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The Armenian government pointedly refused on Wednesday to support a major business project devised by a prominent entrepreneur whose son was recently charged with plotting to assassinate the controversial chief of the national tax and customs service.

The businessman, Albert Yeritsian, planned to construct a new bread-making factory in Yerevan and asked tax authorities to postpone by three years the collection of a 20 percent value-added tax (VAT) from $5.9 million worth of equipment imported from the Czech Republic.

The government introduced the possibility of such a delay earlier this year as part of its efforts to reduce the effects of the global recession on the Armenian economy. The measure can apply to companies importing more than 300 million drams ($790,000) worth of industrial equipment at a time. The tax reprieve was to be granted to businesses meeting specific requirements set by the ministries of finance and economy and the State Revenue Committee (SRC).

Economy Minister Nerses Yeritsian (no relation) told fellow cabinet members that the three agencies have reviewed a relevant application filed by the businessman’s Yeritsian and Sons company and concluded that it does not meet a minimum number of those criteria. Although he did not elaborate, the government quickly approved the rebuff.

“The business plan was assessed objectively,” insisted Hayk Mirzoyan, head of the Industry Department at the Ministry of Economy. He said the new factory will have few jobs and no export potential and could force many small bakeries operating in Yerevan out of business. “If you familiarize yourself with the project, I think you will agree with us,” Mirzoyan told RFE/RL.

But a company lawyer, Aleksandr Sahakian, regretted the decision, saying that Yeritsian and Sons should have qualified for a VAT payment delay. “For us, it is not clear why the government rejected our application for a tax privilege,” he told RFE/RL, adding that the company will lodge a fresh application to the government.

Sahakian argued that the business project was found credible by Czech commercial banks and insurance firms that financed the purchase of the bakery equipment. He also said that 200-250 new jobs which it would create are especially important now that Armenia is grappling with its worst recession since the early 1990s.

Albert Yeritsian was also present at Wednesday’s cabinet meeting. But he refused to comment when approached by RFE/RL.

The government’s decision highlighted a dramatic reversal of the wealthy businessman’s fortunes. As recently as in October 2007 he got elected as mayor of Yerevan’s second most important district, Arabkir, with the backing of President Serzh Sarkisian’s Republican Party of Armenia (HHK). He was removed from that post by Yerevan’s newly elected Mayor Gagik Beglarian in May.

Yeritsian got in serious trouble after his son Robert was publicly criticized by Sarkisian and dismissed as head of an anti-smuggling department at the Armenian customs service in April 2008. It was headed by Gagik Khachatrian at the time. Khachatrian was subsequently appointed as chief of the SCR, a new agency formed as a result of the customs’ merger with the State Tax Service.

In June this year, Armenian law-enforcement authorities issued an international arrest warrant for Robert Yeritsian, saying that he was the main mastermind of an alleged attempt on Khachatrian’s life that occurred in May. Nine persons were arrested as part of a criminal investigation into the case. Yeritsian Jr. has been on the run since then.

His father’s businesses, notably a supermarket chain, have been reportedly raided and inspected by tax officials on a virtually daily basis in recent months. None of those firms is known to have been charged with tax evasion yet.

Still, according to some sources close to Albert Yeritsian, he has decided to sell or rent out his food stores. The businessman has consistently refused to comment on the criminal case against his son and the reported tax inspections.
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