Ex-Minister of Economy of Armenia is under house arrest: corruption scandal

Feb 16 2024
  • JAMnews
  • Yerevan

Ex-Minister of Economy indicted

Former Armenian Minister of Economy Vahan Kerobyan has been placed under house arrest for two months, as decreed by the anti-corruption court. “I intend to appeal this decision,” remarked the ex-minister during the courtroom proceedings.

Kerobyan tendered his resignation merely two days prior, and he was summoned for interrogation yesterday, subsequently being detained by law enforcement authorities.

As per the assertions of the former minister’s legal counsel, he stands accused of abuse of power “in collusion with a group of officials.” Vahan Kerobyan asserts his innocence. The defense contends that “the basis for the accusation is flimsy, relying largely on conjecture.”

The investigative committee has disclosed certain particulars of this criminal investigation, which was instigated on January 31. Presently, there are eight individuals implicated, five of whom are Ministry of Economy personnel, including Kerobyan. The allegations revolve around improprieties purportedly committed during the tender process for procurement services essential to the Ministry of Economy.

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Prior to the Anti-corruption Court’s announcement of its decision, Vahan Kerobyan engaged with journalists. He stated that he perceived no political undertones in the situation and proceeded to elaborate on his resignation. Specifically, he mentioned crafting a resignation letter at the behest of the head of the prime minister’s staff.

“Their dissatisfaction stemmed from my performance,” remarked the former minister.

In response to inquiries regarding his rapport with the prime minister himself, he expressed gratitude to Nikol Pashinyan for their collaborative endeavors. On February 14, when announcing his resignation via Facebook, Kerobyan also extended thanks to the prime minister for “the opportunity to serve the country.”

“Due to numerous differences, I’ve contemplated stepping down on multiple occasions during this tenure, yet I prioritized my professional duties over personal matters to maximize my contribution to the country,” he articulated. However, he refrained from delineating the nature of the disputes under discussion.

According to the investigative committee, the case revolves around abuses committed during a tender announced to establish a Bank for state investment projects in 2022. Four organizations submitted applications to participate, of which two, namely company “S” and foundation “H,” progressed past the preliminary stage and engaged in the competition.

As per the official statement, law enforcement agencies conducted an investigation, including covert operations, with the involvement of employees from the National Security Service in operational search activities.

“It came to light that a group of officials from the Ministry of Economy, driven by a predetermined bias to ensure company “S” as the victor of the tender at any cost, collaborated with the company’s director and employees, who were part of the [criminal] group, to undertake actions aimed at eliminating company “S”’s competition.”

Furthermore, alterations to the tender’s conditions during the process rendered the documents submitted by the “H” fund incompatible, resulting in the exclusion of the company from participation. The Ministry of Economy specified a budget of approximately $300 thousand for establishing the bank. However, despite this, company “S” was declared the winner of the tender, offering its services for $700 thousand.

“It was also discovered that an employee and the director of company “S,” aware of the company’s guaranteed victory in the tender and exploiting the absence of genuine competition, inflated the project’s cost by an amount equivalent to $50 thousand. Consequently, the company, which initially requested $1 million (over 392 million drams), was declared the tender’s winner,” reported the investigative committee.

Foundation “H” was only recognized as the tender’s winner a year later, through a court decision dated June 20, 2023. The Investigative Committee further states that even after this ruling, “an individual holding a senior position within the ministry instructed their deputy, the head of the relevant department, to submit a budget request amounting to 400 million drams to the Ministry of Finance for the acquisition of the project [from company “S”], which was carried out.”

Law enforcement agencies declare that these actions resulted in significant harm to the state and the legitimate interests of the “H” foundation.

Consequently, five employees of the Ministry of Economy and three representatives from the Synergy company have been charged in connection with this case.

Earlier, Deputy Minister of Economy Ani Ispiryan was dismissed from her position and subsequently detained in connection with this case. Also facing charges in the same case are the founder and director of Synergy company, Ashot Hovhannisyan, along with an employee of the organization, Lily Mkryan, and a former employee, Ani Gevorgyan. The arrest of Ani Gevorgyan garnered significant attention in society due to her relation as the wife of the brother of the Armenian parliament speaker.

As a precautionary measure, the court ordered house arrest for Ani Ispiryan, while the other three were remanded into custody. Members of the ruling Civil Contract faction petitioned the prosecutor’s office to reconsider the preventive measures.

On February 12, the preventive measures against Synergy employees Ani Gevorgyan and Lily Mkryan were altered. The prosecutor directed the investigative body to implement “combined alternative preventive measures” for them, including bail, travel restrictions, and surety. The company’s founder, Ashot Hovhannisyan, remains incarcerated.

Prior to his resignation, the Minister of Economy remarked that imprisoning officials on unsubstantiated charges would “cripple the state system.”

“If a person hasn’t been caught stealing… We receive inquiries from agricultural departments: how can we continue our work knowing that our honest efforts might be penalized? I believe we need a cultural shift. We must assess whether we sometimes allow room for errors. Although in this instance, I’m confident there were no significant errors,” Kerobyan stated.