06.12.2019 | Multiple criminal schemes, 18 defendants, preliminary damage of about 23.7 billion drams; Interim Summary of Criminal investigation related to “North-South Road Corridor” Program

Taking into account the importance of public awareness of the ongoing investigation outcomes of abuses recorded during the implementations of the North-South Road Corridor Program (hereinafter referred to as the Project), we inform the following.

 

In the result of the investigation conducted at the RA Prosecutor General's Office on 04.09.2018 a criminal case was initiated on the basis of Article 308, Part 2 of the RA Criminal Code regarding the officials involved in the project implementation process reported corruption allegations during 2009-2018. The preliminary estimated damage caused to the state is about 23.7 billion AMD.

 

Criminal records indicate that competent officials and project-related persons were permitted to make variations in the process of tenders, ineffective Project Management, lack of oversight of works, price and content of contracts, unnecessary and unreasonable changes in the projects. North-South road construction is not coming to end over 10 years. The expected objectives and results for society and the state, traffic have not been implemented according to the Program, as well as it hasn’t promoted the economy and business connections for connecting the south to the north by means of safe, high-quality and fast way to connect with the north, economic development and promote

 

Thus:

 

- In the result of the election of the main contractor and other violations of the rules set out in other competitions, two organizations were awarded the bidding which were equally suggesting higher price, and their ineffective supervision and official misconduct completely failed the North-South Road Construction Program, breaking all deadlines and contractual commitments, inefficiently spending more than $ 300 million credit means and state budget funds.

 

- On the basis of the preliminary research carried out within the scope of the project, Yerevan-Ararat part of the road was improved and only after completion of road marking and repair works of the water pipes, it was decided to cover Yerevan-Artashat section with concrete without any ground and the asphalt cover which was decided previously was covered with concrete. This is due to the fact that no special road cement was produced in the Republic of Armenia and locally produced cement was used in the concrete cover. As a result, the concrete cover of the Project Tranche-1 roads did not comply with the Technical Specifications and standards, and additional works which were not foreseen to do, such as road milling, etc. were unreasonably done in order to eliminate any defects and shortcomings. These additional works have not adjusted the situation, but in all cases the low quality Tranche-1 roads have been put into operation.

 

- Instead of applying means of responsibility for violating the deadlines set by general contractors, subcontractors for construction, provision of services, provision and acceptance of low-quality work and other violations, the competent officials have concluded agreements according to which the state which is the client paid unreasonable fines of millions of dollars.

 

The investigative group established in the RA Investigative Committee, under the supervision of the Prosecutor's Office, has carried out different and large-scale of investigative and procedural actions. As a result, numerous fraudulent schemes, money laundering, tax evasion, real or alleged influence from mercenary, other personal or group interests, theft, and their criminal schemes have been identified, with 10 more criminal cases have been initiated and connected with the basic case.

 

Dozens of major contractors and subcontractors, local and foreign trade organizations affiliated with their representatives, managers, owners, employees, government officials, their relatives, etc. are involved in seemingly criminal mechanisms.  

 

The companies directly involved in the construction work, including Chinese, directors, employees, the head of a foreign consulting group, former senior officials, a total of 18 people are involved as defendants. 9 of them were detained and detention was chosen as preventive means, 3 were granted bail by the court, and 6 signed not to leave.

 

The investigation revealed that employees of a number of contractor and subcontractor companies, in particular managing their business, avoided large amounts of tax, as well as fraudulent accounting and fraudulent accounting, and provided false accounting documents, false accounting registrations which resulted particularly large amount of damage to the State, total 2,848,946,479 AMD which was calculated together with the fines: 3,893,317,723 AMD.

 

Besides, the accused persons have made fraudulent acts by means of adding to the payment certificates for construction works, violated the standards prescribed by the contract, violations in the performance, submission and acceptance acts, in the result generally 1.086.120.000 AMD especially large amount was plundered.

 

In total, currently 225,718,575 AMD was recovered from material and property damages caused by the 18 defendants charged with the case, with 1 billion AMD deposited into the Investigation Committee's deposit account. In addition, about 50 unit real estate and 114 movable property, bank accounts and 82,328,800 AMD in cash are under as arrest.

 

The preliminary investigation continues with 6 main episodes outlined and planned during the investigation.