Corruption remains a significant obstacle to U.S. investment in Armenia. The government introduced a number of reforms over the last few years, including the simplification of licensing procedures, civil service reform, a new criminal procedure code, and the introduction of a new national anti-corruption strategy, as well as laws and regulations. Nevertheless, corruption remains a problem in critical areas such as the judiciary, tax and customs operations, health, education, military and law enforcement. The Special Investigative Service is responsible for investigating corruption and the prosecutor general is responsible for prosecuting it. Both large scale and petty corruption are widespread.
Priorities set by the national 2015 – 2018 Anti-Corruption Strategy, approved on September 25, 2015, included improvement of legislation and infrastructure to combat money laundering, an increase of transparency in the public sector, and enhancement of accountability. The government chose education, healthcare, state revenues, and law enforcement (specifically police services to citizens) as pilot sectors for the implementation of the strategy.
To aid in implementing the Strategy, an Anti-Corruption Council (ACC) was established in July 2015; the ACC, designed to be inclusive with seats reserved for CSO, opposition party representatives and GOA officials, has convened quarterly, as scheduled, and has implemented an open, competitive selection process for NGO membership. One of the most notable actions taken by the Council thus far is the announcement by the Government of Armenia to join the Extractive Industries Transparency Initiative (EITI), a coalition of governments, mining companies, and civil society working to increase the transparency of business activities within the mining sector and ensure favorable competitive conditions. EITI also assists in strengthening accountability and good governance, as well as promoting greater economic and political stability. The ACC has begun consultations with communities, civil society, and businesses to establish the EITI multi-stakeholder group, which is expected to be formalized in March 2016.
Previously in July 2012, the President approved a strategy and action plan for Justice Sector Reforms for 2012-2016, which addresses most of the problems in the judiciary, prosecutors’ office, and civil, criminal, and administrative legislation.
Also in 2012, pursuant to the law on Public Service adopted in 2011, an Ethics Commission for High-Ranking Officials was established. The Commission collects and monitors the asset declarations of high-level officials. However, currently there are no criminal penalties for noncompliance or filing of false declarations, nor are there provisions to further investigate declarations that reflect large unexplained gifts and income and assets that are out of line with officials’ salaries. The Commission is currently working with the Ministry of Justice on developing legislation which provides for administrative penalties for those who file false declarations or fail to comply with the filing rules and deadlines. There is no estimate as to when the new legislation will be approved by the Parliament.
Under the current law on high level officials’ declarations, adult family members living with the official are required to file a declaration. This loophole allows officials to register and/or transfer their property to a minor child or a relative who does not reside in the same household in order to avoid reporting requirements. Furthermore, according to current laws, income, gifts or assets from undisclosed sources are not considered evidence of corruption, nor do they represent sufficient grounds for launching an investigation. Furthermore, the current draft Tax Code includes anticorruption measures/components.
The Law on Civil Service, in force since 2002, as well as the Laws on Municipal Service (2005) and on Local Self-government (2002), prohibits participation of civil and municipal servants, as well as local government elected officials (mayors and councilors) in commercial activities. However, powerful officials at the national, district, or local levels often acquire direct, partial, or indirect control over private firms. Such control is exercised through a hidden partner or through majority ownership of fully private parent companies. This involvement can also be indirect, e.g., through close relatives and friends. These practices promote protectionism, encourage the creation of monopolies or oligopolies, hinder competition, and undermine the image of the government as a facilitator of private sector growth. Because of the strong interconnectedness of political and economic spheres, Armenia is unable to differentiate between the two and introduce legislation to encourage strict ethical codes of conduct and the prevention of bribery in the business field.
According to the SME Policy Index report (OECD/EU/EBRD/ETF study), the Armenian legislation allows for tenders to be divided into lots; this happens in 50-70% of the cases. There is a law regulating late payments to contractors, imposing penalties for late tenders. The information on public tenders is openly available, centralized at the national level and free of charge. Though Armenia has made some progress against improving its procurement practice, the percentage of tenders awarded after negotiated procedure without publications is still very high (48%) and should be furtherer reduced. Armenia has yet to establish an impartial and independent review body which is detached from the body responsible for public procurement policy use of non-competitive simplified procurement.
Armenia is a member of the Council of Europe Group of States against Corruption (GRECO). GRECO’s February 2016 report notes that corruption remains an important problem for the Armenian society, although the fight against corruption has been on the political agenda for years. GRECO specifically recommends that the rules on the acceptance of gifts by parliamentarians, judges, and prosecutors, as well as on submitting regular asset declarations, on their control and enforcement be further developed and made more effective. Adopting a code of conduct for members of parliament, preventing circumvention of the restrictions on business activities by parliamentarians, are among other recommendations. By the end of April 2017, the Armenian authorities are to report back on measures taken to implement the 18 recommendations included in this report.
The 2001 law on NGOs covers all aspects of the relationship between the GOA and non-governmental organizations. No specific law on NGOs dealing with anti-corruption investigation exists. The government, in close coordination with civil society, has proposed new legislation on Public Organizations that would give NGOs the right to engage in economic activities, allowing these organizations mechanisms for independent sustainability. The law is still under discussion at this time; recently a public hearing was organized by the National Assembly Standing Committee on Protection of Human Rights and Public Affairs to further solicit citizen input.
Western companies seeking to invest in Armenia are typically large enough that they do not, to our knowledge, need to get involved in corruption or bribe officials to facilitate their business. They follow the rule of law and are transparent in their dealings and demand the same of the government. However, according to the Transparency International (TI) 2014 Corruption Perception Index (CPI) report, Armenia with a score of 37 out of 100 ranked 94th among 175 countries. Global Corruption Barometer 2013, a worldwide public opinion survey, identified the Armenian judiciary as the most corrupt, followed by public officials and civil servants, and police. The same survey showed that 16 percent of the responders had paid bribes to the registry and permit services, 18 percent to the judiciary, and 9 percent to the tax revenue services.
UN Anticorruption Convention, OECD Convention on Combatting Bribery
Armenia is a member of the UN Anticorruption Convention. While not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Armenia is, however, a member of the OECD Anti-Corruption Network for Eastern Europe and Central Asia, and has signed the Istanbul Action Plan. Armenia was included in the third round monitoring mission in 2014 and the report that came out in 2015 highlighted the absence of a truly independent body responsible for anti-corruption policy implementation with the power to prosecute. The report also analyzed recent developments and provided new recommendations in three areas: anticorruption policy and institutions, criminalization, and prevention of corruption. Armenia has also joined the global Open Government Partnership initiative and will conclude its second Action Plan by 2016.
Resources to Report Corruption
For investigating corruption:
Justice Colonel, Chief of the Investigation Department of Corruption and Organized and Official Crimes
Special Investigative Service of Armenia
13A Vagharsh Vagharshyan Street
[+374 11] 900 002
For prosecuting corruption:
Acting Head of Anti-corruption Department
Prosecutor General’s Office
5 V. Sargsyan Street
For financial and asset declarations of high level officials:
26 Baghramyan Street
374 10 524689
Transparency International (Armenia)
164/1 Antarayin Street
374 10 569589