Corruption remains a significant obstacle to U.S. investment in Armenia. The government introduced a number of legislative reforms over the last few years, including the simplification of licensing procedures, civil service reform, amendments to the Criminal and Criminal Procedural Codes to criminalize illicit enrichment, a draft law on whistleblower protection and the introduction of a more targeted national anti-corruption strategy, as well as laws and regulations, including recently adopted law criminalizing illicit enrichment and a draft law on whistleblower protection. Nevertheless, corruption remains a problem in critical areas such as the judiciary, tax and customs operations, health, education, military, corrections 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 and neither is routinely prosecuted. Armenia’s ability to counter, deter and prosecute corruption is hindered by the lack of independent, empowered Anti-Corruption body with both investigative and prosecutorial powers.
Priorities set by the national 2015 – 2018 Anti-Corruption Strategy, approved on September 25, 2015, included improvement of accountability the integrity of public servants, formation of a more transparent, accountable and participatory governance system across sectors, and effective measures for investigating corrupt practices. The government chose education, healthcare, state revenues, and law enforcement (specifically police services to citizens) as pilot sectors for the implementation of the strategy. The implementation of the strategy was contingent on the implementation of sectoral action plans in response to comprehensive corruption risk assessments in each of the four priority sectors. To date, the government has not completed the risk assessments. To our knowledge, there have not been any reviews of implementation progress.
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 been meeting more frequently after the change of government in September 2016. While opposition representative continued boycotting the ACC, anti-corruption CSOs decided to participate after the NGO membership was expanded from two to five (with three spots yet to be filled through a competitive selection process). One of the most notable actions taken by the Council thus far was 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. Armenia was accepted as an EITI candidate country on March 9, 2017 and is scheduled to submit its first report within 18 months.
Previously in July 2012, the President approved a strategy and action plan for Legal and Judicial Reforms for 2012-2016, which tried to address most of the problems in the judiciary, prosecutors’ office, and civil, criminal, and administrative legislation. These reforms, however, were not fully implemented. For example, the following items were delayed and not implemented (though they may be in the future, there is currently no indication they are forthcoming): Introducing objective criteria and procedures for the performance evaluation and promotion of judges, establishing limited and explicit grounds for holding circuit court sittings and mechanisms guaranteeing the right to fair trial in the event of holding such court sittings, examining the issue concerning jurisdiction over appeals filed to court against the decisions of the head of the penitentiary establishment, enhancing competencies of prosecutor’s office in the sphere of information and communication technologies, and improving the quality of secondary level and higher professional legal education and legal education requirements.
In 2016 the Armenian government initiated legislation on criminal penalties for noncompliance or filing of false declarations and illicit enrichment, which were approved and enacted by the Parliament in late 2016. The legislation is also set to reform the Ethics Commission, established in 2012 to collect and monitor the asset declarations of high level officials, into a broader anti-corruption body with prevention and public education functions.
Under the current law on high level officials ’declarations, adult family members living with the official are not 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 practice, income, gifts or assets from undisclosed sources are not considered evidence of corruption, nor do they represent sufficient grounds for launching an investigation, although the law allows for it.
The Government of Armenia adopted the Unified Tax Code in late 2016, which will become effective in 2018. This document vouches for unified approach to taxpayers, and more simplified tax administration procedures. Also, both the Ministry of Finance and State Revenue Committee have established public-private dialog councils that include representatives of civil society organizations (CSOs), professional organizations, private sector and academia. These fora allow engaging public into tax related legal, administrative and operational issues discussions. Together with the passage of the Unified Tax Code, the creation of councils and automated electronic filing and e-services allowed for improved transparency and reduced opportunities for corruption.
The State Revenue Committee (SRC) SRC recently opened monitoring center, equipped with a state-of-the-art electronic control system, which is supposed to improve and upgrade the process of identification and risk analysis carried out in the SRC. The center will implement expanded and centralized analysis, monitoring of turnover declarations, payment processing and products, import, transport and so on. This will facilitate the process of identification of risks and improve surveillance. The targeted monitoring will allow the SRC to conduct fewer inspections and minimize the interaction of tax officers with the taxpayers. This has the potential of reducing opportunities for corruption.
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.
Armenia is a member of the Council of Europe Group of States against Corruption (GRECO). A GRECO’s March 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. According to the Transparency International (TI) 2016 Corruption Perception Index (CPI) report, Armenia with a score of 33 out of 100 ranked 113th among 176 countries, a steady decline since 2014.
No specific law on NGOs dealing with anti-corruption investigation exists. The government, in close coordination with civil society, has recently approved new legislation on Public Organizations that gives NGOs the right to engage in economic activities, allowing these organizations mechanisms for independent sustainability. The law replaced the 2001 law on NGOs that covered all aspects of the relationship between the GOA and non-governmental organizations
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.
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. Armenia has also joined the global Open Government Partnership initiative.
Resources to Report Corruption
For investigating corruption:
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:
Head of Department for Combating Corruption and Economic Crimes
RA 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