Parking City Service’s 700 Million Dram Loan Obligation Unjustly Waived at the Expense of Yerevan's Community Budget

The private company 'Parking City Service' transferred as a donation to the Yerevan Municipality has resulted in investigations into its subsequent operational abuses, according to data obtained from the Yerevan Municipality and forwarded to the Prosecutor's Office of Yerevan.

It was found that in November 2016, the Yerevan Municipality conducted negotiations with a consortium of 'Parking City Service' and 'Locator' LLC regarding the management of financial flows arising from local fees for paid parking services being transferred to municipal structures. The memorandum established that the municipality accepted the donation of 100% of the shares of the company, assuming the obligation to repay liabilities incurred for asset acquisition only after an audit conducted by a reputable auditing firm.

However, violations of this agreement occurred, as an audit assessment was never conducted, and based on a consulting conclusion, the company's fixed assets were valued at 1,788,000,000 AMD. Following that, the Yerevan City Council's December 21, 2016 decision No. 655 approved the transfer of 100% of the company’s shares as a donation to the Yerevan Municipality. The same decision entrusted the shares of 'Parking City Service' to 'Locator' LLC for fiduciary management.

Yet it has been revealed that the real value of the assets during the donation process was overstated by 1,051,113,700 AMD. Consequently, the Yerevan Municipality, not being a party to civil agreements signed by 'Parking City Service,' undertook obligations it did not have under the council's resolution dated December 21, 2016, and repaid bank loan obligations of 713,000,000 AMD incurred by 'Parking City Service' during 2017-2018 from the municipal budget.

This means that relevant officials of the Yerevan Municipality, acting out of self-interest or group benefits, apparently misused their official positions in contradiction to the public service interests, assuming the repayment obligation for a loan secured for assets with inflated valuations without an audit assessment.

Additionally, during the same period, they unlawfully repaid 713,000,000 AMD for the company's bank liabilities, thereby causing similar damage to the community and leading to serious consequences.

Moreover, it was discovered that officials of 'Parking City Service' misappropriated a total of 20,714,515 AMD through wrong calculations of employee wages, allocating funds for non-operational vehicles and conducting improper fuel payments through the abuse of their official positions during 2017-2018 and the first quarter of 2019.

Considering the presence of criminal elements in the prepared materials, a criminal case has been initiated based on the findings of misuse of official powers by Yerevan Municipality officials and significant embezzlement by the officials of 'Parking City Service' under clauses of Article 308, Part 2, and Article 179, Part 3, Clause 1 of the Criminal Code of the Republic of Armenia. The investigation has been assigned to the Investigative Committee of Armenia.