2019 April 19

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Anti-Corruption Daily

Anti-Corruption Apr/19/2019: Kapan municipality & elevator repair embezzlement.... Vanadzor clinic being audited.... Samvel Babayan case..... PM suspends SOC chief..... So what's the deal with cement? .... Female soccer team .... more stories below
by ar_david_hh

Disclaimer: All the accused are innocent until proven guilty by the court of law, even if they may sound as being guilty. Currency in Armenian Drams unless specified otherwise.

Kapan, Syunik police says they have busted an elevator repair fraud conducted on 2012.

Kapan municipality and EuroVerelak company signed a deal so the latter would repair elevators in 28 large apartment complexes and Zangezur copper mine property. The company failed to do so properly and embezzled 37mln funds, while Kapan municipality workers abused their powers to benefit from it, say the police.

The investigation continues. A felony case is launched. https://a1plus.am/hy/article/338415

The government was discussing the anti-money laundering and terrorism financing asset forfeiture mechanisms.

Pashinyan revealed the list of people who have been in the anti-laundering committee board since 2008: The president of the Central Bank, deputy general prosecutor, deputy justice minister, deputy IRS chief, deputy NSS chief, deputy police chief, PM's assistant, the president of Cassations Court's criminal division, deputy Finance minister, 6 other representatives of relevant anti-laundering bodies. The board was formed on 2008.

On 2018, the board approved the asset forfeiture mechanism plans, and on 2019 Pashinyan created a new committee, which included the Human Rights Ombudsman's office, to begin the discussions to implement the forfeiture institute.

PM says the asset forfeiture doesn't mean there is a felony charge against the person. The justice system will remain as the primary way to seek justice against criminals. World Bank views it as a great way to prevent crime. Assets can only be taken away with a court order. UN, Europe and others have urged Armenia to implement the mechanisms.


Artsakh veteran and its former army commander Samvel Babayan (anti-Serj politician) was arrested few years ago, for allegedly ordering an illegal purchase of an Igla missile unit. He and several others were arrested. After the revolution, the Cassations Court reviewed the case ordered a new trial, after finding problems with the past verdict that sentenced Babayan to 6 years. Babayan was released from detention, while the trial continues.

One of the defendants says the NSS agents allegedly told him to write a false report against Babayan, and in exchange, he would meet president Serj Sargsyan and receive a gift of being able to go anywhere in the world. He says he refused to write a false report.

The defendant says: The NSS, including its then chief Georgi Kutoyan, told him that Babayan is a curse for the country and must be behind the bars, and that if he doesn't cooperate, the NSS will set him up with crimes he didn't commit. "They didn't give me a mattress in the prison for 6 months as a pressure."

https://factor.am/143418.html --- https://factor.am/143397.html

Vanadzor clinic is being audit by the new director and the governor's office. The director can't give all the details, but he says corruption instances have so far been uncovered. The latest reforms have reduced under the table money transactions, improved the services which has resulted in increased inflow of paid patients; there is evidence that some people received millions of Drams while never attending to work, said the director.


Pashinyan has signed the paper to suspend David Sanasaryan from the SOC chief's position until the investigators and courts finish their job.


David Sanasaryan is suing The Ethics Committee of High-Ranking Officials. He disagrees with the committee's March-2019 findings that his public back-and-forth arguments with the Yerevan State University chief were disrespectful to the reputation of the office he held. He also insists to be innocent in the medical dialysis audit story.


There are 3 big cement producers in Armenia, says QP MP Hayk Sargsyan, who is a member of the Parliamentary economic committee which was discussing the tariffs. One of these factories produces the product by importing pre-made cement ingredient called clinker, while the other two (including Gago's AraratCement) produce everything by themselves.

Clinker ingredients make cement production faster and cheaper. Gago says it's not sustainable to compete against the producers who use clinker, so either the government has to apply the tariff on clinker imports too, or Gago has to lay off staff and begin to produce cement by importing clinker himself. (He later decided he doesn't need to lay off).

The cement price from Armenian makers varies ~44k Drams per ton.

Since last year, Iran begun to send several times more cement at 13k Drams. As an emergency measure to prevent Armenian factories from going bankrupt, IRS begun to tax Iranian cement at the border to the point it reached the same price as the local product. On 2018, 75% of cement was produced in Armenia.

When Iranians increased the competition, Gago had to reduce his cement price by 10k and improve the quality so he could compete, says QP MP. He denies Gago's claim that the prices was reduced in a good faith to help the economy.

MP says the IRS's price control mechanism cannot be used for any longer, so the government wants to provide another solution by introducing a tariff on imports to level up the price. Cement importers are unhappy, while Armenian producers want even higher cement tariffs, and tariffs on clinker.

MP says the 4bln in tariffs they can potentially collected from importers is more than what the Armenian cement producers pay in taxes.


BHK Gago says if QP doesn't tariff the clinker ingredient, the building construction costs will be reduced in the country, but it'll be bad for local cement producers. He says the other big cement producer isn't able to naturally reduce their price like they did by dropping 10k Drams.


