By Ruzanna Stepanian
In a landmark ruling, a court in Yerevan acquitted and set free on Monday two businessmen who were arrested nearly two years ago after publicly alleging high-level corruption in the Armenian customs.
Gagik Hakobian, a leading shareholder in the coffee processing and packaging company Royal Armenia, and its deputy director Aram Ghazarian walked free in the court after being unexpectedly cleared of smuggling, tax evasion and fraud.
The two men were arrested in October 2005 at the height of Royal Armenia’s bitter dispute with the State Customs Committee (SCC). Hakobian had repeatedly claimed in the months leading up to the arrest that his company is being illegally penalized by the SCC for its refusal to engage in a scam that would have benefited two senior customs officials.
The SCC has dismissed the corruption allegations, saying that Royal Armenia itself illegally avoided paying more than 1 billion drams ($3 million) worth of taxes and import duties.
The embattled company has strongly denied this. Its representatives have said all along that the criminal case was “fabricated” by Armenia’s National Security Service (NSS) in retaliation for its high-profile spat with the customs service. The latter is headed by a figure close to Prime Minister Serzh Sarkisian.
The NSS stood by the grave accusations throughout the eight-month trial, demanding that Hakobian and Ghazarian be sentenced to 12 and 11 years in prison respectively. The case was largely based on incriminating testimony given by Vache Petrosian, a U.S. citizen and former Royal Armenia supplier.
However, the court of first instance of Yerevan’s Kentron and Nork Marash districts found the charges baseless and acquitted the defendants on all counts. It also ordered prosecutors to launch criminal proceedings against Petrosian, saying that he falsely incriminated his former business partners.
It was apparently the first major court defeat ever suffered by the Armenian successor to the Soviet KGB. The feared security agency has until now had little difficulty securing guilty verdicts by Armenian judges.
Gevorg Minasian, the chief Royal Armenia lawyer, said he was surprised by the full acquittal, which many of those present in the courtroom greeted with rapturous applause. “I though that the court will likely come up with a compromise solution that will somehow satisfy both us and those who fabricated this case,” he told RFE/RL. “But to our surprise, justice prevailed in full.”
“The trial showed that my clients are 100 percent innocent,” said Minasian.
“The trial showed that the whole thing was trumped up,” agreed Ashot Sargsian, another defense lawyer. “I am surprised that there can be just verdicts in this country.”
Prosecutors who represented the NSS at the trial think otherwise, though. A spokeswoman for the Prosecutor-General’s Office told RFE/RL that they will appeal the ruling.
The SCC is reputed to be one of the most corrupt government agencies in Armenia, with local businessmen routinely complaining about its allegedly arbitrary practices. However, most of them avoid going public with their grievances for fear of government retribution. In fact, Royal Armenia is the only private firm which is known to have publicly clashed with the SCC.
The dispute stems from the SCC’s discretionary power to determine the market value of imported commodities before levying a fixed 10 percent duty from them. It broke out more than two years ago when Royal Armenia charged that the deputy chief of the customs, Gagik Khachatrian, and another senior official offered the company to grossly undervalue the price of its imported coffee beans in return for sharing in the resulting extra profits.