Violations Worth Approximately 4.1 Billion AMD Found at Haypost LLC: State Audit Office

On the basis of investigations conducted by the Head of the Republic of Armenia's State Audit Office, significant violations amounting to approximately 4.1 billion AMD have been identified at Haypost LLC.

The study examined the efficiency of the management of Haypost LLC during the years 2017-2021, focusing on issues such as revenues and expenses, accounts receivable, properties, leases, as well as construction works and procurement processes.

Notably, the company operated profitably from 2017 to 2019, but reported financial losses in the summary report for the years 2020-2021. It was found that Haypost purchased the "Riposte" software system from the Irish Escher Group for approximately 1.7 million USD to enhance the quality of postal services, but the system was never utilized and did not serve its intended purposes. The acquisition of this unused software was recorded as an increase in Haypost's assets, leading to a payment of approximately 446 million AMD as financial compensation to the company’s trustee manager.

According to the purchase agreement, the software was not only unused as planned (with an expected usage period from 2016-2026) but also approximately 410 million AMD was expended for its depreciation from 2016 to 2021. Specifically, around 24.8 million AMD was expensed in 2016, and approximately 75.8 million AMD in 2017, while about 77.4 million AMD was expensed for each year from 2018 to 2021.

The aforementioned circumstances had a negative impact on the company’s fulfillment of its obligations to the Armenian state budget, resulting in losses amounting to around 1.4 billion AMD.

Significantly, during the period of investigation, after the identification of violations, the depreciation calculation for the unused software was halted.

Haypost has not properly fulfilled its legislative obligations towards the Armenian state budget, failing to calculate and pay approximately 724 million AMD in profit share and accrued penalties. Specifically, between February 1, 2020, and December 22, 2021, the company calculated around 2.5 billion AMD in profit share but did not pay it to the state budget, leading to a penalty of approximately 568 million AMD. The company also failed to calculate about 146 million AMD in profit share for 2019 and 2021, resulting in an additional penalty of about 11 million AMD.

Results of the State Audit Office’s investigation revealed that the company provided stamps to its subsidiary, Haypost USA Corp, registered in the United States, during 2015-2022 without taking measures to collect the funds owed for the goods provided, resulting in a total accounts receivable of approximately 758 million AMD. The company's underreporting of net profits from 2019 to 2021 led to a failure to pay around 55 million AMD in profit tax to the Armenian state budget.

Amidst a deterioration in the company’s net assets, the individual occupying the position of executive director of Haypost received a bonus of approximately 39 million AMD over one year, in addition to around 16 million AMD as severance pay. However, according to the employment contract signed with him, the director was obligated to prevent a decrease in the company’s net assets, which was not adhered to.

Violations were also found in the leasing contracts by the State Audit Office. In one instance, the company entered into a contract at a price lower than its defined minimum price scale, forfeiting at least around 82 million AMD, while in another case, it signed a lease agreement exceeding its defined maximum price scale, incurring a loss of around 125 million AMD.

Upon reviewing the construction works conducted, violations amounting to approximately 25 million AMD were identified, including calculated but not actually performed works, overaccounted and paid sums, costs for dismantled materials not recorded, and instances of poor-quality and ineffective works.

During the use of the company's "Phoenix" program, a software defect led to a withholding of around 24 million AMD from employees as a shortfall, while another instance involved expenditures of around 17 million AMD without supporting documentation.

The State Audit Office’s investigation also revealed that several employees of Haypost LLC were absent from the Republic of Armenia without justified reasons while continuing to receive full salaries, resulting in a violation estimated at around 15 million AMD.

Additional violations amounting to around 448 million AMD were identified with respect to loans provided to the subsidiary, penalties paid due to late notifications regarding employee dismissals, and other expenses.

Moreover, the company has not adhered to the procurement requirements established by Armenian legislation since its inception. Procurements were carried out through unqualified specialists, without legal grounds or the publishing of procurement plans and other documents.

The results of the audit have been forwarded to the Prosecutor General of the Republic of Armenia for legal assessment and to ensure subsequent proceedings.

The State Audit Office operates as an oversight body subject to the Prime Minister of the Republic of Armenia, fulfilling the supervisory powers as stipulated in the Law on the State Audit Office, aiming to ensure the execution of the oversight powers entrusted to the Prime Minister by the Constitution and laws of the Republic of Armenia.