BHK's position on the topic is that clinker must also be taxed at the border. Not doing so will prompt Gago to lay off hundreds of workers, and produce cement not from the scratch (which requires many workers) but by importing pre-made stuff.


The debate got heated and some MPs accused each other of harming the public interest.

In response to harming the public accusation, QP MP responded saying Gago's cement factory paid only 800mln in taxes on 2017, while 2.1bln on 2018 (magic wand effect). "Should we assume 60% of his business was in grey economy", said MP. "Why was Gago selling cement to Georgia for 25k while the price was 50k in Armenia." The MP supports the import tariffs, but wants Gago to launch a joint Parliamentary audit to find out what the real basic cost of cement production is, in order to understand how much the tariffs should be and how much the Armenian construction companies "overpay".

https://armtimes.com/hy/article/159491 ---- https://www.youtube.com/watch?v=OrfO5tSUJYk

Gago says the reason he exported cement to Georgia for 2x lower price than he sells in Armenia, is to prevent Georgian cement business from entering Armenia. "I exported it at cheaper price at a monetary loss, so they won't intrude into our market." (Would this be against the Sherman Act in United States?). He says that last year's 10k price reduction in Armenia wasn't forced by the competition, but rather a humanitarian move. Says his cement is better than Iranian. (QP MP earlier said Gago lowered the price and improved the quality to compete against Iranian cement)



The Parliament has approved the draft bill to tax the Iranian cement for 1 year, but not the clinker ingredient. BHK voted against because they wanted clinker to be taxed, too. LHK voted against because they needed more discussions on the topic (as if this wasn't enough).



The Parliament voted unanimously to approve the draft bill to restrict how much stock and power a subsidiary company can own in its parent company, and few other restrictions, to prevent corporate machinations.


Robert Kocharyan wrote an anti-Pashinyan opinion piece for EuracTiv (shout out to all you Robofans out there 🙋‍♂️)


Pashinyan went Live on Facebook. Spoke about the promises he gave and some other things. (Today he was criticized by LHK/BHK for not helping the poor)

PM said: No mass terminations of workers appointed by the previous administration. He promised to increase the budget by ~30%. So far since last year it has been rising by 10%, with the 2019 presumed to end with 5% increase. 4 more years to go.

He promised to aid the poor and villagers with their loans and debt. On July-2018, they passed a law allowing people to have their records cleared with the bank, and the debts reformed/pardoned; thousands have taken advantage so far.

Those who were unable to pay for Sashik Sargsyan's speeding tickets had their 13bln in debt pardoned.

Currently working on the system to allow people to use a special card to get a cashback after each purchase. People get free cash, and in return, help to fight against business's attempt to hide the real income, since IRS will see business's transactions through the card. Some of these things require time and 10 months haven't been enough, said PM.

State-guarded monopolies are finished. Those who used to be monopolies may still hold large percentage of the market, but that is rapidly changing, said Pashinyan, citing the fuel and food industries.

Other things: The end of terror by the officials, not persecuting people for their political beliefs, keeping the position in CSTO, few foreign affairs advancements, fair and transparent elections, March 1st investigation.

If not all then a large percentage of concessionaires are charged and facing justice, said PM. Serj Sargsyan cannot be arrested unless there is a solid evidence against him. (One Facebook user asked how come Serj is still free). Said that after Manvel's arrest, some people got rid of their stolen property to not get caught. http://www.armtimes.com/hy/article/159533

He gave credit to QP teammates, saying the media spends too much attention on him and forgets that the rest of his team are working hard.

https://armenpress.am/arm/news/972031.html ---- https://armenpress.am/arm/news/972035.html ---- http://www.armtimes.com/hy/article/159529

Says the transitional justice system cannot be implemented in a hurry. It's not a matter of several months. https://armenpress.am/arm/news/972044.html

Aid for disabled people has increased beginning 2019, to meet the "basket of goods". They should feel good and confident today, we have two ministers with disabilities. (Justice and Labor ministers) https://armenpress.am/arm/news/972043.html

Said they failed to implement the traffic reform that establishes points-based license suspension system on the time, but it'll be ready and sent to Parliament in a month. (it's done so the rich can't get away with constantly running red light and paying fines, their license will be suspended) https://armenpress.am/arm/news/972039.html


During the live-feed, his little girl walked into the room and asked him when his elder brother is going to come back from the army. (got the video?)


Armenian Beykoz church in Istanbul has won a $4.2mln lawsuit against the city for having part of its land illegally taken away to be used as a public road.


Ballot recount confirms Turkish opposition CHP candidate won Istanbul mayoral elections.


Football Federation is assembling a female national soccer team. The Under-19 is ready. The adults' national team will be ready by Jan-2020. Around half of the team will be from diaspora. They met a few who currently play in Germany and United States.


Montreal, Canada (50,000 Armenians) municipality has adopted a resolution to mark the April 24th as the Armenian Genocide remembrance day. The mayor and the municipality will pay tributes.


Link to original report: https://www.reddit.com/r/armenia/comments/bf43hi/anticorruption_apr192019_kapan_municipality/

2018 Daily Armenia Reports








2019 Daily Armenia Reports