Tuesday, 26 September

Money Laundering, Offshore Transactions: Nairit’s Rubber Money Flows Into Pockets of Russian & Armenian Officials



Kristine Aghalaryan
Edik Baghdasaryan 

Part 4

Nairit isn’t able to pay wages to its workers because the plant’s former director, Vahan Melkonyan, along with Minister of Energy and Natural Resources Armen Movsisyan, entered into an arrangement whereby they would obtain the rubber produced at cheap prices and then resell at double or triple the price. Over the years, InterCaoutchouc (UK), the offshore company set-up by Vahan Melkonyan, obtained 10,000 tons of rubber in this manner. Melkonyan obtained the product at $2,400 a ton and then resold at $4,100-$7,800. He’s thus racked up a tidy profit of at least $25 million. Only Melkonyan knows how much went to line the pockets of various Russian and Armenian officials. As to how   the payments were made, in cash or to their offshore accounts, remains unanswered as well.

Officials not only pocketed the loans received to get Nairit back up and running, but they went out of their way to prevent it from operating. The rubber produced by Nairit was in great demand in Russia, the former Soviet-bloc countries and the United States. Now, a well-known German company has captured the market. Perhaps this was the ultimate goal of Armenian officials? There is no government that hands over the market for the sale of one of its products to some other company. 

How was the rubber sold?

Vahan Melkonyan, the former director of Nairit Plant and the current representative Interstate Bank in Armenia, refused to answer Hetq’s questions. During a telephone interview we said that the questions not only concerned Nairit but those offshore corporations registered in his name. Mr. Melkonyan said it was impossible for us to have any such information concerning him and confidently stated, “I have no offshore registered companies.” Before examining those companies, here’s an excerpt regarding how Nairit went bankrupt.

From 2005 until February 2007, InterCaoutchouc (UK) had been granted exclusive rights for the sale of Nairit Plant  rubber. In other words, InterCaoutchouc served as a middleman. Nairit was prohibited from selling its product directly to another company. Karen Israyelyan, who served as Nairit Plant director at the time, sold 10,000 tons of rubber to InterCaoutchouc at $2,400 a ton ($24 million). What’s interesting is that these transactions do not appear in the financial books of InterCaoutchouc. This means that the sale of rubber was transacted through other companies.

After the sale of the plant, from 2007 onwards, Nairit rubber was sold by Rhinoville Property Ltd. (90% shareholder) via two companies operating in Russia – Rhinoville Ltd and Nairit Ltd.

Documents in our possession show that InterCaoutchouc, and later on Rhinoville Property Limited, resold Nairit rubber at very high prices. Russia’s “Vimpel” company, the “Chapaev Production Facility” in the Russian town of Cheboksary, and Russia’s Orenburg “ORT” CJSC, purchased rubber at the following prices.

                    “Vimpel”

“Chapaev Production Facility”

«ORT» CJSC

 

 

 

 

 

 

 

 

 

 

 

 

 

Price(rubles)

Price(US $)

Price(rubles)

Price (US$)

Price(rubles)

Price (US$)

2006

 111000

4100

110000

4100 

110000

4100 

2007

 130000

4500

130000

4500 

130000

4500 

2008

 188800

7800 

188800

7800  

188800

7800  

2009

 180000

6000

188000

7800 

188000

7800  

(U.S. $ amounts according to foreign exchange rates at the time of transaction)

“I told the minister that I could sell at better rates. I entered into an agreement and received the money. I wanted to organize the delivery but the minister telephoned and told me not to deliver. I said we would assume heavy losses, but he told me that wasn’t my concern. A week later they sold the plant to Rhinoville,” recounts former Nairit director Karen Israyelyan. He was subsequently dismissed from his job.

Vahan Melkonyan’s offshore company

There are numerous offshore companies involved in the sale of Nairit Plant and its history of loans. These companies, in turn, are owned by other offshore companies, and so on in a never ending chain. Naturally, such a scheme was meant to cover up all traces of criminal activity.

 InterCaoutchouc, registered in Wales, was one such company. Our colleagues abroad assisted us in obtaining information about the company. InterCaoutchouc was established in February 2005 and was dissolved in February 2011. The company’s shareholders were: 

Charrydale Limited - 40%

Lankwood Finance Limited - 10%

Egler Corporation - 50 %

Charrydale Limited is registered in the British Virgin Islands. The sole shareholder is Vahan Melkonyan, former Nairit Plant director and currently Interstate Bank’s representative in Armenia

Lankwood Finance Limited is also registered in the Virgin Islands and Vahan Melkonyan is the sole shareholder.

