Four Individuals Indicted for Mismanagement in the State Property Management Department

The Main Investigative Department of the RA Investigative Committee has revealed details of mismanagement within the State Property Management Department of the Government of Armenia following an extensive investigation.

According to the factual data obtained during the investigation, the director of "Ani" LLC, aiming to reduce tax payments through expenses related to the "Waterzor" HPP on the upper canal of the Akhuryan river operated by a family-owned LLC, as well as to increase income by raising the electricity sales tariff generated by this HPP, submitted a request on February 2, 2017, addressed to the Prime Minister of Armenia. The request sought the direct sale of the upper canal segment of Akhuryan river, measuring 1.882 square meters in area, as well as necessary land parcels for its use and maintenance.

In the same application, he also requested the sale of a segment of the Akhuryan upper canal, presenting falsified information that it supposedly serves the water supply of a large merged community, especially emphasizing the need for the reconstruction and investment in this segment of the canal.

This request was forwarded to the Public Property Management Department of the RA government for discussion and recommendations. In compliance with the Prime Minister's instructions, the State Committee for Water Economy of Armenia sent a letter on February 21, 2017, notifying the Public Property Management Department about the potential for the irrigation system to be sold to "Ani" LLC, indicating that the company claimed that the irrigation system would provide water to approximately 4,700 hectares of land in nine communities if reconstructed, thus it could not be considered local significance.

For the purpose of determining the market value of the specified property, data were provided for the preparation of an assessment report to the State Property Inventory and Valuation Agency, which conducted preparatory work together with qualified specialists. They preliminarily concluded that the property's value could be around 200,000,000 AMD, which was communicated to the acting head of the department.

Upon learning of the preliminary calculations regarding the potential value of the property, the director of "Ani" LLC expressed outrage but leveraged his relationship with the acting head of the department and assured him, through the latter's son, that the section of the canal was significantly worn out and nearly unusable. They still intended to purchase it for 30 million AMD, renovate it, and ensure its normal operation while making substantial investments for the state.

Motivated by the claims of the LLC's director and acting out of careerism to demonstrate that he was bringing significant investment of 540,000,000 AMD in the case of low-value property, the acting head of the department, due to his personal interest linked to connections with the director's son, misused his authority contrary to the service interests by verbally instructing the head of the valuation department to declare the value of the property at a preferred price of 30,000,000 AMD, leading to the creation of an official fake document. This document was then presented to the acting head of the department, although he reiterated its falsity. Nevertheless, ignoring this and the statutory ban on privatizing the water system of national significance, he sent the falsified assessment to the management department.

The head of that department, alongside the head of the privatization department and the chief specialist involved in the process, demonstrated negligence towards their service duties, failing to obtain any written inquiries from a competent body to clarify the number of communities served by the mentioned canal segment and whether it constituted a local significance water system and whether there were legal impediments to privatization.

They did not adequately consider or discuss the aforementioned warnings from the State Committee for Water Economy. Lacking a legally compliant assessment report, they presented a draft decision No. 372-A to the acting head of the department. The acting head sent this draft to the government, attaching notes that indicated the acceptance of this draft would not require changes or amendments to other legal acts, supposedly leading to an increase in state budget revenues, citing claims from "Ani" LLC that the canal serves one community and could be privatized according to established procedures. It was also noted that the State Committee for Water Economy had approved the privatization of the property but did not address provisions in that committee's letter concerning privatization bans.

As a result, by the government's decision No. 372-A on April 13, 2017, it was allowed to sell property worth 615,860,000 AMD in the form of a direct sale for only 22,695,306 AMD to "Ani" LLC. On May 2, 2017, ownership rights were registered for the strategic water structure, inflicting a property damage of 439,199,694 AMD on the state, causing severe consequences.

Following the collection of sufficient evidence, charges were filed against the acting head of the Public Property Management Department under parts 2 of Article 308 and part 1 of Article 314 of the RA Criminal Code, against the director of the LLC under part 2 of Article 308 and part 1 of Article 314, as well as against the head of the management office of the Public Property Management Department and the head of the privatization department under part 2 of Article 315. A decision was made during the pre-trial investigation not to prosecute the head of the valuation department based on non-justifiable amnesty grounds.

The pre-trial investigation has concluded, and the criminal case, with a charge conclusion, was forwarded to the prosecutor.