Complex Criminal Schemes Involving 29 Defendants in the 'North-South Road Corridor' Criminal Case

The Prosecutor's Office has presented an interim summary regarding the criminal case related to the 'North-South Road Corridor' project. According to the statement, the available information in the criminal case evidently indicates that violations were committed by relevant officials and individuals associated with the project during the conduct of tenders, resulting in ineffective management of the Project, lack of oversight on the execution of works, price and content discrepancies in contracts, and unwarranted changes to the projects. As a result, the construction work on the North-South road has not been completed over a period of about 10 years, and the anticipated objectives and outcomes for citizens, society, and the state have not been achieved, including reducing travel times and connecting southern Armenia with quality and rapid roads to the north, thereby promoting the development of economic and business ties.

The unprecedented scale of the criminal case has revealed numerous incidents of official and economic crimes in several directions, including the criminal abuses of the responsible officials for the Project, foreign contractors, and local subcontractor organizations involved in the Project, as well as the criminal activities of senior officials associated with these organizations. At the present stage of the investigation, criminal prosecution has already been launched against 29 individuals, four of whom are current and former officials, while the others are leaders and employees of organizations involved in the project.

Focusing specifically on various incidents, the investigation will look into how certain employees of contractor and subcontractor companies, along with those effectively managing their operations, presented apparent forged documents as grounds for taxation to avoid particularly large tax liabilities, as well as the preparation of fraudulent accounting documents for money laundering purposes without the actual performance of works or provision of services. It is noteworthy that, at this stage of the investigation, total damages caused to the state amount to 4,211,416,057 AMD.

For instance, as part of the 'Reconstruction and Improvement of the M1 Road from Talin to Gyumri' program, representatives of the Armenian branch of the contractor 'Sinohydro Corporation' and individuals managing the local subcontractor company 'Stons' reached an agreement to sign fake contracts for services without actually rendering any services, along with submitting payment documents in order to reduce the tax liabilities of 'Sinohydro Corporation' in Armenia. As a result of the fraudulent schemes previously orchestrated, a total of 1,162,260,574.5 AMD was transferred to 'Stons' via seven transactions up until April 4, 2017.

The director of 'Multi Group' concern, S.A., in cooperation with two employees, established two companies for no entrepreneurial purpose as part of the criminal scheme to disguise the illicit origin of funds received within the 'Stons' company. The chief accountant of 'Stons', acting under instructions from the aforementioned company leadership, transferred funds received from 'Sinohydro Corporation' to the two newly established companies, declaring a portion of the funds as dividends and handing them over in cash to S.A.

'Stons' also presented seven fake tax invoices worth 1,167,409,328.31 AMD to the Armenian branch of 'Sinohydro Corporation', which were accepted by the company’s director and accountant, thus maliciously avoiding the payment of arising taxes. These data were included in the reports regarding profit tax concerning non-residents and VAT calculations submitted to the Armenian State Revenue Committee as required by law for the years 2016 and 2017. As a result of the described illegal transactions, extraordinarily large damages amounting to 2,729,457,229 AMD have been identified at this stage of the investigation.

Based on sufficient evidence obtained, charges have been filed against S.A., who effectively directed the operations of 'Stons', four associated employees, and three employees from the Chinese contractor company for evasion of large tax payments, fraudulent entrepreneurship, and money laundering. A precautionary measure of detention has been selected by the court against S.A., which was later replaced by an alternative measure of bail. A representative of 'Multi Group' concern has restored 1 billion AMD to the deposit account of the RA Investigative Committee as a guarantee for the recovery of damages. The pre-investigation continues, and information will be regularly provided concerning the progress and outcomes of the investigation in all directions.

Note: The suspect or defendant in an alleged crime is considered innocent until proven guilty by the court as dictated by procedural law.