Over 2 Billion AMD Mismanaged in the Restoration of the Ishkhan Resources

The State Interests Protection Department of the Prosecutor General's Office of Armenia has examined documents regarding the control results of the financial and economic activities of the "Sevan Ishkhan" and "Sevan Aqua" LLCs, established by the "Fund for the Restoration of the Sevan Ishkhan Resources and Development of Fish Farming." This examination found that from 2013 to 2018, approximately 9 billion AMD was allocated from the state budget for the implementation of the statutory objectives of the foundation and companies, a portion of which was misappropriated through various transactions and schemes or wasted through unreasonable and unpurposeful expenditures.

In particular, under a contract signed by the "Sevan Ishkhan" LLC, 200,000 juvenile fish worth 180 million AMD were supplied in November 2015. However, they remained in the supply location in Gyumri due to the fishery and net farming operations not being ready for use. As a result, a storage contract was signed with the supplier LLC, and an additional payment of 151.2 million AMD was made, while only 99,772 out of the 200,000 juvenile fish were alive, resulting in a cost price of 13,896 AMD per kg instead of the 5,000 AMD stipulated in the contract.

Furthermore, during the 2014-2017 period, it was established that 68.3 million AMD worth of transportation waybills for juvenile fish were missing, as well as information on 273.1 million AMD worth of juvenile fish outs based on the comparison of issued tax invoices and transportation documents. According to accounting documents, the quantity of juvenile fish transported to net farming exceeded the reported volume by 32,612 kg (worth 291.9 million AMD).

In December 2016, a contract worth 319,000 USD (154.7 million AMD) was signed between "Sevan Aqua" LLC and a Ukrainian company for the construction of a catamaran, while the purchasing process was confirmed without the product being accepted. Additionally, the contract price later rose to 470,000 USD, and the delivery period was extended three times, from 180 days to 555 days, setting the deadline to March 17, 2019.

It was also discovered that 110,000 USD (53.3 million AMD) was unjustifiably paid to the Ukrainian company for changes in technical specifications and for lowering the catamaran into the water, whereas those costs should have been covered by the supplier within the total contract value. Despite payments to the Ukrainian company totaling 234 million AMD, the catamaran was not delivered by March 17, 2019, and no measures were taken by the company’s staff to reclaim the funds or receive the catamaran.

Additionally, in April 2017, due to damage to the net farming facilities, "Sevan Aqua" LLC reported losses of 425 million AMD in biological assets (fish escape) and 97 million AMD in fixed assets (details of pontoons and cages). According to the company’s reports, the freezing of Lake Sevan in winter led to damage to the cages, resulting in mass fish escapes; however, the freezing of the lake is considered a predictable risk in the fishing industry, and clear guidelines were noted in the technical characteristics for the equipment for the "Sevan Ishkhan’s cage farming" regarding actions to be taken in the case of ice formation. No appropriate measures were taken by responsible company officials.

It was also determined that over 733 million AMD was spent through a contract signed between "Sevan Ishkhan" LLC and another company for constructing a processing plant in the Karchaghbyur community, but the work remains unfinished and since 2016, the factory building has been in a half-built state without being used for any purpose.

According to a decision by the board of the "Sevan Ishkhan" LLC, a retail shop called "Pepo" operated on Saryan street in Yerevan from November 2015 to March 2017 as part of an advertising campaign, for which a total of 129.6 million AMD was spent. However, only 32.3 million AMD in income was recorded throughout its operation.

Further apparent criminal violations were identified. Overall, the materials received from the State Control Service contain information about the responsible officials of "Sevan Ishkhan" and "Sevan Aqua" LLCs conducting transactions against the interests of the companies during 2014-2019 by abusing their powers, falsifying documents, misusing budgetary resources exceeding 1 billion AMD, and causing damages of about 1.3 billion AMD.

Based on the above, a criminal case has been initiated at the State Interests Protection Department of the Prosecutor General’s Office under part 3 of Article 179, part 2 of Article 214, and part 2 of Article 325 of the Criminal Code of Armenia. The preliminary investigation has been assigned to the Investigative Committee of Armenia.