The Case of Money Laundering by the Sons of the Former Head of the State Revenue Committee Sent to Court

On December 12, 2023, the prosecutor confirmed the indictment against A.K., son of former State Revenue Committee Chairman G.K., and his nephew, the General Director of Multi Group Concern, S.A., along with A.P., a driver from one of the banks. The indictment was submitted to the Anti-Corruption Court along with the accompanying materials of the case.

The investigation carried out by the main investigative department of the National Security Service revealed that from 2008 to 2016, G.K., while serving as the acting chairman and later as the president of the State Revenue Committee and the Minister of Finance, directed officials of both the Committee and the Ministry of Finance to collaborate with his sons A.K. and G.K., as well as with the company founded by his relative A.H., in order to eliminate obstacles in the procurement process and implement more favorable purchasing procedures.

Utilizing the illicitly created favorable conditions by G.K., the company signed contracts with the Committee for the supply of goods and services worth 4 billion 426 million 435 thousand drams from 2008 to 2020. Additionally, G.K. ensured, with the involvement of individuals dependent on him and others, that a contract for the purchase of 19 software modules was signed with his sons’ and nephew’s company at a significantly inflated cost of 4 billion 283 million 580 thousand drams (the procurement was conducted without a public tender, and the contract was awarded through a negotiation process without prior public announcement, with invitations sent only to his sons’ and nephew’s company).

Although the work stipulated in the contract was actually carried out by the contractor and subcontractor for 2 billion 777 million 410 thousand drams, the state budget transferred 4 billion 283 million 580 thousand drams to the company, resulting in an embezzlement of 1 billion 506 million 169 thousand 583 drams through misappropriation.

The properties obtained through these actions, as well as the income generated from their use, were redirected through bank transfers to the accounts of companies associated with G.K.’s sons A.K., G.K., and his nephew A.H., where they were mixed with other funds and managed by them. Through this method, from 2011 to 2018, another company associated with them was transferred an amount equivalent to 39 billion 723 million 323 thousand drams, of which 32 billion 332 million 943 thousand drams was given as a loan.

Part of the funds, accrued along with financial resources from a telecommunications company, totaling 8 million 589 thousand 900 US dollars, was cashed out by the sons of G.K. at their request under the pretext of repaying the loan and deposited into an account of a company registered in the British Virgin Islands.

Moreover, G.K.’s sons, being aware of the agreement made by S.A., the General Director of Multi Group Concern when their father was the head of the State Revenue Committee, to pay a bribe of 22 million 185 thousand US dollars and 206 thousand 500 euros, met with S.A. to discuss methods of providing the subject of the crime.

S.A. transferred the bribe of 22 million 185 thousand US dollars and 206 thousand 500 euros to the accounts of non-resident companies indicated by G.K.’s sons and associated with them: VETO GROUP, VETO TRUST, and WEST COAST ESCROW. To conceal and mask the criminal nature of the transaction, loan agreements were established between S.A. and G.K.’s sons for 7 million, 10 million, and 13 million 400 thousand US dollars (no amounts have been repaid to S.A. for years).

Additionally, from 2011 to 2016, G.K.’s sons laundered criminally obtained funds amounting to 1 billion 555 million drams, 97 million 203 thousand US dollars, and 2 million 65 thousand euros. Specifically, A.K., G.K., and A.H. participated in and managed about 48 companies operating in the Republic of Armenia and, benefitting from the patronage associated with G.K.’s positions, concealed the actual volume of these organizations’ activities from 2011 to 2016. This resulted in undeclared and untaxed income amounting to 1 billion 555 million drams, 97 million 203 thousand US dollars, and 2 million 65 thousand euros.

The criminally obtained funds were entrusted to A.P. who worked as a driver at one of the banks and was instructed to register cash deposits in their accounts. A.P. deposited the cash amounts he received and subsequently transferred them to the accounts of five companies registered abroad, including offshore zones, that do not conduct any economic activities in Armenia, mixing them with other funds. The financing from these transactions and cash withdrawals has been managed by G.K.’s sons and related individuals.

Additionally, G.K.’s nephew A.H., as the sole founder and director of Mega Food LLC, manipulated data in documents submitted to tax authorities in 2011, 2012, 2014, 2015, and 2016 and failed to pay additional tax liabilities amounting to 369 million 439 thousand drams. Moreover, A.H., as the director of the company Aperion founded by G.K.’s sons, introduced clearly false information in the documents submitted to tax authorities from 2011 to 2016 and did not pay additional tax liabilities amounting to 424 million 555 thousand drams.

The prosecutor has initiated public criminal proceedings against A.K., G.K.’s son, under Article 38-308, Part 2 of the Criminal Code (assisting in the abuse of official powers resulting in severe consequences), Article 38-179, Part 3, Clause 1 (assisting in the embezzlement of especially large property using official position), and Article 190, Part 3, Clause 1 (money laundering of especially large amounts—three episodes), Article 38-311, Part 4, Clause 2 (assisting in receiving especially large bribes). The prosecution has also been initiated against G.K.’s son G.K. under Article 38-308, Part 2, Article 38-179, Part 3, Clause 1, and Article 190, Part 3, Clause 1 (two episodes) along with Article 38-311, Part 4, Clause 2 (preventive measure of detention has been chosen, and he has been declared wanted), and against G.K.’s nephew A.H. under Article 38-308, Part 2, Article 38-179, Part 3, Clause 1, Article 190, Part 3, Clause 1 (two episodes) and Article 205, Part 2, Clause 1 (malicious evasion of payment of taxes, fees, or other mandatory payments). The General Director of Multi Group Concern, S.A., is charged under Article 312, Part 3, Clause 1 (giving an especially large bribe) and Article 38-190, Part 3, Clause 1 (assisting in the laundering of especially large amounts of money). Driver A.P. is charged under Article 38-190, Part 3, Clause 1 (assisting in the laundering of especially large amounts of money).