Tigran Avinyan-Alexander Yesayan – bank triangle; and the consequences of fruitful, but suspicious transaction

At a special sitting on July 10, the Public Services Regulatory Commission (PSRC) discussed and approved the alienation of Beeline telecommunication company operating under VEON Armenia to Team LLC, the owners of which are Hayk and Alexander Yesayan brothers who have left Ucom.

A day before that sitting, the RA SCPEC convened a sitting and also approved the concentration of VEON Armenia CJSC and Team Limited Liability Company through acquisition by Team Limited Liability Company of 100% shares of VEON Armenia Closed Joint-Stock Company.

Shadow arrangements: Attempts to drag down Ucom

Before elaborating on the details of the transaction, shadow arrangements and interests, let’s start with the prehistory, some details of which have become known to 168.am.

This history dates back to the end of the previous year when Beeline operating under VEON Armenia CJSC wanted to acquire Ucom telecommunication company owned by the Khachatryans (former Chairman of the State Revenue Committee Gagik Khachatryan, hereinafter referred to as G.S.). There is a remarkable nuance here. In fact, the owners of the two company have decided that Beeline’s current director Andrey Pyatakhin will become the director of the company in case of a successful outcome of the transaction. This idea was strongly opposed by the then director of Ucom Hayk Yesayan who made a big fuss around this topic. To remind you Hayk Yesayan and his brother Alexander Yesayan are the shareholders of 6% in Ucom who declared about leaving the company.

Actually, a classic sabotage was being organised but it was manageable in its nature to the extent that everything Hayk Yesayan needs is done, and what he does not need is not done; the works remain abandoned.

Political-criminal cases against the majority shareholders of Ucom

In parallel with these processes, criminal cases are initiated against Gagik Khachatryan’s sons Gurgen and Artyom Khachatryans and it was then when Yesayan brothers have realized that the “moment of truth” has come and it’s a sin not to benefit from it; so, they have announced their intent to buy Ucom. However, negotiations on the company acquisition are initiated with Ucom’s management and USD 30 million is offered as a negotiable amount hoping that the pressure by the authorities on the Khachatryans will force them to sell the much more expensive business “at rock-bottom price”.

“This situation was created due to disagreements among the shareholders. The brothers who are the Company’s founders and shareholders of 5,94% in the company offered the other shareholders to acquire the remaining shares. AMD 22 billion 100 million was offered to pay for 94,06 percent of shares,” the Yesayan brothers said.
To the surprise of the Yesayan brothers, the Khachatryan brothers refuse to sell Ucom at the offered price and already this time the Yesayans offered a much higher price in the amount of USD 70 million and of course here a question arises where the brothers who are the shareholders of 6% will get that huge amount; this question remains on the agenda for a while but still it has not received its exhaustive answer.

Explicit intervention of the Government. The Prime Minister’s spokesperson’s statement

It is worth remembering that during this period the criminal cases initiated against the Khachatryans are gaining momentum; i.e. arrest requests, searches, etc. This is followed by Prime Minister Nikol Pashinyan’s spokesperson Mane Gevorgyan’s post which particularly says:

“As for Ucom, the alienation of its shares can be done only with the consent of the Armenian Government, according to the law. After a dispute broke out among the company’s shareholders and the change of the composition of the shareholders turned up on the agenda, the Government’s position was that the sale of the Khachatryans’ shares could take place only if the whole revenue received from the transaction is transferred to the state budget of Armenia”.

Gurgen Khachatryan has also made a statement in this regard clearly stating that the high-ranking officials of the country directly and indirectly (as well as during the meeting) required him to alienate Ucom with an unprofitable offer accompanied by public pressure.

However, the Khachatryans also refuse to alienate the company at a higher price as they clearly understand that as a result of that “political” transaction they will lose their company and their funds. Everyone knows what happened then. Detention against Gurgen Khachatryan was chosen as a measure of restriction.

After all this, the Yesayans announced the establishment of Team LLC.

Suspicion of Surveillance; the plan is linked to the Yesayan brothers

We have also a very interesting episode here. It is still unknown by whose magical touch the Yesayan brothers acquired the right to take over the operation management of the Commandant’s Office system for tracking people’s location via cell phones. Our information reveal that these works turn out to have been performed by the employees of IUnetworks affiliated with the name of Alexander Yesayan, Hayk Yesayan’s brother. We know their names and positions in the company however we do not disclose them at the moment.

By the way, the Government did not even respond to the official inquiry on the identities of the implementers of the location detection software, stating that the work performed on a voluntary basis is not considered an acquisition, therefore, the Government has the right not to disclose information about the authors of the software.
Please see the post and Tigran Avinyan’s office response here.

It should be stated that this is a very expensive system with great capabilities, because even the National Security Service of the Republic of Armenia, having great opportunities, has never had the opportunity to analyse such a large amount of data, and IUnetworks, in fact, has. It works with big data of all mobile operators and instantly maps location by phone.

And why Alexander Yesayan’s company is in charge of it, we think is logical. He is Deputy Prime Minister Tigran Avinyan’s old close friend, with whom he often meets at his own Gastropolis cafe, and have discussions, including, of course, about snatching Ucom away from the Khachatryans.

Let’s go back to Team.

Takeover of Veon by the virtue of a potential violation of law

Shortly following the establishment of the company, the Yesayans have announced about acquisition of Beeline and the negotiations initiated for that purpose. They have filed an application with the State Commission for the Protection of Economic Competition (SCPEC) to receive an opinion proving that the mentioned transaction does not distort the competition. Discussions have been held behind the closed doors under the veil of commercial secret and SCPEC has approved the transaction very quickly. It is worth mentioning that SCPEC Chairman Gegham Gevorgyan is also Deputy Prime Minister Tigran Avinyan’s friend.

