5.3 Billion Dram Loss: Misappropriations by Officials and Sanitek in the Waste Management Sector

The investigation conducted by the State Interests Protection Service of the Republic of Armenia's Prosecutor General's Office, based on information received from the Yerevan City Hall, revealed that officials from the Yerevan City Hall had introduced blatantly false information in official documents between 2013 and 2015. These documents pertained to the presence of professional experience, necessary technical means, financial resources, and labor resources from Sanitek International LLC and Sanitek SARL, which were evaluated as sufficient to meet the qualifying criteria for tender submissions.

As a result, contracts were signed with these companies for waste collection and sanitation services in Yerevan, including during the winter months. Moreover, the contracts ignored the stipulation that to sign annual agreements for the provision of services, a guarantee from a bank, credit organization, or insurance company must be submitted. Nevertheless, contracts effective for 10 and 12 years were signed starting in 2014, without such guarantees in place. Consequently, the community was deprived of the opportunity to receive funds corresponding to the amount of the bank guarantee while the poorly performed or non-performed services were financed from community resources.

As a result, the Yerevan community incurred a material loss amounting to 1,607,721,900 AMD.

The investigation also found that two contracts signed in 2013 and 2015 included the supply and installation of a total of 16,000 1100-liter metal containers (bins) for waste collection, as well as their washing, repair, and replacement work, for which approximately 1,805,000,000 AMD was paid each year. However, documents provided by the Yerevan City Hall indicated that only 5,170 containers had been registered, of which only 99 were metal. Only 2,553 were in good condition, even though the contractor was obliged to immediately replace any container that required cleaning, maintenance, or repair with the same or a similar clean and serviceable container.

Furthermore, according to data submitted by the two service-providing companies, only 9,907 1100-liter containers were acquired and installed under contracts signed with the Yerevan City Hall since 2014. Additionally, the contracts stipulated the cleaning of 4,000 platforms for the containers, yet only 459 were built. Officials at the Yerevan City Hall paid 100% of the costs for the cleaning of platforms, despite only around 20% of them being constructed. As a result, for platforms that did not exist since 2014, approximately 354 million AMD was overpaid, causing the same amount of financial damage to the Yerevan City Hall.

Consequently, it follows that the authorized persons of the company, knowing that they acquired and installed a maximum of only 9,907 containers instead of the 16,000, and provided cleaning services for only 20% of the container platforms, have received 3,706,000,000 AMD in excess funds for services related to nonexistent container installations, collection and transportation of waste, washing, and repair, as well as for the cleaning of non-existent platforms.

Beginning in 2014, officials from the Yerevan City Hall failed to exercise oversight and control over the work performed and the effective and targeted use of funds allocated from the Yerevan city budget. As a result, for years, the community budget has paid the companies for work not actually performed and services not rendered.

Thus, due to the introduction of obviously false information or entries in official documents by the officials of the Yerevan City Hall, signing contracts without bank guarantees, misusing their positions contrary to the interests of service, or failing to perform their official duties, the community has suffered a material loss of approximately 5,313,721,900 AMD, leading to severe consequences.

Taking into account the evident presence of the elements of crime in the violations registered by the investigation, sufficient data indicating sufficient grounds for prosecutions have been gathered. A criminal case has been initiated in the State Interests Protection Service of the Prosecutor General's Office under Article 314, Part 1; Article 308, Part 2; and Article 178, Part 3 of the RA Criminal Code. The pre-investigation of the criminal case has been assigned to the Investigative Committee of Armenia.