tools to effectively fight [corruption].”

The fight against corruption is in full swing. However, the anti-corruption body has yet to be created.

One day of scandalous discoveries

Residents of Armenia have already become accustomed to reading news on a daily basis regarding a newly uncovered case of corruption. Judging by the number of cases opened per day, it is possible to get a sense of just how seriously the anti-corruption and law-enforcement agencies have set about their work.

For example, on 16 July:

• Companies that sold and bottled mineral water were found to have abstained from paying some 230 million dram or around USD 480 thousand for the right to exploit such natural resources.
• Gas stations belonging to former MP Meger Sedrakian, MP Gagik Tsarukyan and former head of the State Revenue Committee Vardan Harutyunyan were found to owe AMD 946 million, around USD 2 million, in taxes.
• MP Ashot Arsenyan used AMD 13 million (USD 27 000) to bribe 1 300 voters.
• The head of the Metsavan community in the Lori region was found to have inflicted AMD 7 million 217 thousand (USD 15 thousand) in damages to the state.
• The former head of the Vardablur community in the Aragatsotn region, Artavazd Galstyan, appropriated AMD 4.5 million (almost USD 10 000).
• A Yerevan school director was found to have appropriated large sums of money with the help of two teachers.
• A former employee of military drafting was caught colluding with doctors, officers of the military commissariat and high-ranking officials to organise the release or postponement of more than 40 draftees by giving them false medical diagnoses.

Special operations and premises searches of large tax-paying entities

Law enforcement bodies and tax authorities have uncovered a number of tax evasion cases from 25 May to 18 July:

• Norfolk Consulting did not pay some AMD 3.3 billion in taxes (around USD 7 million).
• The management of the Security Dream and Ellips companies stole AMD 1 billion 16 million (more than USD 2 million).
• Gyumri-Garejur hid AMD 360 million (USD 750 thousand) in taxes.
• Spayka failed to pay 2 billion in taxes to the state treasury (more than USD 4 million).
• Companies carrying out vehicle inspections appropriated more than AMD 2 billion (more than USD 4 million).

Keeping their own in check

Nikol Pashinyan stated that he does not feel obligated to the MP-businessmen who supported him in his bid for prime ministership. Violations were also uncovered in companies belonging to such individuals.

MP Samvel Aleksanyan, for example, owns a chain of supermarkets called Yerevan City. The National Security Service recently found that the chain had failed to pay taxes properly for a number of years.

Violations were also uncovered among gas stations belonging to one of the richest people in Armenia and the leader of a parliamentary faction, Gagik Tsarukyan.

However, the largest and most scandalous case was the revelation that General and MP Manvel Grigoryan had been stealing soldier’s rations and using them to feed animals in his personal zoo.

Items and food stuffs gathered during the April 2016 conflict in Karabakh were also found in his storehouses. These items were gathered by numerous people and groups: everyday citizens, the socially vulnerable, public and commercial groups. Grigoryan was also accused of illegally acquiring and possessing firearms and ammunition.

How much has been returned to the state treasury?

Pashinyan stated at a government meeting on 10 July that:

“As a result of criminal cases launched by various law-enforcement agencies, 20 billion 622 million dram has been recovered from unpaid taxes as of 1 July. We’re talking about 42 million dollars.”

David Ananyan, the Head of the State Revenue Committee, said that this was from checks performed on only 73 companies, and that this number will continue to grow.

The fate of the corrupt

Nikol Pashinyan stated:

“Our aim should not be to put away as many people [in prison] as possible, but to come up with mechanisms that will restore the losses sustained by the state.”

It has been reported on numerous occasions that criminal cases were closed and re-qualified as compensation to the state for damages.

Responses to the uncovering of tax fraud and corruption

After cases of tax fraud and corruption were uncovered, a number of companies decided to attempt to defend their honour.

The Spayka, Security Dream and Ellips companies stated that the State Revenue Committee did not ‘uncover’ anything, but had instead simply defamed their names.

The head of the gas stations who didn’t pay taxes also stated:

“At the heart of the criminal cases there are clearly baseless calculations that are problematic in terms of justice and the rule of law.”

One company that was accused of appropriating AMD 38 million or USD 80 thousand through a fertilizer subsidy programme also believes that it has been a victim of defamation and filed a lawsuit at the office of the prosecutor general.

The campaign against the relatives of the former president

The fight against corruption has also made its way to the doors of the relatives of Armenia’s third president, Serzh Sargsyan. Accusations of unjust enrichment were put forward against the president’s brother, Levon Sargsyan, as well as the latter’s son and daughter. Deposit checks were discovered at their house to the value of USD 6.6 million. They were arrested and later freed but forbidden from leaving the country.

Later, the National Security Service conducted a search at the home of the former president’s second brother, Aleksandr Sargsyan, who was arrested along with his son Hayk Sargsyan on charges of attempted murder.

Accusations of unjust enrichment were also made against Vachagan Kazaryan, the former head of Serzh Sargsyan’s security force. Millions of dollars were uncovered in his possession, to which he said that he had ‘forgotten’ to tell the ethics committee.

The European Union: ready to support the new government

After the revolution came to an end, the European Union in Armenia announced its support for Nikol Pashinyan’s fight against corruption.

On 16 July, the head of the EU delegation in Armenia Peetr Switalski said that the EU, despite its support for the former government, had refused to participate in the work of the anti-corruption committee under the former PM because they did not think it was independent.

However, Armenia expects more from the European Union. The PM recently stated after his visit to Brussels that:

“During a meeting with one of our European partners, I expressed confusion as to why the EU has not increased the amount of support to Armenia after the revolution. One high-ranking EU official answered: ‘Why do you say that? We added 10 million euros’. And I said that we had already recovered 42 million euros while fighting corruption, and that if we were to just give a well-known oligarch a little shake then we’d have the same amount fall out of his pockets.”

Afterwards, Switalski said:

“The new government has stated that Armenia’s policy regarding the EU will not change, so it is not worth expecting changes in the EU’s policy towards Armenia.”

The independence of judges

One of the most important aspects in the fight against corruption in Armenia is the court system. Ten days after his election, Pashinyan stated in a live Facebook feed:

“Any judge that tries to take a bribe must know that [we] will come for him. Ladies and gentlemen, no directions will be given from 26 Bagramyan [the address of the presidential administration -ed] to the courts. Not a single representative of the authorities has the right to give directions to judges in any case.”

Side-effects of the fight

The fight against corruption received unanimous support from the country’s residents and a more ambiguous response from business circles. Checks are being performed everywhere, businesses are kept in waiting, investments are not being made and cutbacks are taking place.

Many of those who were involved in big businesses under the former authorities are believed to be corrupt. The anti-corruption push has caused them to be more cautious, which has affected the economy as a whole.

The fight against corruption continues.

•  The third article from this JAMnews series will focus on reforms and changes made to the electoral code.