“COUNTRY OF OUR DREAMS”?: NOT FOR SOME DIASPORA INVESTORS
By Gayane Abrahamyan
ArmeniaNow
05.09.12 | 11:17
President Sergh Sargsyan, meeting with Diaspora in London in July.
Business investors from Armenia’s far-flung diaspora, a key engine
for the South Caucasus country’s sluggish economy, increasingly are
expressing frustration with what they describe as Armenia’s corrupt
judicial system and state bureaucracy. The government, for its part,
asserts that it promotes favorable conditions for diaspora investors.
Reports vary about how large a stake diaspora investment holds in
Armenia’s Gross Domestic Product of $18.17 billion, the lowest in the
South Caucasus; estimates range from “60 to 70 percent” to as little
as 10 percent.
But, given the diaspora’s strong networks, keeping those investors
happy is key. “Profit, while at the same time building the country
of our dreams,” President Serzh Sargsyan urged diaspora Armenians in
London on July 31.
In interviews with EurasiaNet.org, though, some diaspora investors
claim that such appeals fail to materialize into reality.
“Diaspora Armenian businesspersons are leaving Armenia to avoid
total bankruptcy,” alleged Valerie Ashkhen Gortsunian, the founder of
coffee importer and popular retailer Le Cafe de Paris, which employs
50 people in Yerevan.
As part of a divorce from her husband, Armenian jazz drummer Vazgen
Assatrian, Gortsunian lost control over her company in 2007 when a
Yerevan court awarded Assatrian half of the property rights in Le
Cafe de Paris. The decision was made despite a marriage contract,
signed in France, which defined Gortsunian as the sole owner of the
business, she said.
Faced with a “huge” 80-million-dram fine (about $200,000) for unpaid
taxes – a fine Gortsunian says should be applied to the company itself
rather than her personally – the diaspora businesswoman says she
eventually had to sell her remaining half-stake in Le Cafe de Paris.
Reasons for why the court did not honor the terms of Gortsunian’s
alleged marriage contract were not immediately available. Gortsunian
charges that her ex-husband, a prominent musician, used “bribes,
acquaintances, connections with the top” to secure the ruling.
Assatrian declined to comment to EurasiaNet.org about the case.
Gortsunian, who moved back to France from Yerevan this January, says
that she “ended up leaving Armenia empty-handed” after investing
roughly $2 million into the company since 1995.
“If the president makes promises, offers assurances for us to come and
invest, he has to ensure fair competition as well,” she fumed. “The
corruption of Armenia’s judicial system has reached a point when it’s
simply impossible to run a business there.”
Edmond Khudian, a real estate investor from Glendale, California,
has similar complaints.
In 2010, Khudian filed a lawsuit against his two Armenian partners,
Eduard Yesaian and Vladislav Mangasarian, in construction business
Arin Capital for allegedly embezzling funds from the company and
forging his signature on documents for the sale of apartments in a
13-storey building in downtown Yerevan that had already been sold to
diaspora buyers.
When the company declared bankruptcy, the initial diaspora buyers
were unable to reclaim the $4 million they had paid for the flats.
In 2010, Khudian filed a criminal case against Arin Capital, but claims
that the company’s director, Eduard Yesaian, has not been called in
for questioning and that his own fingerprints have not been taken to
test his accusation of forgery.
“No action has been taken to investigate those deals, because they
have powerful sponsors in the top,” he said in reference to Yesaian,
whom he described as a friend of President Sargsyan’s brother, Levon.
Levon Sargsyan, a former member of parliament for the ruling Republican
Party of Armenia, has denied the acquaintance.
Contacted by EurasiaNet.org about Khudian’s charge of deliberate
negligence, General Prosecutor’s Office case investigator Tigran
Harutiunian responded that “[i]t’s my business when to call in someone
for questioning.”
“This case needs more time than the diasporan thinks,” Harutiunian
said, hanging up the phone.
Similar scenarios have marked the investments of several other
diaspora Armenians, leading to the loss of sums ranging from a few
hundred thousand dollars to a few million.
Senior officials have been quick to absolve the government from any
blame for the failed investments. In general, the losses of diaspora
investors are “not massive, and the state isn’t at fault, but rather
some deceitful people and diaspora Armenians’ lack of knowledge about
Armenia’s legislation,” asserted Armen Alaverdian, deputy chairperson
of Armenia’s State Revenue Committee.
One advocacy group for diaspora Armenians argues otherwise. The main
stumbling block for diaspora investors, claimed Chamber of Advocates
Vice-President Nikolai Baghdasarian, a member of the Initiative Group
for the Protection of Diaspora Armenian Investors’ Rights, occurs when
individuals in the elite abuse their ties to the state bureaucracy.
“Documents are forged and through these ‘legal’ documents everything
is seized and appropriated, and when the [diaspora] investor turns
to the courts, fake bankruptcy is declared,” claimed Baghdasarian.
International monitors long have chastised Armenia for a judiciary
system that allegedly does the executive branch’s bidding and for
widespread corruption among government bureaucrats. The 2012 US
Department of State Human Rights Practices Report identified corruption
as “a serious problem.”
“Officials frequently engaged in corrupt practices with impunity,
and authorities took limited preventive measures,” the report found.
Armenia’s courts, meanwhile, are expected “to find the accused guilty
in almost every case.”
But Minister of Diaspora Hranush Hakobian is convinced that Armenia’s
diaspora still believes in the government’s sincerity. “Those cases
will not affect the overall sentiment” of Diaspora investors toward
Armenia,” she told EurasiaNet.org.
“The issue here is not about trust, but, rather, [the] economic
profitability” of individual investments, Hakobian stressed.
Economy Minister Tigran Davtian agrees, telling EurasiaNet.org that
“serious investors” take into consideration “weighty international
ratings” that show supposed improvements in Armenia’s business climate,
and “macroeconomic data” that shows 8 percent growth in the first
five months of 2012, rather than individual cases” of bad investments.
“Naturally, we don’t want our compatriots to leave Armenia in
disappointment, but not everybody can succeed in business,” said
Davtian.
(This article was commissioned by Eurasianet: )
www.eurasianet.org