By Emil DanielyanThe Armenian authorities moved on Tuesday to effectively liquidate one of the country’s largest mineral water companies that belongs to a fugitive opposition tycoon and has been controversially accused of large-scale tax evasion.
The Bjni bottling plant located in Charentsavan, an unemployment-stricken town 40 kilometers north of Yerevan, has stood idle since being raided by law-enforcement officers almost two months ago. They enforced an October 10 court ruling that upheld tax authorities’ decision to fine the company employing more than 400 local residents 4.2 billion drams ($13.5 million). Bjni lawyers unsuccessfully challenged the ruling in a higher court.
In a statement on Tuesday, the Justice Ministry’s Service for the Mandatory Execution of Judicial Acts (SMEJA) announced that it is putting Bjni’s property and other assets up for sale to collect one of the heftiest fines ever imposed on an Armenian company. It invited private individuals and business entities to take part in auction scheduled for December 19.
Bjni is one of the largest and most lucrative of over a dozen companies making up the SIL Concern group owned by businessman Khachatur Sukiasian and his extended family. They were inspected by tax officials and charged with evading millions of dollars in taxes shortly after Sukiasian publicly welcomed former President Levon Ter-Petrosian’s September 2007 return to active politics.
Two SIL entities, a pizza restaurant chain and a printing house, saw their chief executives arrested on corresponding charges. Another Sukiasian-owned firm, the exclusive distributor of Phillip Morris cigarettes in Armenia, went out of business earlier this year, saying that customs officials are refusing to process its imports.
Sukiasian, who had made his fortune during Ter-Petrosian’s 1991-1998 rule, himself went into hiding along with several other opposition figures following the March 1 suppression of the post-election opposition protests in Yerevan. His whereabouts have been unknown ever since.
In an October 31 statement, SIL claimed to be heading for financial ruin because of what it described as a “political vendetta” waged against its owners by the government. The authorities deny any political motives behind the crackdown on Sukiasian-owned businesses, saying that it is part of a broader fight against widespread tax evasion in Armenia. They have not imposed similar sanctions on other businesses owned by even wealthier tycoons close to the government, however.
Government connections have long been essential for engaging in large-scale economic activity in Armenia. Consequently, very few local “oligarchs” have dared to openly back opposition candidates in local and national elections held since the country’s independence.
The almost certain liquidation of Bjni will raise more questions about the current Armenian government’s pledges to improve the business environment. Prime Minister Tigran Sarkisian unveiled last June a wide-ranging plan of government actions relating to tax collection, enterprise registration, contract enforcement, investor protection and other aspects of doing business. Sarkisian’s ambitious reform agenda has been welcomed by Western governments and lending institutions.
(Photolur photo: Khachatur Sukiasian.)