Large-scale Misappropriations in the Organization of a Foreign State Leader's Visit in 2016

The Armenian Ministry of Education, Science, Culture and Sport has initiated a broad investigation into the legitimacy and justification of the expenses related to organizing the visit of a leader from another country in 2016. This initiative follows a letter received from the RA Prosecutor General's Office concerning the possibility of filing a lawsuit for state interests.

The Public Relations Department of the Prosecutor's Office reports that in order to ensure the completeness of the investigation, documents and information were requested from and received by the Ministry of Finance, the Government's Office, the Public Television and Radio Company of Armenia, the State Revenue Committee, and the Police.

The investigation revealed that pursuant to a secret decision by the Armenian government dated June 9, 2016, a donation of 576 million AMD was allocated from the Government reserve fund to the Ministry of Culture for the proper organization of the foreign leader’s visit, which was granted to a company under a secret order from the Minister. Although the contract specified that the funds provided to the recipient included taxes, fees, and other mandatory payments, approximately 60.2 million AMD was also transferred to the company for fulfilling tax obligations, based on justifications presented by the company.

However, according to data obtained from the Ministry of Finance, the documents prepared by the company already included a 10% markup on expenses, meaning that the provision of additional funds for the specified purpose was unwarranted.

It was also found that purchases of goods, works, and services within the framework of the amount granted to the company were supposed to be conducted through a negotiation procedure as stipulated in the Armenian law on procurement, without prior publication of the procurement announcement. Nevertheless, no documents regarding the negotiation process, price offers, qualifications, justifications, names and technical specifications of the purchased products, or any other relevant documents were provided.

Furthermore, details regarding the composition of the delegation, the number of participants, timelines, and necessary expenses during the visit were not submitted. An examination of the contracts submitted as a report revealed that in several cases, the prices stipulated in the contracts significantly exceeded market prices. Properties, works, or services were acquired or rented, the necessity or pricing of which was not substantiated, and it remains unclear how the state budget resources spent on these properties were managed afterwards.

For instance, contracts were signed with three different Ukrainian companies for the services of two mobile television stations in Yerevan, Gyumri, and Vahakni, totaling approximately 171 million AMD. However, data obtained from the Ministry of Finance indicates that a Russian company had, for a similar occasion in 2018, provided a price quote for such mobile television services at nearly half the cost of one unit.

Additionally, goods valued at a total of 16.3 million AMD, such as a red carpet, shirt, umbrella, and polyethylene film, were purchased, but there is no information on how these items were used or to whom they were transferred. There were also works to prepare barriers valued at 22 million AMD, but the contract lacked any mention of technical specifications, dimensions, shapes, or materials.

With another company, the LLC had contracted to organize translation services valued at around 6 million AMD, but it was discovered that both companies were registered at the same address in Yeghnadzor during that time, and the translation service company had no registered employees from May 2016 until March 2017, thus during the aforementioned visit. The individual who acted as the director of that company and signed the contract had only held that position since December 2018 according to RA tax authority data.

Moreover, under another contract signed by the company, passenger transport services were provided using five different brands of cars from June 17-28, 2016, but it was found that the company allegedly providing the services had no registered employees besides the director for the years 2016-2017.

The company also reported expenses related to financial structuring, financial consulting, monitoring services, and legal services, none of which were justified in relation to the visit. The investigation established that the package of secret government decisions submitted by the Minister of Culture to the government regarding the allocation of funds to the LLC lacked any justification regarding the nature, necessity, and amount of expenses, merely mentioning the phrase 'to properly organize the visit.'

As a result, the investigation has uncovered information indicating that responsible officials in the Ministry of Culture presented untrustworthy data to the Government, leading to the unwarranted allocation of 60.2 million AMD from the state budget, causing grave consequences for the state, and utilizing their official position to misallocate around 110.3 million AMD in unjustified expenses. Consequently, the Prosecutor General’s Office has initiated a criminal case based on Article 179, Part 2, Clause 1, as well as Part 3, Clause 1, and Article 308, Part 2 of the Criminal Code. The preliminary investigation has been entrusted to the Investigative Committee of Armenia.