Riot police clashed with scores of employees of Armenia’s leading food producing and exporting company on Monday after its official owner, Davit Ghazarian, was arrested on tax evasion charges strongly denied by him.
The State Revenue Committee (SRC) said on Friday that the Spayka company evaded over 7 billion drams ($14.4 million) in taxes in 2015-2016. Ghazarian, who is also Spayka’s chief executive, was quick to reject the claims as baseless, saying the SRC moved to arrest him after he refused to pay the alleged back taxes.
A district court in Yerevan allowed the SRC to arrest Ghazarian pending investigation as several hundred Spayka workers demonstrated outside the court building. They said they fear losing their jobs as a result of the criminal proceedings.
The angry protesters responded to the court decision by blocking an adjacent street in the city center. They then surrounded a car carrying a handcuffed Ghazarian that emerged from the court compound.
Riot police pushed back the crowd to allow the car to transport the businessman to a detention center. One protester was detained in the scuffle, the Armenian police said afterwards.
Although the busy street was unblocked about an hour later, the rally led by another senior Spayka executive, Karen Baghdasarian, continued outside the court building. In an emotional speech, Baghdasarian accused the SRC of “destroying” what he described as one of Armenia’s most successful and rapidly expanding businesses. He claimed that Ghazarian’s arrest will not only hurt Spayka and its more than 1,200 workers but also thousands of farmers whose agricultural produce is purchased by the company.
The protesters chanting “Spayka!” and “Freedom to Davit!” then marched to the main government building in Yerevan to demand a meeting with Prime Minister Nikol Pashinian. The latter declined such a meeting, sending instead one of his aides to talk to them.
The official, Nairi Sargsian, told the protesters that Pashinian will not “intervene” in this or any other criminal case. Baghdasarian insisted, however, that the prime minister must give the court a “personal guarantee” that would pave the way for Ghazarian’s release.
At a news conference held on Friday, Ghazarian claimed that Pashinian had a hand in the tax evasion charges brought against him.
Meanwhile, the businessman’s lawyers said that they have already asked the court to free him on bail. One of the lawyers, Karen Sardarian, told reporters that the tax fraud case against his client is based on a mere “expert assessment” cited by the SRC. He said the tax agency should conduct a fresh and more thorough inquiry with Spayka’s representatives. The company would accept its findings, he said.
In an April 5 statement, the SRC said that the accusations stem from large quantities of cheese and other foodstuffs which were imported to Armenia by another company, Greenproduct, in 2015 and 2016. It claimed that Greenproduct is controlled by Spayka and that the latter rigged its customs documents to pay fewer taxes from those imports. Ghazarian said that Spayka is not connected to Greenproduct and has only carried out cargo shipments for it.
Spayka was set up in 2001 and has since become Armenia’s largest producer and exporter of agricultural products grown at its own greenhouses or purchased from farmers in about 80 communities across the country. It also owns hundreds of heavy trucks exporting those products to Russia and other countries.
In March 2018, the company borrowed $30 million from the Manila-based Asian Development Bank to build more climate-controlled greenhouses equipped with drip irrigation systems.
As recently as on March 26, Spayka inaugurated a newly built dairy factory in Yerevan at a ceremony attended by Pashinian. It claimed to be planning to expand further with a $100 million investment project which will be mostly financed by the Kazakhstan-based Eurasian Development Bank.
Ownership of Spayka has long been a subject of Armenian media speculation. Some media outlets have linked it to the family of former President Robert Kocharian and then to his successor Serzh Sarkisian’s son-in-law, Mikael Minasian. Ghazarian has maintained that he is the company’s sole real owner.