State Property Sold Below Market Value by 146.3 Million Dram Due to Violations in Assessment

The Public Interests Protection Department of the RA Prosecutor General's Office has initiated an investigation into the privatization of state property based on documents received from the State Property Management Committee of the Republic of Armenia. This has revealed apparent characteristics of large-scale corruption related to illegal actions.

Specifically, an evaluation conducted by a trading company on December 1, 2016, estimated the market value of a public building and land lot located at 23/6 D. Anhaxt Street, Kanaker-Zeytun community in Yerevan, with a total area of 1455.5 square meters for the building and 3922.64 square meters for the land, at 119.7 million dram. This process of service provision between the State Property Management Department and the named LLC was carried out without any legal basis or contractual agreements, in violation of the requirements of the Law on Real Estate Valuation.

As a result of the conducted assessment, the Armenian government, through a decision made on December 29, 2016, allowed the aforementioned property’s auction. On March 20, 2017, based on the state property sale and pledge agreement, the public building and land were sold for 88.7 million dram.

However, an analysis conducted by the State Property Inventory and Valuation Agency on February 14, 2020, revealed that the probable market value of the property in December 2016 could have been around 235 million dram, nearly twice the previously estimated value. Consequently, due to the apparent illegal actions of responsible officials in the department, the state property was sold for 146.3 million dram less than its probable market value, leading to severe consequences for the state.

It was also discovered that the State Property Inventory and Valuation Agency receives a grant from the state budget for conducting registration, inventory, studies, and valuation works. Under such conditions, the delegation of real estate valuation to the LLC and its execution was carried out through improper procedures from the outset.

Given that the studies revealed data containing signs of crimes against official duties leading to severe consequences by responsible officials of the State Property Management Department, a criminal case has been initiated under the second part of Article 308 of the RA Criminal Code. The criminal case has been forwarded to the Investigative Committee of Armenia for pre-trial investigation.