By Atom Markarian
Armenian prosecutors have joined parliament speaker Artur Baghdasarian in challenging the integrity of the government’s privatization policies, saying they have inflicted “considerable damage” on the state.
In a report to the National Assembly made public by Baghdasarian’s office on Wednesday, the Office of the Prosecutor-General said the privatization of a large part of Armenian state assets from 2001-2004 was carried out in violation of a government directive that was meant to make the process transparent and competitive.
The directive adopted in 1994 mandated the holding of open auctions for all state-owned enterprises and real buildings put up for sale. According to the report, only 85 of 206 entities privatized during that period were auctioned off by the Department on State Property Management.
The prosecutors, who investigated the process at the request of the Armenian parliament’s Audit Chamber controlled by Baghdasarian, found that the rest of them were “arbitrarily” sold off at knock-down prices that were well below their value estimated by the government agency.
The report released by the parliamentary press service cited over a dozen allegedly shady transactions. In one such example, a big hotel not far from central Yerevan was privatized without an auction in 2002 for just $25,000. The prosecutors estimate the resulting “damage” to the state at $355,000.
“As a rule, draft [privatization] decisions submitted to the government of the Republic of Armenia for approval had a personalized character, reflecting the interests of certain individuals,” said the report. Officials at the Department on State Property Management questioned by prosecutors failed to provide a “clear explanation” of this policy, it added.
The head of the department, Karine Kirakosian, denied any wrongdoing, insisting that decisions taken by the privatization agency did not breach any laws or government regulations. “The economic situation in 2001, 2002, 2003 and 2004 was different from the economic situation existing in 2006,” Kirakosian told RFE/RL. “So we can’t apply the existing market prices to deals cut several years ago.”
While strongly questioning the legality of the process, the prosecutors’ report did not speak of criminal proceedings launched against any of the officials involved in the long-running sale of state property in Armenia.
Still, it came as a further embarrassment for Prime Minister Andranik Markarian whose government’s report on the 2001-2004 privatization was publicly attacked by Baghdasarian and his loyalists in parliament last week. They implicitly accused the government of corruption, a charge angrily denied by Markarian and lawmakers representing his Republican Party of Armenia (HHK).
(Photolur photo: Prosecutor-General Aghvan Hovsepian.)