By Atom Markarian
The Armenian government is struggling to fully repay $20 million worth of funds allocated by the Lincy Foundation of U.S.-Armenian billionaire Kirk Kerkorian in 1998 for providing the country’s small and medium-sized businesses with cheap credit.
With the January 1 deadline for their return nearing, the Finance and Economy Ministry has turned to law-enforcement agencies for helping it collect some $4.5 million in loans that have yet to be repaid. Most of that money was handled by seven Armenian commercial banks that went bankrupt or were liquidated in recent years.
The former chief executives of two of them are already facing fraud charges. One of them was arrested this week, while the other is believed to be on the run.
Lincy’s lending scheme was launched shortly after Kerkorian’s visit to Yerevan more than five years ago. Its first installment was allocated to 12 local banks that in turn lent it private firms with credible business plans at up to 15 percent per annum.
The reclusive Armenian-American tycoon, who has since been Armenia’s single largest Diaspora benefactor, initially committed himself to providing a total of $100 million for that purpose. However, the scheme’s implementation proved slow and it was decided to confine it to the $20 million limit.
The head of the program’s implementation unit in Yerevan, Robert Harutiunian, believes that it has been a success despite all the difficulties. Speaking to RFE/RL on Wednesday, he said the Lincy loans have financed 49 business projects, helping to create 3,200 new jobs. Most of the businesses that have utilized them are involved in the food processing and light industry, he added.
Harutiunian also expressed confidence in the government’s ability to return the remainder of the sum to Lincy. “We do see prerequisites for getting the money back,” he said.
Prosecutors, meanwhile, confirmed reports about the arrest of Levon Farmanian, the ex-chairman of Ardshinbank which used to be one of the largest in Armenia. It was controversially taken over by another bank after filing for bankruptcy last year. Details of the case against Farmanian are not yet known.
Similar charges have been leveled against Martin Hovannisian, the former boss of the now defunct Kredit-Yerevan bank which owes the government and Lincy 1.35 billion drams ($2.4 million). Hovannisian, who reportedly fled Armenia earlier this month, is accused of channeling the loans into firms owned by his close relatives and effectively controlled by himself. None of them were paid back after Kredit-Yerevan’s bankruptcy.
Several Hovannisian relatives are now in custody pending an investigation conducted by the Sixth Directorate of Armenia’s national Police Service which is tasked with fighting organized crime. The banker’s wife and sister were briefly detained by the feared police unit following his disappearance.
Apart from the low-interest funds, Kerkorian has granted $155 million for various infrastructure projects across Armenia. The bulk of the sum, which makes up nearly one third of the impoverished country’s annual budget, has already been used for the construction of highways, repair of streets and cultural institutions in Yerevan and rebuilding of thousands of homes in northern Armenia devastated by the 1988 earthquake.
(Photolur photo: A section of a road built recently with the Lincy money.)