Numerous Apparent Violations Detected at High Voltage Electric Networks LLC: Prosecutor's Office

Based on documents and information received from the RA Audit Chamber, the Prosecutor General's Office of Armenia initiated a process to protect state interests regarding the legality of reconstruction and other works carried out at several substations and facilities by the state-owned High Voltage Electric Networks LLC.

Relevant documents were requested and obtained from the RA Audit Chamber, High Voltage Electric Networks LLC, and the RA Urban Development Committee. This was reported by the Public Relations Department of the Prosecutor's Office.

As a result of the study, it was revealed that High Voltage Electric Networks LLC announced an open competition on June 29, 2017, for the reconstruction of the production facility, cafeteria, and administrative area, as well as the improvement of the adjacent territory.

According to the evaluation committee of the High Voltage Electric Networks LLC, on August 9, 2017, the participant that ranked first in the procurement procedure was Company A, with an offer of 353 million 934 thousand drams (VAT included).

The bid of another company that submitted a price proposal of approximately 119 million drams less was evaluated as inadequate and rejected on the grounds of not providing construction implementation licenses in the field of urban development.

It was found that in response to the competition invitation, Company A submitted the construction implementation licenses of another company that has a nearly identical name, which had been revoked back in 2014, and that the license for Company A was only granted on September 5, 2017, after being declared the winner in the competition. Additionally, Company A submitted previously signed contracts of that almost identically named LLC as proof of professional experience.

Thus, the officials of High Voltage Electric Networks LLC used their managerial or other powers against the interests of the organization, relying on obviously false documents submitted by Company A, violating the requirements of the RA Law on Procurement, and thereby declared Company A as the winner of the competition with the amount of 353 million 934 thousand drams, rejecting the lower offer of 119 million drams and causing serious consequences.

The study also found that in order to implement the reconstruction programs of two substations with the support of the Asian Development Bank, a contract was signed with a Chinese company on May 6, 2016, worth 14 million 805 thousand US dollars.

According to information and documents received from the RA Audit Chamber, a letter was sent on February 25, 2019, by the project manager of the Chinese company to the director of High Voltage Electric Networks LLC, indicating that the selection of subcontractors for design institutions, construction works, and equipment installation was carried out under pressure from former directors of High Voltage Electric Networks LLC, and there was no independent selection; the mentioned subcontractor companies did not have sufficient capacity to carry out the specified works.

The letter also stated that the subcontractor presented volumes for payment that exceeded the actual completed work. In particular, the construction costs for the reconstruction of one substation nearly tripled, exceeding about 1 million 200 thousand US dollars (approximately 576 million drams), while for the other substation, it was around 608 thousand US dollars (approximately 291 million 840 thousand drams).

Thus, the information and documents received from the RA Audit Chamber contain data regarding the misuse of powers by High Voltage Electric Networks LLC employees against the interests of the organization, causing approximately 867 million 840 thousand drams in damage and resulting in severe consequences.

According to the information and documents received from the RA Audit Chamber, a contract was signed between High Voltage Electric Networks LLC and an LLC on June 26, 2017, through a negotiation procedure, under which the LLC was obliged to carry out the transfer of 110 kV overhead line works for a contractual value of 129 million drams, which was later changed to 130.5 million drams.

Although in January 2018, 130.5 million drams were transferred to the LLC for the performance of contractual works, it was found that the disconnection of the mentioned overhead lines scheduled for relocation in 2017 and 2018 did not take place. Without disconnection, the mentioned works cannot be performed.

In connection with the aforementioned facts revealed by the study, the Prosecutor's Office of the RA's Department for the Protection of State Interests initiated a criminal case under the first part of Article 178, part 2 of Article 214, and part 2 of Article 325 of the RA Criminal Code.

The preliminary investigation has been entrusted to the National Security Service of the RA.