Assets of Hayapaki Company Sold through Criminal Schemes, Criminal Case Initiated

Under the instruction of the Prosecutor General of the Republic of Armenia, materials have been prepared by the Anti-Corruption and Economic Crime Division of the RA Police’s Special Investigation Service, uncovering information on the sale and bankruptcy process of Hayapaki LLC being executed through criminal schemes and fraudulent activities, which led to the illicit appropriation of the company's assets.

In particular, a comprehensive and effective operational-investigative work by the personnel of the Police’s Special Investigation Service revealed that the 80% state-owned shares of Hayapaki LLC, valued at approximately 574 million AMD, were sold directly for only 145 million AMD under the RA Government's decision No. 90 dated 07.02.2001, which established the company's statutory capital at 717 million AMD, with the stipulation for the buyer, identified as N.A., to make 250 million AMD in investments over three years and provide 700 jobs as a social guarantee.

However, N.A., with the apparent intent to deceitfully gain control over the company's assets, deliberately failed to fulfill his contractual obligations. Moreover, through a director appointed by him, the company, transformed into Haybyureghapaki LLC, was managed inefficiently, and tax and other obligations were intentionally not met, resulting in the company's declaration of bankruptcy by the court on 29.12.2003.

Subsequently, the bankruptcy administrator appointed by the court, without undertaking measures aimed at rehabilitating the company, illegally entered into a contract for the appraisal of the company’s assets with a person guaranteed by the company’s director, as an independent appraiser, with the intention of signing a clearly unprofitable agreement. Ignoring the balance sheet values of the assets and failing to take necessary measures to determine the market value, without any justification, the entire assets of the LLC were appraised at a significantly lower value of 121.3 million AMD, resulting in a clearly fraudulent appraisal report.

As a result, the bankruptcy administrator, relying on this forged document, initiated the auction process for the sale of the company’s assets. During this time, N.A. founded a limited liability company under the name of an acquaintance and reached a preliminary agreement with entrepreneur A.K. to sell all of the company’s assets for 1.5 million USD.

On 15.05.2004, through a formal auction organized by the bankruptcy administrator, the entire assets of Haybyureghapaki LLC were acquired for 121.3 million AMD by the newly established LLC, which had already been included in the authorized capital of the company owned by the aforementioned entrepreneur in May 2004. Thus, through the described machinations and with the assistance of the bankruptcy administrator, N.A. fraudulently appropriated a particularly large amount of state property valued at 571,166,000 AMD belonging to Hayapaki LLC.

As a result, the rights of the other 20% shareholders of the LLC were also effectively disregarded and violated. A criminal case has been initiated at the main division of the RA Police’s Special Investigation Service regarding the apparent crimes of theft of property on a particularly large scale through deceit, illegal actions during bankruptcy, assisting in the theft of property on a particularly large scale through fraud, and forging and using false documents, based on the characteristics of Articles 178, Part 3, Clause 1, 192, Part 1, 38-178, Part 3, Clause 1, and 325, Part 1 of the RA Criminal Code. The criminal case has been forwarded by the Prosecutor's Office to the Investigative Committee of the Republic of Armenia for further investigation.