Prime Minister Nikol Pashinian called for the nationalization of the Electric Networks of Armenia (ENA) operator last June just hours after Karapetian was arrested on charges stemming from his strong criticism of Pashinian’s crackdown on the Armenian Apostolic Church.
Karapetian was also charged with tax evasion, fraud and money laundering following his subsequent decision to set up his own political group. It is now expected to be the main opposition contender in Armenia’s June 7 parliamentary elections. The tycoon, who was moved to house arrest in late December, rejects all the accusations as politically motivated.
The government forcibly took over ENA’s management in July, accusing its parent company owned by Karapetian’s Moscow-based business conglomerate, Tashir Group, of mismanaging the power distribution network. Tashir rejected the accusations before appealing to the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).
Armenia’s Public Services Regulatory Commission (PSRC), a body headed by a political ally of Pashinian, formally revoked Tashir’s operating license on November 17. The decision meant that ENA can be nationalized if the two sides fail to agree within the next three months on its sale to another investor.
The government has still not disclosed the price of ENA set by it in a formal proposal submitted to Tashir on February 17. A copy of the proposal obtained by RFE/RL’s Armenian Service shows that it valued the utility employing thousands of people at just 23.3 billion drams ($62 million). What is more, payment of that sum was conditional on Karapetian and his family returning about 23.2 billion drams in dividends from ENA profits paid to them over the past decade.
The proposed deal would leave the tycoon with a net gain of 142 million drams ($380,000). The Forbes magazine estimates his fortune at over $4 billion.
“I don’t know how on earth the company was valued at 23 billion drams,” said Davit Ghazinian, ENA’s former chief executive close to Karapetian. “I presume that was done by a local appraisal company under government pressure.”
Tashir has used its ENA shares as collateral to receive at least $125 million in loans from international development banks. This suggests that those banks had a much higher estimate of the utility’s market value than the Armenian has now.
Under Armenian law, Tashir has three months to formally reply to the government proposal. Citing this provision, Armenia’s Administrative Court banned the government recently from nationalizing ENA before May 25.
Pashinian’s government will have to compensate Tashir even in the likely event of the nationalization which Karapetian’s group will almost certainly challenge in court. Tashir is already seeking $500 million in damages for what it calls an illegal “expropriation” of Karapetian’s biggest asset in Armenia.
The Stockholm arbitration body ordered the Armenian authorities last summer to refrain from seizing ENA, changing ENA’s top management or revoking Tashir’s operating license pending a verdict in the case. The authorities ignored the order.