Opposition leader Nikol Pashinian has renewed his allegations that one of Armenia’s richest men close to the government may be evading millions of dollars in taxes through a fraud scheme allowed by President Serzh Sarkisian.
Speaking in the parliament on Wednesday, Pashinian again questioned government statistics showing that the tycoon, Samvel Aleksanian, manufactures, rather than imports, the bulk of sugar consumed in the country.
Under Armenian law, imports of most raw materials are largely exempt from customs duties, meaning that it is supposedly more profitable to produce sugar and other prepared foodstuffs than to buy them abroad and sell them in the domestic market.
This tax incentive was the main stated rationale for Aleksanian’s decision to invest about $100 million in the construction of a sugar refinery in Akhurian, a small town in the northwestern Shirak province. Customs data shows that Armenia has imported very small volumes of sugar since the launch of that facility in 2010.
According to the national tax and customs services, Aleksanian, who had enjoyed a de facto monopoly on lucrative sugar imports since the late 1990s, currently imports only raw materials that are turned into white refined sugar at the Akhurian plant. His Alex-Grig company claims that the plant has manufactured 80,000 metric tons of sugar annually for the past five years, meeting the country’s practically entire demand.
Pashinian has frequently questioned those claims on the parliament floor, saying that Aleksanian may well be continuing to import refined sugar and evading taxes in the process. “Is that really a sugar-producing plant or a bogus facility used for receiving refined sugar as a raw material and then presenting it as an end product and thereby evading tens of millions of dollars in customs duties?” he said.
Pashinian added that both the State Revenue Committee and Aleksanian have only given more weight to his suspicions with their refusal to reveal the number of people employed by the Akhurian plant and the amount of their payroll taxes.
Aleksanian, who holds a parliament seat and is affiliated with the ruling Republican Party of Armenia (HHK), dismissed these thinly veiled fraud allegations when he spoke to journalists on Thursday.He claimed that Pashinian is only keen to score points for next year’s parliamentary elections.
The tycoon offered to organize a press tour of the Akhurian plant in order to prove that production operations there are not fictitious. But when some reporters expressed readiness to visit the sugar refinery this week he backtracked, saying that the plant is standing idle at the moment.
“Within one or one-and-a-half months, we will reactivate it and invite you to come over and have a look,” said Aleksanian.
In his emotional speech, Pashinian pointed out that the Akhurian plant was supposed to produce sugar with sugar beet grown in Armenia. He recalled that President Sarkisian personally declared that the refinery will serve as an economic “locomotive” for thousands of farmers in the area when he visited Akhurian in 2009.
Aleksanian admitted that his company has never purchased significant amounts of sugar beet for the plant from Armenian farmers. “Believe me, it’s not a financial problem, it’s just that we need specialists and time,” he said. “Beet has not been grown in Armenia for 30 years.”
The controversy generated by Pashinian’s statements will only add to a widespread perception that government-linked tycoons controlling lucrative sectors of the Armenian economy enjoy privileged treatment by the state in return for helping Sarkisian remain in power. Aleksanian, for example, holds sway in Yerevan’s Malatia-Sebastia district where official election results have given landslide victories to Sarkisian and the ruling HHK. The district is notorious for election-related fraud and violence reported by the Armenian media.