Abuses in the Implementation Process of the 'Book World' Complex Construction Investment Project

The Examination of documents received from the RA State Control Service by the State Interests Protection Department of the RA Prosecutor General’s Office has revealed that on July 26, 2012, based on a project presented by the Mayor of Yerevan, the Government of Armenia made a decision regarding the investment project for the construction of the multifunctional complex 'Book World' at 36 Yeghnik Kohrbatzi Street in Yerevan.

According to this decision, Company N proposed to construct the 'Book World' multifunctional complex in connection with the 500th anniversary of Armenian printing and Yerevan being recognized as the global capital of the book by UNESCO in 2012. The company was ready to construct a new boiler house at the site, according to the construction contract for the Yerevan P. Tchaikovsky Secondary Music School, in accordance with its own funds, as well as to build an attic of 288 square meters on the corner building of Yeghnik Kohrbatzi and Pushkin streets to serve as a concert hall. This information has been disclosed by the Prosecutor General’s Office.

Based on that resolution, a plot of land with an area of 300 square meters, a 35.3 square meter boiler house, was returned to the property inventory of the school at the above-mentioned address, and it was transferred to the Company as a payment method for the said works.

The preliminary estimate for the boiler house and attic construction works, according to project estimation documents, is 102 million AMD, while the market value of the specified 300 square meter plot of land and the 35.3 square meter boiler house as of July 23, 2012, is assessed to be 100 million AMD.

In order to ensure the fulfillment of the obligations for the implementation of the boiler house and attic works, a pledge agreement was signed, with the aforementioned properties serving as the subject of the pledge. According to the main contract signed between the RA Ministry of Culture and the company, the completion date for construction has been set at 2.5 years, and the Ministry was tasked with overseeing the quality of the works specified in the contract.

However, it has been revealed that the mentioned complex has not yet been constructed, the aforementioned government decision did not impose any obligations or deadlines for overseeing the construction of the complex, no market assessment was conducted for the state property plot and boiler house, and preliminary estimations and project estimation documents have not been composed.

It has also been found that the Company, becoming the owner of the aforementioned 335.3 square meters of state property, and holding only the mentioned plot of land in its assets, sold it for 160 million AMD in September 2016, and in March 2019, the plot was pledged at a bank with an estimated value of 194 million AMD. This means that misleading information regarding the market value of the state property included in the RA Government’s decision No. 1052-A dated July 26, 2012, as well as the preparation of project estimation documents and construction costs, was presented.

Furthermore, in June 2015, the Armenian government decision No. 1052-A dated July 26, 2012, was amended and it was established that instead of construction works planned for the ‘Yerevan P. Tchaikovsky Secondary Music School’ SC, the company should acquire musical instruments worth 82,477,000 AMD, while the oversight of the quality of the acquired musical instruments was entrusted to the RA Ministry of Culture.

On May 12, 2016, as per the handover-acceptance act, musical instruments valued at 83,611,570 AMD were accepted. However, an examination initiated by the employees of the RA State Control Service revealed that the actual market value of the 10 violins and 2 violas valued at 47,265,000 AMD (excluding VAT) transferred to the RA Ministry of Culture is only 22,950,000 AMD, indicating a shortfall of 24,315,000 AMD.

This indicates that responsible officials of the RA Ministry of Culture, with the assistance of a representative of the Company, included false data in the handover-acceptance act regarding the real value of supplied musical instruments, misusing their official position and manifestly embezzling public funds amounting to 24,315,000 AMD.

Based on the facts revealed during the examination, a criminal case has been initiated in the State Interests Protection Department of the RA Prosecutor General’s Office under part 3, point 1 of Article 179 and part 2 of Article 308 of the RA Criminal Code. The criminal case has been forwarded to the RA Investigative Committee for further investigation.