It's a defining theme for Armenia's presidential campaign.
Five case studies show how deep the debate over corruption actually goes.

Case Study #3: Tax Inspections
Armenian companies routinely underreport and/or hide their revenues to avoid paying taxes. Tax authorities' preferred method of trying to detect widespread tax evasion is to regularly or unexpectedly inspect company books and other financial operations. Anecdotal evidence suggests that such inspections, although regulated by a special law, are often conducted in an arbitrary manner that breeds corruption among tax officials.

It is not uncommon for local entrepreneurs raided by those officials to allege, usually in private, that they are forced to pay kickbacks or face hefty fines. They say local businesses are vulnerable to government harassment because it is practically impossible for them to fully comply with Armenia's complicated tax laws and regulations, which frequently undergo changes.

Financial investigations also appear to be a powerful government weapon for discouraging the business community from supporting political opponents of the country's leadership.

In late 2007, tax officials, accompanied by a special police unit, repeatedly raided companies owned by prominent Armenian businessman Khachatur Sukiasian after he publicly pledged allegiance to former President Levon Ter-Petrosian. One of those companies was accused of evading about $10 million in taxes. Also accused of tax fraud was a television station, based in Armenia's second largest city of Gyumri, that broadcast a September speech by Ter-Petrosian in which he harshly criticized the government. Both Sukiasian and the owner of Gala TV have denounced the crackdowns as politically motivated. The authorities strongly deny this, however.

The Government Says:

"There are people who understand that the state has adopted an anti-corruption strategy and is consistent. There are also people who do not want to reduce the shadowy segment of their business and are trying to politicize the matter, make noise and, to put it bluntly, become hysterical in order to pay less money to the [state] budget."

-- President Kocharian reacting to businessman Khachatur Sukiasian's claims in a November 14, 2007 conversation with journalists

The Other Side Says:

"Imports of 21 basic consumer goods to Armenia are in the hands of a few monopolists. What we are seeing is a monopolization of whole sectors of the Armenian economy."

-- "The reason for this state terror is that I stand alongside Levon Ter-Petrosian."

--Businessman Khachatur Sukiasian insisting on his claims in a December 5, 2007 interview with RFE/RL

There's more to the campaign than corruption alone. Take a survey of other issues driving the race. » Dig deeper

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