Of course, neither the transaction price nor the source of their money is mentioned, bearing in mind that you were just the technical director of Ucom and owned 6% of shares.

Here, it is appropriate to quote the Head of Luys faction of the Yerevan Council of Elders Davit Khazhakyan’s post where he particularly mentioned that the transaction price is about USD 60 million, for which Team presented to VEON the bank’s approval of financing. The potential financier is Ardshinbank.

Davit Khazhakyan, however, was more interested in the loan issuing procedure, the current regulations and the details of issuing that huge loan to Team in that scope.

“Financial organizations in the Republic of Armenia have the maximum risk limit for one borrower while issuing a borrowing: a procedure regulated by the Central Bank. In this case the loan issued by Ardshinbank to Team LLC should not exceed 20% of the bank’s total capital.

Thus, as of 31.03.2020 the total capital of Ardshinbank was AMD 77.5 billion. As of March, the mentioned regulation was 17.47%. That is, as of the end of March the amount of loan provided to one borrower and its affiliated persons was AMD 13,54 billion.

Now let’s convert USD 60,000,000 to AMD and try to understand which regulations do apply to this transaction as the combination of the numbers available shows that it significantly exceeds those provided for by CB. Do these “regulations” imply guarantee of any “benefactor” or “goodwill” of a state official?” he wrote.

Davit Khazhakyan also stated that we should finally know whom and what interests the strategic institution with Armenia’s only underground infrastructure will serve.

During the interview with 168.am to the question what the long-term goal of this transaction is, Davit Khazhakyan said that in his opinion in this context it is necessary to consider to which extent the competition has been ensured while the Yesayans still continue to hold certain share in Ucom.

“Finally, there are still rumours circulating on the fact that the long-term goal of these transactions is to merge the two operators for some purpose, which, we understand will distort the existing competition in the sector Armenia really can be proud of. We had a competition of three communication operators also due to the Yesayans’ professional efforts, as a result of which we have reduced tariffs and increased quality of the services provided. Regardless of their political considerations the authorities must keep the sector free from shocks and exclude distortions of competition,” he said.

According to Davit Khazhakyan each loan also implies the guarantee provided to the bank. It is not clear how the Yesayans addressed this problem and what guarantee they provided.

As he argues in addition to this question there is a second and not less problematic factor.

After all, according to the Head of Luys faction of the Yerevan Council of Elders, current Armenian authorities have always been talking about the problems of privatization, purchase and sale of the strategic institutions and now it seems the owner of the communication operator of strategic significance changes but it is not visible to the public where these acquisition funds come from and whether there are interested Government officials.

According to our information through Deputy Prime Minister Tigran Avinyan’s intervention Ardshinbank received a “friendly” advice to provide the Yesayans with the amount necessary to buy Beeline, otherwise there is a possibility for the mentioned bank to be involved in the circle of some criminal cases. As a ground it was stated that the company would be profitable and Ardshinbank will receive its amount in compliance with the regular schedule. Of course, the bank has provided the amount and as we have already stated the transaction has been concluded.

While the Yesayans’ Team LLC received a license, the entry of another operator was aborted on time

Here we should also remember IT specialist Simon Alpetyan’s post and story who came to Armenia encouraged by the 2018 events, tried to establish a national operator which the Yesayans so much talked about, but was rejected.
“I was particularly touched while hearing the expression “national operator”. It evoked in me vague memories of April-May 2018 when encouraged by the revolution I arrived in Armenia and submitted to the RA Government the Concept of National Operator (enclosed in three pages). The concept implied the launch of a company in which the Armenian Government would be the majority shareholder and the private individuals would be minority shareholders. The operator was supposed to be built from scratch with a loan provided by the Vendor. The Concept also (but again in compliance with Hayk Yesayan’s wordings) described all the advantages of such a project, namely elimination of income outflow, people’s participation in economic life, etc. In short, it has been an impossible and fantastic harmony of thoughts.

However, let’s leave emotions aside. I should state that the Concept was rejected on 12.04.2019 with the following wording: the radio frequency range is distributed among three mobile operators and there is no radio frequency resource for a new operator (the answer enclosed in two pages). In other words, there is no air resource in the country for the launch of the National Operator. That we also found out and got used to it. And now, a year later we have a new status,” Simon Alpetyan wrote.

In fact, the distinction among owns and foreigners is relevant also for the patriotic work to create a “national operator” and not everyone may be lucky enough to get the favour of a revolutionary Government.

As George Orwell states in his famous Animal Farm all animals are equal but some are more equal than others.
However, let’s come back to the details of the transaction. As far as we know, the infrastructures of the newly established, already merged company, namely automated telephone stations (ATSs) known still from the soviet period are pledged for the amount provided by the bank, despite the fact that they are institutions of strategic significance. So, is it right to trust institutions of strategic significance to the private sector? It is the same like you are telling the bank that I want to buy ENA and I will pledge ENA itself.

In fact, let’s note that Ardshinbank is obliged to present the conditions under which it provides such a large amount of money. And Team is obliged to do the same: if its operation is transparent and there are no suspicious arrangements behind the transaction it should disclose to the public what it is pledging and whether it has guarantors.

The cycle of unlawful actions continues

168.am, of course, will follow the developments, but the participants of this story must first of all themselves be interested in ensuring the transparency of the transaction, otherwise the number of questions will increase, and the parties to this suspicious transaction will not be pleased with ther answers given by the public and the media.