Charges Filed Against Two Tax Inspectors and an LLC Director

The Investigative Committee of Armenia's Chief Department for Investigating Especially Important Cases has conducted a comprehensive investigation revealing that an LLC engaged in importing wheat and producing and selling flour sold wheat, flour, and other cereals to various individuals and businesses from 2018 to 2019 without preparing the necessary invoices. To provide a legal basis for the flour and wheat shortages that arose in the company, tax invoices were issued in the names of several individual entrepreneurs from April 9, 2018, to February 1, 2019.

According to the data obtained during the investigation, in the period from February 17 to March 18, 2020, two chief tax inspectors of the State Revenue Committee (SRC) conducted a complex tax audit in this company. They found that tax invoices had been issued in the names of five business entities that had ceased operations, and suspecting these invoices were unlawful, they initiated an inventory check at the company’s production facility in Ejmiadzin on February 17, 2020.

As a result, it was revealed that there was a total shortage of 192,386,284 AMD in wheat and flour volumes compared to the accounting records, which the inspectors reported to the director of the accounting firm managing the company's records. After learning about this and fearing that the audit would reveal not only the shortages but also the aforementioned illicit transactions conducted by the company, the director of the LLC decided to inform the accounting firm's director about his intention to bribe the SRC inspectors to avoid recording the violations.

The accounting firm's director then organized a meeting between the LLC director and the tax inspectors at his office, requesting to discuss the situation before any formal act was drawn up. During a meeting on March 3, 2020, the inspectors demanded a bribe of $30,000, equivalent to 14,807,400 AMD, to refrain from acting against the LLC director under their authority. The director agreed but stated he could only pay in increments of $10,000, promising to provide the first payment on the day of receiving a zero audit act.

Agreeing to this arrangement, one of the inspectors urged the accounting firm’s director to draft a new inventory act dated February 19, 2020, obscuring the discovered shortage to avoid penalties. The SRC employees, having engaged in a criminal agreement to receive a bribe from the LLC director, failed to fulfill their official duties, misusing their positions to benefit against the interests of service. The formal act generated from this audit on March 19, 2020, omitted details about the discovered shortage and the resulting applicable fines totaling 96,193,142 AMD, instead incorporating false information about failing to detect violations, thereby causing significant harm to the legal interests of the state.

After preparing this audit report, the LLC director met with one of the inspectors on March 20, 2020, on the 15th km of the Yerevan-Sevan highway to hand over a portion of the agreed bribe, specifically 4,000,000 AMD, in exchange for the non-detection report. Immediately after this bribery transaction, both the LLC director and the inspector were apprehended by the National Security Service of Armenia.

Based on sufficient evidence collected, one of the tax inspectors has been charged under parts 2 of Article 308, part 1 of Article 325, part 1 of Article 314, and part 4 of Article 311 of the Criminal Code of Armenia, while the other inspector faces charges under the same articles. The LLC director has been charged under part 1 of Article 312. A signed commitment not to leave has been chosen as a preventive measure for all three defendants. The criminal case against these three defendants has been separated and concluded, sent to the prosecutorial oversight authority with a request for a trial.

Notice: A suspect or accused person is considered innocent until proven guilty in accordance with the procedures established by the Criminal Procedure Code of Armenia, by a legally binding court verdict.