Tag Archives: Corruption

Blatant Nepotism

Corruption is a well-known long-term problem in Armenia. While Armenia has been making incremental improvements, the amount of blatant nepotism, especially in the regions, is astonishing. Hetq recently publicized multiple instances of no-bid contracts being given to family members of the people in power. This obvious conflict of interest is exactly what Armenia needs to fight against.

In the first link, the mayor’s brother’s company got the no-bid contract because his company was “one of the biggest road construction companies around and best capable to get the job finished on time.” First, if you primarily give contracts to only one company, then of course they’ll be one of the biggest company. Second, even if they are the best to get the job finished on time, require documented proof, especially when there is a clear conflict of interest. Here’s the list so far:

In yet another setback, the police have not investigated another small town mayor six months after Hetq reported on the 1.2 million AMD spent on gas on a car that doesn’t run, among other petty embezzlements. The media can only do so much, it’s up to the police and prosecutors to act to stop this blatant corruption.

To end on a positive note, the Freedom of Information Center of Armenia (an NGO that I just recently learned about, but I believe does great work) helped organize the Open Government Partnership Conference here in Armenia. The Partnership is an international agreement between a number of states to “promote transparency, empower citizens, fight corruption, and use new technologies to strengthen governance.”

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Hetq does real Investigative Reporting into Corruption, Nothing Results

Hetq.am’s tag line is “investigate journalists,” but if you’re looking for the Armenian version of New York Times, good luck. Hetq only has 15-20 journalists, and is unable to afford to pay many of its contributors in the regions. Most of their “investigation” is simply to examine public records or go check out a river to see if there is pollution in it. However, with the sad state of journalism in Armenia, both of these activities are completely newsworthy.

In a change of pace, Hetq has recently done a serious investigation: investigating a missing $170 million from the Nairit rubber plant. They spent seven months tying together the players and shell companies that had dealings with the $170 million loan meant to get the plant operational again. When they pieced together how public money was ending up in private Russian bank accounts, they contacted the authorities. The authorities did absolutely nothing or simply gave a choice quote like “I don’t want to make any comment in order not to annoy anyone.”

On Thursday, Hetq published a scorching criticism of the government agencies that turned a blind eye to corruption. They’ve also said they’re going to publish everything they have: they’re going to name names and the evidence that proves “money laundering, bribery, abuse of state power” and other crimes.

I have to give Hetq props. This type of in-depth reporting is what gets Armenian newspapers hit with million dram slander suits. I really hope the same doesn’t happen to Hetq. While it claims it has hard evidence, the police haven’t helped in the investigation, so Hetq’s information might be weaker than what a court would demand. Without sufficient evidence to support their claims, Hetq is a sitting duck for a slander suit from any of the big shots they’re trying to call to justice.

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Azerbaijan, Leaping for the Future without Reconciling the Past

Two recent articles on Azerbaijan have popped up that give a fresh perspective on the country. As reported earlier, the anger from Aylisli’s recent book that focuses on Azerbaijani continues. The President stripped him of his honorary title of “People’s Writer,” protesters have burned his books and there is even a €10,000 bounty on his ear. [Addition: Human Rights Watch has called on the government of Azerbaijan to end its “hostile campaign of intimidation” against Aylisli.] The one concrete positive result is his action has sparked popular debates on the subject. It’s too early to say whether anything will come of these debates, but they do allow moderates to criticize hardliners that espouse hate speech.

Unfortunately, but understandably, even those in favor of Aylisi are not willing to come far enough to even begin talking about reconciliation. His supporters still generally reiterate the line that “both sides” should be represented. While I personally agree that in any historical analysis, all reasonable viewpoints should be examined and included, but this is not a historical analysis. Aylisi wrote a story, a story that is meant to recognize and atone for the atrocities committed by Azerbaijanis. To include the other side would be like someone confessing a sin but only in comparison to someone else’s sin. The question remains whether an Armenian artist or activist will similarly rise up to the challenge of pointing a spotlight at the brutal acts Armenians committed during wartime.

