The move comes after an RFE/RL’s Armenian Service investigation raised more questions about the legality of the deal.
The influential businessman, Khachatur Sukiasian, was elected to the current Armenian parliament on the ruling Civil Contract party’s ticket in June 2021. Sukiasian and his extended family have reportedly expanded their business interests since the 2018 “velvet revolution” not least because lucrative government contracts won by their firms, including SIL Insurance.
It emerged last month that the Armenian Interior Ministry will pay SIL Insurance about $500,000 to buy yearly insurance coverage for some 2,000 vehicles used by the national police. The company was contracted for the so-called APPA package covering minimum insurance required by the law.
The ministry said it had checked with other insurance firms and found out that they would charge higher fees. Interior Minister Vahe Ghazarian claimed afterwards that SIL Insurance offered 2.5 million drams less ($6.400) less than its competitors.
SIL told RFE/RL’s Armenian Service, however, that the police never inquired about the cost of the company’s basic insurance service. Other insurance firms likewise insisted that they did not bid for the police contract officially or unofficially.
The APPA tariffs are set by Armenia’s Bureau of Auto Insurers, a public regulatory body. They are the same for all private insurers.
The Bureau confirmed that neither SIL nor any other company is allowed to charge lower APPA fees. It said that it has therefore launched disciplinary proceedings against SIL.
Even if Sukiasian’s firm is fined by the regulators its contract with the Interior Ministry will not be rescinded.
The Interior Ministry also signed with SIL a separate $300,000 deal for an optional broader insurance coverage for police vehicles. There was no competitive tender in that case as well.
Interior Minister Ghazarian commented on the dubious deals during a recent cabinet meeting in Yerevan chaired by Prime Minister Nikol Pashinian. The latter described the resulting media uproar as a “pseudo or not pseudo scandal.”
Pashinian pledged to separate business from politics when he swept to power in 2018. He declared that Armenian entrepreneurs no longer need government connections in order to protect and increase their assets.
There are growing questions about integrity in public procurement in Armenia. This is one of the reasons why Transparency International downgraded the country’s position in its annual survey of corruption perceptions around the world released in January.
Armenian law allows the government not to put contracts for the delivery of goods or services out to competitive tender in some cases. The number of such government decisions has reportedly increased in recent years, prompting concerns from opposition figures and civil society activists.
