Corruption in Armenia

Political corruption
Corruption Perceptions Index, 2010
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Electoral fraud · Economics of corruption Nepotism · Bribery · Cronyism · Slush fund
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Political corruption in Armenia is a widespread and growing problem in Armenian society. The United Nations Development Programme in Armenia views corruption in Armenia as "a serious challenge to its development."^[1]

Corruption levels

In 2008, Transparency International reduced its Corruption Perceptions Index for Armenia from 3.0 in 2007^[2] to 2.9 out of 10 (a lower score means more perceived corruption); Armenia slipped from 99th place in 2007 to 109th out of 180 countries surveyed (on a par with Argentina, Belize, Moldova, Solomon Islands, and Vanuatu).^[3] Despite legislative revisions in relation to elections and party financing, corruption either persists or has re-emerged in new forms.^[4]

Institutions

The main anti-corruption institutions of the Armenian government are an Anti-Corruption Council – headed by the prime minister – and the Anti-Corruption Strategy Monitoring Commission, established in June 2004 to strengthen the implementation of anticorruption policy. However, these institutions scarcely functioned in 2006-2007, even though they were supposed to meet twice-quarterly and monthly, respectively.^[2]

History

The late Prime Minister Andranik Margarian launched Armenia’s first post-Soviet campaign against corruption in 2003. The initiative, however, has been widely disparaged for being short on results.^[5] Current Prime Minister Tigran Sargsyan has acknowledged that corruption is Armenia’s "number one problem that obstructs all our reforms."^[5]

The government has recently launched an anti-graft campaign which has been accompanied by changes in customs regulations, reported tax police inspections of companies owned by pro-government businesspeople and numerous high-profile firings of people in the tax department, customs service and police. The recent crackdown on corruption has received mixed reactions.^[5]

Misappropriation of international loans

In March 2004, an ad hoc commission of the Armenian parliament investigating the use of a $30 million World Bank loan concluded that mismanagement and corruption among government officials and private firms was the reason of the failure of the program to upgrade Yerevan's battered water infrastructure.^[6] The World Bank issued the loan in 1999 in order to improve Yerevan residents' access to drinking water. The government promised to ensure around-the-clock water supplies to the vast majority of households by 2004, but as of 2008, most city residents continue to have running water for only several hours a day.^[6]

Veolia Environnement, the French utility giant that took over Yerevan's loss-making water and sewerage network in 2006, has said that it will need a decade to end water rationing.^[6] In August 2007, Bruce Tasker, a Yerevan-based British engineer who had participated in the parliamentary inquiry as an expert, publicly implicated not only Armenian officials and businessmen but also World Bank representatives in Yerevan in the alleged misuse of the loan. In an October 4, 2007 news conference, the World Bank Yerevan office head Aristomene Varoudakis denyied the allegations, claiming that the World Bank disclosed fully all information available on the project to the parliamentary commission and that based on this information there was no evidence of fraud or mismanagement in the project.^[6]

Illegitimate use of eminent domain

Northern Avenue residents protest the proposed demolition of their building through signs and posters, 2011.

Eminent domain laws^[7] have been used to forcefully remove residents, business owners, and land owners from their property. The projects that finally are built on the site are not of state interest, but rather are privately owned by the same authorities who have executed the eminent domain clause. A prominent example is the development of Yerevan's central Northern Avenue area. Another involves an ongoing project (as of November 2008) to construct a trade center near Yerevan's botanical garden. The new land owners are non other than Yerevan's mayor Yervand Zakharyan and Deputy Mayor Karen Davtyan, who was at one time Director of the Armenian Development Agency and successfully executed the eviction of residents on Northern Avenue.^[8]

Tax and customs agencies

The notoriously corrupt Armenian State Revenue Committee (housing both the Armenian Customs Service and the Armenian Tax Service) helps maintain import monopolies as well as aid tax evasion.

In 2007, World Bank economists pointed to serious problems with rule of law and widespread corruption in the Armenian tax and customs agencies.^[9]

References

1. ^ "Strengthening Cooperation between the National Assembly, Civil Society and the Media in the Fight Against Corruption", Speech by Ms. Consuelo Vidal, (UN RC / UNDP RR), April 6, 2006.
2. ^ ^{a b} Global Corruption Report 2008, Transparency International, Chapter 7.4, p. 225.
3. ^ 2008 CORRUPTION PERCEPTIONS INDEX, Transparency International, 2008.
4. ^ Global Corruption Report 2008, Transparency International, Chapter 7, p. 122.
5. ^ ^{a b c} "ARMENIA: GETTING SERIOUS ABOUT CORRUPTION?", EurasiaNet, July 11, 2008.
6. ^ ^{a b c d} Corruption Chronicles: International Loans, Eurasianet.org, 2008.
7. ^ The Constitution of the Republic of Armenia (27 November 2005), Chapter 2: Fundamental Human and Civil Rights and Freedoms, Article 31
8. ^ The Yerevan Municipality Allocates a Parcel of Land to one of its Employees under the Guise of “Eminent Domain”, Hetq Online, November 10, 2008.
9. ^ World Bank Urges ‘Second Generation Reforms’ In Armenia, Armenia Liberty (RFE/RL), March 20, 2007.