Through the past ten months, whilst the Government Accountability Project, the UK’s Foreign & Commonwealth Office, the British Ambassador in Armenia and I have been battering our heads against the World Bank’s institutional integrity brick wall, we have been debating why, since the turn of the century, the financial institutions have been orchestrating an escalation of Armenian corruption. The Permanent Representatives of both the World Bank and the International Monetary Fund (IMF) have been watching how billions of dollars worth of Armenian public assets has been stolen by a small circle of state cronies, who have concealed their involvement in the takeover process by working through a variety of overseas organizations. But the institutions have made little mention of the criminal activity, preferring to highlight how Foreign Direct Investment (FDI) has been the spearhead of a remarkable economic boom. The institutions have also overseen numerous financial schemes, which each year have facilitated the embezzlement of hundreds of millions of dollars worth of public funds. But they have praised foreign investment in major construction projects, knowing that foreign investment has been virtually non-existent and the construction has simply been the laundering of those funds.
When in 2004, Vahan Hovhanissian’s Parliamentary Commission raised the corruption problem with the World Bank Country Manager, he responded with aggression, and made sure that unwelcomed parties paid for their inquisitiveness. And when the same Parliamentary Commission presented documents to the Resident Representative of the IMF, indicating a scam of more than 100 million dollars, knowing Armenia has a ‘Technical Assistance’ agreement, under which the IMF is obliged to monitor and normalize all financial activity within the Armenian state system, the representative said that he had ‘Noticed the Problem’ and explained that his intervention to stop the scam was ‘Dependent on his Conscience’. It turned out that his conscience was not all it could have been; the scam went ahead, the Armenian people lost another valuable state asset, and the IMF joined its World Bank partner in the release of another glittering report on Armenia’s remarkable economic boom.
Why have the international financial institutions been so supportive of Armenia’s precarious economic boom and why have they been so nonchalant about the major problem of corruption, which has led to what today is already a well-entrenched Armenian autocracy? Could it have been for personal gain, or for collective gain, or in pursuit of a quick economic fix for Armenia, or could there be a more sinister reason? Information that has become available leading up to the February 19th Presidential election gives grounds to believe the reason is the latter, in support of a political agenda.
The corrupt Armenian authorities have been pumping hundreds of millions of their illicitly earned dollars into hundreds of thousands of square meters of accommodation space. But the ever-increasing newly constructed apartment buildings have now stood empty for several years. Moreover, in the past year or two, the quality of construction has deteriorated from the not unimpressive of five years ago, to the decidedly slip-shod of today. Even half-built apartment buildings which have stood like skeletons on the outskirts of Yerevan since the end of the Soviet period are now being rushed to completion, using all manner of unsightly construction materials. And through the past several months, property agencies have sprung up around Yerevan, owned by the same state cronies and their buddies, when apart from those within the inner circle, who may receive a new apartment (or three) in return for services rendered, there is simply no sign of the thirty or forty thousand punters needed to bring Yerevan’s newly constructed real estate to life.
But the people of Armenia should not dismay; their economic boomer babes have got a multi-billion dollar ace tucked so well up their sleeves, that after several years of preparation, ably assisted by their friends in the international financial institutions, only the very best informed have an inkling of the full house the new President is about to slap on his Republic of Armenia table.
Soon after Serge Sargsyan has terrorized himself into the Presidential Palace, all will eventually be revealed. The people of Armenia will see a sudden influx of a new generation of Yerevanites, who will not only move into the spanking new apartments, but who will take up their positions in the booming Armenian economy, and in the new administration. The multi-billion dollar money laundering of the past years will then bear its bountiful fruit, no doubt with more help from the international community, and the people of Armenia will understand why the World Bank’s Department of Institutional Integrity (INT) in Washington should long ago have responded to my claim and open a full investigation into fraud and corruption in Armenia World Bank projects.