Panama Papers: Poghosyan

A new offshore controversy is erupting in Armenia. This time it is focused on the former chief of the Compulsory Enforcement Service of Judicial Acts (CES), Major-General of Justice Mihran Poghosyan. Last month, the online edition Hetq.am, the staff of which participated in a joint project of the International Consortium of Investigative Journalists (ICIJ), published a scandalous article about the CES chief Mihran Poghosyan's companies in the offshore zone in Panama. The CES head engaged in business through those companies, using his position for its development and hiding revenues.

According to the authors of the article 'Mihran Poghosyan: Armenia’s Chief Compulsory Enforcement Officer’s offshore companies and Swiss bank accounts', the former CES chief has shares in three companies registered in Panama: Sigtem Real Estates Incorporated, Hopkinten Trading Incorporated and Bangio Invest S.A. The first two companies are equal owners of Best Realty Ltd. registered in Armenia. Best Realty was the company that appraised the value of the Karen Demirchian Sports and Concert Complex in Yerevan at 25.8 billion drams ($1 = 490 drams) only without taking the fact that the complex is a state landmark into account. In addition, Best Realty is carring out appraisals of fixed and moveable property in CES cases.

Mihran Poghosyan and his family members are involved in many of the important business ventures in Armenia in the field of construction, supervision of paid parking lots, metal exports, nourished with state budget funds. According to the leaked documents, Sigtem Real Estates Inc. and Hopkinten Trading Inc. have opened accounts in LGB Bank (Suise) SA. Mihran Poghosyan is the only person authorized to manage the account with individual signiture right. Two weeks after the controversy broke out he resigned, not even attempting to dispute a claim, but only promised to return to the topic of offshore companies as an ordinary citizen.

Mihran Poghosyan is not the first high-ranking Armenian official to be at the center of an offshore scandal. Three years ago the uproar associated with the publication of materials by Hetq.am that the former Prime Minister Tigran Sarkitsyan and the head of the Ararat Diocese of the Armenian Apostolic Church Archbishop, Navasard Kchoyan, have companies registered in an offshore zone of Cyprus. According to analysts, this fact, along with the development of the situation around the mandatory funded pension system, which was negatively perceived by society, caused the resignation of the prime minister, who would have seemed invulnerable. According to the US non-governmental organization Global Financial Integrity (GFI), which is engaged in the research of illegal capital flight from developing countries, in 2004-2013 the annual average flow from Armenia was $983 million.

Despite the documents confirming the involvement of ex-prime minister and Kchoyan in the activities of offshore companies, despite the testimony of a witness, the businessman Paylak Hayrapetyann, the Armenian law enforcement bodies are investigating this case without much enthusiasm. The preliminary investigation was completed last year and transferred to the court, however, the process has been stalled for now.

The law enforcement officers show the same attitude towards companies registered in Panama's offshore sector. According to the Department of Public Relations and Information of the Armenian Police, an investigation is being carried out, information about Mihran Poghosyan's offshore companies is being verified.

According to experts, the resignation of the CES chief was aimed at easing tensions in society and to avoid such serious questions as which those companies are, what they are doing, why they were open as offshore and, if financial resources were exported from Armenia, then of what volume? Some observers believe that the entire legal chain around the case of these companies does not mean anything, because, as it often happens in Armenia, in this case the decision depends on the leadership of the country, rather than on investigation materials or the force of law, and according to rumors, the former CES head is President Serzh Sargsyan's favorite.

One way or another, the facts were discovered that a government official had offshore companies, controlled the bank accounts of these companies, the activities of which were largely tied to the Armenian economy. The official himself did not deny this information. Therefore, there is every reason for a criminal investigation, within which answers to society's questions can be given. However, the law enforcement bodies are still busy studying the published materials and, judging by the atmosphere in the higher echelons of power, which determine the application of the law, this 'study' will last as long as society's questions are 'buried' after all this time.

The desire of the authorities to hush up scandals linked to Sargsyan and Pogosyan demonstrates that the statements by the representatives of the ruling elite of Armenia in the fight against corruption remain an imitation. Otherwise, a senior official should face criminal sanctions, not just get off with nothing more than a fright after resignation.