Scandal surrounding Ucom, the only local telecom operator in Armenia. Redistribution, takeover or seizure of property?
Ucom, the only local telecommunication company in Armenia built with Armenian capital, is at the center of several scandals.
The scandal broke out a few weeks ago. The founders of the company, brothers Hayk and Alexander Yesayan, who own about 6 percent of the shares, stated that they had come into conflict with other owners of the company. Ucom CEO and co-founder Hayk Yesayan announced his resignation. As a sign of solidarity with him, more than 800 employees–that is, about half of the entire staff–also resigned.
At the same time, the National Security Service launched an investigation into Gurgen Khachatryan, one of the shareholders and chairman of the Ucom Board of Directors. In addition, he is the son of the former chairman of the State Revenue Committee, Gagik Khachatryan, who was arrested on charges of abuse of power and embezzlement on an especially large scale.
A petition for the arrest of Gurgen Khachatryan was filed in the court, and his house was searched on the evening of April 30.
The day before, Gurgen Khachatryan that he was facing pressure “at the state level,” as well as demands to give up control of the company. He said that these were accompanied by threats of arrest, and he demanded that accredited diplomats and international organizations turn their attention to the issue.
The issue is that Armenian authorities believe that if the Kachatryan family’s shares in the company are sold, the entire sum should be put into the state budget in order to offset the damage caused by Gagik Khachatryan during his years of service as chairman of the State Revenue Committee.
More details below on why the founders of the company abandoned their brainchild, why the Khachatryan family is being persecuted, and how the authorities are approaching the issue.
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Details on the scandal
The buzz surrounding this company Ucom started on April 10, following the resignation of the Yesayan brothers–the founders, shareholders and CEOs of the company.
They had disagreements with the board of directors concerning a possible merger of Ucom and another telecom operator operating in Armenia, the Russian company Beeline.
It was already known that Ucom intended to buy all Beeline shares. There were also rumors that after the merger, the company would be managed by Beeline Executive Director Andrei Pyatakhin.
But the pertinent issue for the Yesayan brothers was the possible reduction in their shares that would occur as a result of investments in the event of a merger.
Hayk Yesayan twice suggested that other Ucom shareholders buy all their shares, that is, the remaining 94% – first for 22 billion drams ($45,000,000), then – 34 billion drams (about $70,000,000). And he was refused․
Currently, 29% of Ucom’s shares are owned by IU Telecommunicate, the brothers Gurgen and Artem Khachatryan each own 11.9% of the shares, and their other relative, Suren Khachatryan, owns 24%. The IU Telecommunicate shares are also owned by the Khachatryans.
The Russians also have their fingers in the company pie: 10% of the shares are held by Fora Bank, owned by Samvel Karapetyan, a Russian businessman of Armenian heritage.
On April 23, after leaving Ucom, the Yesayan brothers announced the creation of a new telecommunications company.
And the Ucom Board of Directors elected Ara Khachatryan as the new head of Ucom.
Arrest appeal and house search of Gurgen Khachatryan
The story surrounding the chairman of the Ucom Board of Directors and the future of the company began to gain momentum in late April, when Gurgen Khachatryan made a statement that “some of the country’s senior officials are demanding that Ucom be sold”:
“The threats reached the point where they promised to create an uncontrolled situation within the company, which, according to them, would force us to agree to sell the company at the lowest possible price. Seeing that this sabotage did not work, they made a direct demand for the seizure of Ucom assets and clearly stated that if we do not comply in the short-term, they would accuse me of committing a particularly serious crime and arrest me, followed by a similar situation with my brother and other family members and people associated with us.”
Gurgen Khachatryan says that the situation must be made public and that they must appeal to international structures, as they have already exhausted all of the legal resources to ensure their protection within the country:
“I am certain that we can rely on law and morality, and will not allow anyone to turn this 12-year-old institutional structure, in which both social capital and the well-beings of the employees involved are intertwined, into a bargaining chip, even under the most serious pressure. Ucom is not for sale, and our dignity is not in doubt.”
The chairman did not give information on who specifically is putting pressure on him to sell the company. However, a spokeswoman for the prime minister responded to his statement.
On her Facebook page, Mane Gevorgyan wrote that the family of Gagik Khachatryan expressed a willingness to return the embezzled funds and to compensate for the damage caused to the state:
“Gagik Khachatryan and his sons led the corrupt mafia system operating in Armenia for many years, as a result of which they illegally accumulated several hundred million dollars in state funds.
As for Ucom, the seizure of its shares under Armenian legislation is only possible with the consent of the government. After a dispute arose between the shareholders of the company and the issue of changing the composition of the shareholders appeared on the agenda, the position of the government was that the sale of Khachatryan’s stake could only happen if the entire amount from the sale was transferred to the state budget of Armenia.”
Immediately after this post was published, it became known that Gurgen Khachatryan had been charged and that the court had already filed a motion for his arrest. On April 30, Khachatryan’s lawyers stated that the charge was considered “gross interference in the free market and personal life by the state”:
“We consider it necessary to report that Gurgen Khachatryan has already been charged, and that part of his sentence included a restriction of travel measure. Now the charge has been changed. This new charge states that Gurgen Khachatryan is implicated in receiving a bribe, while both the case file and the explanations show that the amount indicated in the charge is a loan, the loan agreement is still valid, and that the amount must be repaid by the end of the term.”
That evening, investigators searched the house of Gurgen Khachatryan.
What they discovered is unknown. The whole country is closely monitoring the events surrounding the company as they unfold, and the company itself has divided into supporters and opponents of the Kachatryans. Media and experts have so far refrained from commenting.