Saturday, 13 July 2013

Armenia Shocked by Control Chamber's Budget Report

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by Haroutiun Khachatrian (07/10/2013 issue of the CACI Analyst)

The Armenian Control Chamber (CC) recently released a highly controversial report on the government’s execution of the 2012 state budget. Under Armenian legislation, the CC is a special non-partisan body which controls the efficiency by which state funds are used. The CC’s president is proposed by Armenia’s president and appointed by the Parliament for six years. The report was presented at a session of Armenia’s parliament, the National Assembly, on June 17 and 18 although it had been ready for some time.

During the presentation, the CC’s president Ishkhan Zakarian passed a tough verdict on the usage of state funds in 2012, stating that Armenia’s state budget “was sacked.” To underscore his point, Zakarian held a piece of cable while delivering his presentation, saying that the CC had discovered purchases of such cable in a project at prices exceeding the market price by ten times. This and other, similar examples induced questions from a number of MPs, including the parliamentary chairman Hovik Abrahamian, whether the prosecutor’s office was studying the facts presented in the report. The National Assembly immediately decided to forward the report to the Prosecutor’s office.

The report received significant public attention and many Armenians considered it to constitute evidence of severe corruption within the country’s state structures. The Armenian government received the report with alarm, inducing an instruction from Prime Minister Tigran Sargsyan to his ministers to “either reject or confirm what the CC says.” The first government official to react to the CC report was Vice Prime Minister Armen Gevrgyan, who said that the report demonstrated to the government that violations had indeed taken place in 2012, but added that the volume and rate of such violations indicated in the report were inflated. Hence, words like “sacked” should not be used to describe the use of state funds in 2012, Gevrgyan said.

In a special statement on July 4, the CC dismissed claims made in Armenian newspapers that its suspicions comprised about 70 percent of the state budget. The CC said it never made such a claim, neither in its reports, nor in Zakaryan’s speech in the National Assembly.

On July 1 and 2 at least eight government representatives met with reporters. The general conclusions of these meetings were, firstly, that as rule, the ministries themselves did not perform the works indicated in the report. Rather, they acted as controllers of the hired companies and had in many cases detected, and punished, the same violations as indicated in the CC report. Secondly, the ministries and the CC for the most part agree that the legislation needs improvement. Thirdly, the implementation of some processes that the CC and the government agree upon need more time. Fourthly, the government and the CC disagree on certain points.

PM Sargsyan is a member of the ruling Republican Party Board (RPB), while Zakarian, formally a non-partisan and a former head of the National Olympic Committee, occupies his current office since November 2007 when current President Serzh Sargsyan was Prime Minister. Hence, both are members of the current ruling elite and the dispute over the use of state funds seems to indicate an intra-elite conflict. The minister of education and science Armen Ashotyan, also a member of RPB, put it the following way: “It is natural that in conditions of weak opposition the authorities should create more opportunities for … discussions, to enable progress.”

President Sargsyan himself acted in defense of the government, which he recently reappointed. During a meeting on July 2, Sargsyan said that the CC should function as a Statistical Service; it should present facts and avoid drawing political conclusions. The RPB organized a meeting on July 4 to discuss the conclusions of the CC report, but it took place behind closed doors and its results have not been made public. As for potential further action by the Prosecutor’s Office, it may need at least a month to reach a conclusion on this issue. 

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