Veering away from human rights, New York Times has a great article on Azerbaijan’s rapid planned growth. The most interesting part of the story to me is mentioned only at the end when the author questions Ibrahimov, a very powerful oligarch, about President’s Aliyev’s regime. Ibrahimov simply responds with “I don’t know anything about politics,” when everyone knows Ibrahimov can do whatever he wants in part because he’s well connected to the President.

Many post-soviet countries have economies dictated by oligarchs, Azerbaijan included. The question is what happens next. Do the oligarchs block trade to keep a monopoly like in Armenia?  Or, do they invite foreign investors to build grand constructs that represent their dreams and goals and not the dreams and goals of the people like in Azerbaijan? More importantly, what does the government do to (unfortunately) support the oligarchs and suppress the people? Arrest protestors or sue newspapers out of existence? An oligarch-led economy is not sustainable, as the level of corruption and waste will constantly drag against the country until something breaks. The question is what can the people do to fight against the oligarchs, and—the scariest possibility—what should the people do when the government defends the oligarchs against the people?

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Oligarchs, Corruption and Stifling the Economy

Armenia’s first international supermarket, Carrefour, has been planned to open doors since October. There is even space for it in the new mall with signs on the door saying “Coming Soon.” Unfortunately, Carrefour is saying that it might take more than a year, before the doors actually open. The reason is that local leaders keep delaying meeting with Carrefour. Their explanation is something keeps coming up (currently the excuse is the Presidential election), while others say that the local oligarchs don’t want the competition from its cheaper products.

A graph showing an increase in the power of the sugar monopoly from 2001-2011

Armenia’s sugar monopoly has only become worse over time.

One interesting note is that Sargsyan is distancing himself in his presidential campaign from the petty oligarchs that were previously used to guarantee votes. This might be a sign of the beginning of systemic change in the power structure of Armenia, but chances are it’s simply because he doesn’t need them to ensure victory in this election.

And, just to add a tangential story about corruption. Hetq measured the size of the new Tsitsernakaberd highway. They found that the 2km long highway was on average 1.5 meters thinner than it should be. This results in 3000 square meters of asphalt missing, a tidy sum that likely went into someone’s pocket.

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Buy your own piece of Hraparak: (Former) Foreign Affair’s Ministry is up for Auction

A few months ago, there was a shock that the Ministry of Foreign Affair’s building on Republic Square (Hraparak) was sold to a foreigner. Obviously, people were upset. In a quick move to save face when they realized the shady deal would not be acceptable to the public, the government turned around and said that the building will be put for auction with the previous price being the initial bid for the building.

So here’s your chance to own a beautiful piece of architecture on the most famous intersection in Armenia, all for a starting bid of only $130,000 USD.

Republic Square Fountain and Clocktower

Republic Square

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Economic Freedom, at least on Paper

The Heritage Society has rated Armenia 38th in the world for economic freedom, beating many larger more developed economies like Spain, Mexico and Israel. While this is fantastic news for Armenia, I feel that Heritage’s methodology doesn’t accurately portray the real situation.

As Heritage is a conservative organization, it focused almost exclusive on official government actions that affect the market (e.g. laws and regulations) and not on private citizens’ negative impacts. So, an oligarch that controls the sugar market would not count against a country’s economic freedom score. As I understand it, a country that establishes anti-monopoly laws would get a worse score from the Heritage Society because its governmental action impedes on the market, even if the action benefits the market overall.

Heritage does include respect of property rights and freedom from corruption as factors, both which Armenia does very poorly on, but those only constitute two-tenths of Armenia’s final score.

Heritage Society's 2013 World Economic Freedom World Map

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Skimming off the Top

Hetq has continued its series of calling out public servants who magically have millions in unaccounted money in their tax fillings. This time around we have:

  • The Minister of Justice declared 3 million in “other revenue,” above his salary of 3.7 million.
  • The Minister of Emergency Situation’s bank account went from 4.8 million to 34 million in two years when his revenues were only 7.2 million.
  • An appeals court judge’s wife bank account grew 34 million more than her stated income.
  • A member of parliament has a few million in undisclosed revenue.
  • And, an assortment of governors whose bank accounts grew suspiciously.

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