Armenia: Politics Puts Water Company Up the Spout?

The auction of one of Armenia's leading mineral water companies has reignited criticism that the government is pursuing a political vendetta against supporters of ex-President Levon Ter-Petrosian.

Water products from the Bjni mineral water company, founded in 1976 in a central Armenian village, are among Armenia's top exports. Since 1995, when the firm was privatized, Bjni has been owned by the SIL Group, a large holding company that also owns the companies representing Philip Morris and Adidas in Armenia.

Bjni's troubles began in October 2007, shortly after the chairman of the SIL Group, Khachatur Sukiasian, publicly declared his support for former president Ter-Petrosian's reelection bid. [For background see the Eurasia Insight archive]. At one of Ter-Petrosian's first rallies, the 47-year-old Sukiasian declared that he would "endure any possible persecution and pressure" for his beliefs "with great pleasure." Tax inspections at both Bjni and the SIL Group began shortly thereafter.

Sukiasian went into hiding after the March 1 crackdown on opposition demonstrators in Yerevan. [For background see the Eurasia Insight archive]. A criminal case against him has since been opened for allegedly attempting the government's violent overthrow, and for allegedly staging public disorders that resulted in loss of life.

In December 2008, Bjni was declared bankrupt. The Ministry of Justice subsequently sealed the Bjni factory, including its delivery trucks, and announced an auction to sell off the company. The call for bids to buy Bjni started on January 23 and was scheduled to last 10 days.

Bjni attorney Ara Zohrabian affirms that the actions taken "do not meet regulations." The company was not told about the government's evaluation of its property value, or about the auction's starting price, she said. Bjni has appealed to the government to cancel the auction.

A spokesperson for the Ministry of Justice's Service for Compulsory Implementation of Court Decisions countered that the government's actions "fully comply with the law."

"If they have objections, if they consider that their statements are legally grounded, they can use their constitutional right and appeal to the court, and not make ungrounded statements," said spokesperson Ruben Grdezelian.

But the SIL Group's complaints go beyond procedural matters. The company now faces a $13 million charge for water its factory has returned to the nearby Hrazdan River as part of its production process over the past several years. The government first flagged the issue in January 2008, some three years after the Ministry of Environmental Protection installed the company's water meter, said SIL Group spokesperson Anna Mkrtchian.

"[T]he thing we are charged for has nothing to do with us," said Mkrtchian, who termed the situation "absurd." Other companies owned by the SIL Group are also being targeted, she alleged.

As did the Justice Ministry, the Ministry of Environmental Protection maintains that the fine is "in accordance with the law," and suggested that SIL Group sue the ministry if it is not satisfied. "If the violation was not revealed before, most likely they simply had not noticed it," said ministry spokesperson Artsrun Pepanian.

Company lawyer Zohrabian stated that Bjni intends to appeal to Armenia's highest court, the Constitutional Court, and to international courts.

Bjni's experience has stirred fresh controversy over the government's handling of supporters of Ter-Petrosian since the 2008 violence in Yerevan. [For background see the Eurasia Insight archive].

Ombudsman Armen Harutiunian commented to EurasiaNet that if tax and environmental violations alone drive the authorities' interest in Bjni, equal attention should be paid to other companies as well. "But, as we can see, they get seriously interested in one's economic activities only in the case of a certain political position," Harutiunian stated. The opposition has echoed that allegation; Heritage Party parliamentarian Larisa Alaverdian termed the alleged political connection between Bjni's owner and the company's recent financial and legal problems "obvious."

Representatives of the governing Republican Party of Armenia, though, reject the claim. "One can find politics in anything," scoffed senior parliamentarian Galust Sahakian at a January 24 news conference.

Meanwhile, though some 500 former Bjni employees recently offered "to carry the cases [of Bjni's products] on our own backs to get them to distributors," both Bjni water and Noy, a popular still water brand, are long gone from Yerevan supermarket shelves.

For some shoppers, that is the real tragedy. "I am a supporter of the authorities myself, but I still can't understand how Bjni and Noy water, which are national brands, can be treated this way," commented Hair Martirosian, a 31-year-old software engineer. "They are our achievement, independent of politics."