Big elephant in the room of Armenian-Chinese cooperation

Three years ago an Armenian delegation led by PM Tigran Sargsyan participated in Shanghai Expo 2010. This participation of the Armenian delegation in the Chinese exhibition was widely broadcast in Armenian media.

For this exhibition the governments spent AMD 580 million from the public budget, but it did not bring and real benefit. Officials may claim that such participation boosts recognition of our economy internationally, however, if as a result of this competition foreign participation does not grow, and even reduces year by year, such expenses are not justified. This point is better proven by the fact that Armenia is not represented at the major international business gathering in Davos. This means that such expense from the public budget on participation in similar exhibitions is not justified. It maybe also a good way for earning kickback. The Armenian supervisory commission estimated such expenses as unjustified for the public budget as well. This inspection found a number of violations such as provision of 200 million drams for services worth of 167,831.8k without proper documentation. The remaining amount that was leftover after spending was not returned but credited as a debtor’s debt. For this amount this agency made a contract with some Red Style Ltd (the contract was worth of 5.4 million drams) for the purpose of organizing presentation event in October 2010. This was not envisaged in the original budget and plan. By the way, the impression is that this Red Style company was registered only for the purpose of Shanghai exhibition, in October 2009. The founder of this company was a person named Sadyan Vladimir, and now there is no information about this company in any database.

If there is no trace, the conclusion is that the leftover was embezzled or misspent. The problem is that import from China was not properly organized, and the cargo remained in Dzyunik terminal for 82 days, for which importers had to pay AMD 1.57 million. The supervisory committee writes in the conclusion that this was unjustified expense. The bodies responsible for this are the government and ministry of economy.

The government paid 300 million drams to Armenian section of Expo company in Shanghai to organize the participation logistical works for the exhibition. Besides this amount, the Chinese government provided 650,000 dollars for designing, maintaining and other expenses of the Armenian section at the exhibition.

The Supervisory Committee found inconsistencies in expense planning and actual works as works planned to be done in Armenia were done for higher prices in China. In the meantime, the government decided to save on spending provided by the government of China, which was done on the account of the Armenian budget.

During the exhibition it was planned to spend 79.2 million, but in fact 87 was spent as the honorariums of team members was tripled and expenses on lunch was increased by five times. The ADA tried to cover these inconsistencies and submitted a draft to the government, which the government approved on 23.12.2010, by Decision #1726-N.

Armenian official were so busy with saving the Chinese funds that they did not spend 168k out of 650k dollars provided by the Chinese government, and later in order to claim that money they developed proposal to the Exhibition bureau for making a film on the Armenian stand at the exhibition. The remaining amount to be spent on the film was deposited with the account of the Armenian Section of Expo company, in case when the exhibition had been over one year before (on 04.11.2010) and no such film had been made. The money remained in the Chinese Bank of Communications till the Armenian Development Agency decided to spend that money on participation in Expo 2012 Yosu Korean event for environmental and ocean protection. Even the ADA management cannot explain why Armenia needs to participate in such exhibition that has nothing to do with Armenia.

To be fair in analysis, during the recent years the Chinese government has been kind to Armenia and has donated buses, and another group of buses were later bought by Armenia. Businesses more suffer rather than benefit from cooperation with China. There have been many examples when Armenian businesses did not receive their orders from China or, for example, after ordering alcohol found water in containers, or they receive cheap raw materials instead of expensive ones. Such companies have not been able to get their rights protected as the government failed to be efficient in protection of their rights by responding that they cannot do anything in affairs between private companies.

By the way, Armenia’s Ambassador to China is PM Tigran Sargsyan’s brother. This is just a small reminder.

By Gayane Khachatryan