EurasiaNet Business & Economics - Corruption Remains Pervasive in Armenia, Despite Two-Year Anti-Graft Campaign

BUSINESS & ECONOMICS

CORRUPTION REMAINS PERVASIVE IN ARMENIA, DESPITE TWO-YEAR ANTI-GRAFT CAMPAIGN
Emil Danielyan 11/10/05

Corruption remains entrenched in Armenia, despite a two-year government anti-graft campaign.

Government officials in Yerevan insist that the program, endorsed by Western donors, is making a dent in corruption. But representatives of non-governmental organizations voice doubts about this assertion. Their skepticism is fueled by the most recent corruption report issued by the international watchdog Transparency International, whose senior representatives noted "reasons for serious concern" about corruption in Armenia.

Transparency International’s 2005 Corruption Perception Index ranked Armenia 88th out of 146 countries surveyed, down from 82nd the previous year. Armenia’s neighbors in the Caucasus were seen as more corrupt, with Georgia ranking 130th and Azerbaijan 137th. Nevertheless, representatives for the Berlin-based organization suggested that Armenia was far from being in position to declare victory in the fight against corruption.

"The situation [concerning corruption] does not seem to be improving," Transparency International’s regional director for Europe and Central Asia, Miklos Marschall, said in a statement on November 8.

The head of Transparency’s Armenian branch, Amalia Kostanian, was even more critical. "We don’t see the political will to combat corruption in Armenia," she told EurasiaNet in an interview. "What we see is a desire to show off for the international community."

A nationwide opinion poll conducted by Kostanian’s office in August suggests that about two-thirds of Armenians believe that corruption has become more rampant in the past few years. Only 4.5 percent feel that the situation has improved, according to the poll.

However, an official advising President Robert Kocharian on anti-corruption initiatives dismissed the Transparency rankings, which are based on at least three separate surveys conducted by other Western organizations. "Corruption is a phenomenon which is impossible to measure, just as it is impossible to measure love," said Bagrat Yesayan.

Roger Robinson, the World Bank’s resident representative in Yerevan, likewise believes that the government’s anti-corruption drive is achieving tangible results. "I do see progress in the implementation of the government’s anti-corruption strategy," Robinson told EurasiaNet.

The World Bank played an important role in the implementation of the anti-corruption initiative, having provided $340,000 to government experts who worked on its development. The document, unveiled in November 2003, is essentially a set of legislative measures which the Armenian authorities have to enact by 2007. They include laws on financial disclosure, state procurements and lobbying.

Critics have strongly questioned the program’s emphasis, citing serious problems with the rule of law in Armenia. "This program is inherently flawed because it focuses on legislative changes that have a preventive character," said Kostanian. "It says nothing about identifying and punishing corrupt officials."

In defending the initiative’s effectiveness, Yesayan cited official statistics that show a 15 percent increase in the number of "corruption crimes" solved by Armenian law-enforcement authorities in the first half of 2005. However, the Kocharian aide refused to identify any of the individuals purportedly sanctioned for bribery or other forms of graft. Virtually no senior government officials are known to have been prosecuted this year.

For his part, Robinson cited the first-ever publication this year of the list of Armenia’s 300 largest corporate tax-payers and the amount of various taxes paid by them. The move was aimed at publicly embarrassing the country’s wealthiest tax evaders (many of them linked to the government). Robinson also found increased transparency in the activities of the tax and customs agencies, the main source of complaints from Armenian businessmen.

Incidentally, two of those businessmen, who run a coffee importing company, were arrested recently and are facing controversial fraud charges after alleging high-level corruption within the Armenian customs service. They are the only Armenian entrepreneurs to have publicly attacked the notoriously corrupt agency so far.

The continuing lack of high-profile corruption cases brought against senior officials is feeding a widely held perception that top-level officials are not interested in tackling graft in earnest because they themselves are corrupt. But the World Bank’s Robinson disagrees with this line of reasoning. "The generalized statement that there is corruption in Armenia and it affects the highest levels of authority is not helpful to defining a way forward," he said.

However, corruption allegations are not always short on specifics. Armenian newspapers regularly carry reports about the extravagant lifestyle of government ministers and other top officials, which sharply contrasts with their modest salaries. Most of them are wealthy individuals with extensive business interests.

Defense Minister Serge Sarkisian, widely considered to be Armenia’s second most powerful official after Kocharian, is also rumored to regularly gamble in Russia and Europe. Speaking to reporters in September, he admitted spending his most recent summer vacation in Monaco but denied visiting its world-famous casinos. The minister, whose official monthly salary is worth $700, would not explain just how he could afford a trip to the world’s most expensive gambling resort.

Armenian Trade Minister Karen Chshmaritian, meanwhile, urged the press to stop searching for the real owners of glitzy businesses in Yerevan and elsewhere in the country. He specifically referred to a new luxury hotel that was built in the middle of the city’s largest public park. It is managed by one of Chshmaritian’s relatives. "See how good this building is," Chshmaritian told a group of journalists as they stood outside the hotel in early November. "Why do you need to know who owns it? What would change as a result?"

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