Corruption Violations of Nearly 2 Billion Drams Exposed in Case of 'Tsaghkadzor Main Sports Complex'

The Armenian Prosecutor General's office has conducted extensive investigations into the legality of the property lease and sale processes regarding the state-owned 'Tsaghkadzor Main Sports Complex'. This investigation required essential documents and information from various government bodies, including the Ministry of Education, Science, Culture and Sports, the State Property Management Committee, the State Revenue Committee, the Cadastre Committee, and the National Archives of Armenia.

According to the Prosecutor's Office press service, the investigation revealed that according to the Armenian government’s decision No. 74-N dated January 21, 2010, the state-owned enterprise (SOE) 'Tsaghkadzor Main Sports Complex' was permitted to sell a property covering 32,237.1 square meters (including 20 buildings such as hotel structures, sports halls, and public centers) and a land area of 76,121 square meters to Company 'N' for a total of 541.7 million drams.

The basis for this government decision was an agreement signed on November 8, 2006, between the SOE and Company 'N' to lease the land and buildings located in the Tsaghkadzor community for 50 years. The investigation found that the lease agreement contained clauses that were contrary to the interests of the state SOE, such as unprofitably one-sided terms regarding the calculation of lease payments and additional payments to be made upon termination of the agreement.

The justification presented for the government decision stated that Company 'N' had already made investments exceeding 3.4 billion drams based on the lease agreement. However, it was revealed that only invoices of approximately 2 billion drams from construction work performed in 2007-2008 were submitted as justification. Further, data received from the State Revenue Committee indicated that these investment-related documents, valued at around 738 million drams, were missing from Company 'N's tax records.

The property evaluation report from the State Property Management Committee stated that the market value of the property sold under the mentioned government decision was approximately 1.8 billion drams, significantly exceeding the sale price by 1.3 billion drams. Thus, the government was presented with unreliable data regarding the property value, appraisal basis, and investments.

It was also determined that the remaining property used by Company 'N' after the aforementioned government decision had a market value of around 6.1 billion drams as of 2019. If leased at market value, the total rental income from 2010-2018 would have amounted to about 704 million drams, which the company has never paid.

The investigation highlighted that an unfinished building of 2,323.3 square meters was valued at 604.3 million drams in 2005. However, by June 2011, this structure's materials and construction value were re-evaluated at just 50 million drams, leading to its demolition and eventual sale for only 3.6 million drams; however, there is no record of these funds being deposited in the state SOE's accounts.

Consequently, the investigation has uncovered factual evidence of criminal offenses committed by responsible officials of the Ministry of Sports and Youth Affairs in 2010 for presenting unreliable data to the government, resulting in the sale of state SOE properties at 3.3 times less than their market value and the embezzlement of significant property using their official position from 2010 to 2019.

Based on these findings, the Prosecutor General's office has initiated a criminal case under Articles 179, 214, and 308 of the Armenian Criminal Code. The preliminary investigation has been assigned to the Investigative Committee of Armenia.