Egler Corporation is registered in Belize. We haven’t yet found out who the shareholders are. Mr.S. Kulikov, former president of Interstate Bank, is a likely candidate

According to company registry data, Vahan Melkonyan’s Charrydale Limited owns 120 shares. Melkonyan’s Lankwood Finance Limited owns 30 shares. Egler Corporation owns 150 shares. 

Later, Vahan Melkonyan seems not to have shared something with Egler Corporation. Melkonyan’s two companies became entangled in a court case with Egler over disagreements regarding the distribution and management of shares they owned in InterCaoutchouc. We deduce this from the verdict handed down by Jules Sher QC hat we obtained from the High Court of Justice, Chancery Division

 InterCaoutchouc has had a number of directors, including former Interstate Bank employee Tatanya Serbkova. She served as director from February 18, 2005 until September 21, 2007. She was replaced by Aleksandr Yegelski. Sergey Sklyarov was appointed director on June 18, 2008. Ashot Pashinyan was director in 2009.

We were able to get in touch with a former employee of InterCaoutchouc. He informed Hetq that Vahan Melkonyan managed the company’s accounts. The employee confirmed that S. Kulikov owned shares in InterCaoutchouc. He didn’t rule out the possibility that former Interstate Bank president Anatoly Turkadze also benefited from these transactions. According to the same source, not only Armenian but top Russian officials as well benefitted from the Nairit transactions.

The participation of former Interstate Bank deputy director Sergey Kulikov in the matter is clear since his wife, Anna Barisovna Kulikova, was also a director of InterCaoutchouc. This fact is noted in a document. In 2006, InterCaoutchouc made a payment to Russia’s pension fund. The payment was made in the name of Anna Kulikova, listed as the company’s director.

"Accidental” Coincidence

It turns out that Vahan Melkonyan is an expert in offshore companies. Furthermore, he and his two sons formed “M-V-M Consulting Company”, a firm providing legal advisory services. The chief director is Samson Melkonyan, Vahan Melkonyan’s eldest son. The company is well versed in providing clients with professional advice in setting up offshore companies. Their website even offers a special section on the matter.

When obtaining information regarding the offshore companies that have played a role in the Nairit loan story, several coincidences are strikingly apparent. There is no doubt that all the companies are closely linked and that, given such a scenario, Nairit’s going bankrupt was no accident. For example, a company called Cls Secretaries Ltd. was carrying out the secretarial duties for InterCaoutchouc and was doing the same for Drayton Finance Limited and Latheron Properties Limited; two companies which own shares in Rhinoville Property Limited.  

The addresses where InterCaoutchouc  and Latheron Properties Limited are registered are the same.

And here’s another interesting coincidence. The registration address of G.S.L. Law & Consulting (UK) Limited, the company who handled the registry   of these companies and all the transaction paperwork, is the same as that of Rhinoville Property Limited.   G.S.L. Law & Consulting (UK) Limited-has branches in Russia, Cyprus, the Netherlands and the Virgin Islands. Documents we possess reveal that the registration, their subsequent sale, and other issues, were handled by the Russian branch. Vahan Melkonyan has very close ties with Moscow and he makes frequent visits to Russia.  

 Finally, there is an important fact appearing in the 2010 financial statement of Rhinoville Property Limited. It clearly exposes the connection of Rhinoville Property Limited (who own 90% of Nairit Plant shares), the other offshore companies, and Vahan Melkonyan in all of this.

According to the 2010 financial statement of Rhinoville Property Limited, $8.8 million was “written off”. The written off amounts belonged to two companies of Vahan Melkonyan, and another to Ashot Pashinyan. ($19,000 was written off to a third company).

Charrydale Limited – more than $8 million

Lankwood Finance Limited - $600,000

Ashot Pashinyan – more than $30,000

The statement shows that that Rhinoville Property Limited gave the above amount as a loan to these companies and Ashot Pashinyan. Since the payback deadline had already expired, Rhinoville Property Limited had given up hope of ever getting paid back. Thus, it decided to “donate” the amounts to the above-mentioned companies and individual, thus writing off the amounts in its books.

As we’ve already mentioned, Ashot Pashinyan served as InterCaoutchouc’s director as of November 2009, the period when InterCaoutchouc wasn’t acting as the seller of Nairit rubber but continued to legally exists and make transactions.

What we end up is a troubling reality. $170 million is squandered and stolen in Armenia, a country in the midst of a deep economic crisis and where 35% of the population officially lives in poverty. The regime brandishes a sword in its declared fight against corruption in one hand, while the other hand is busy stealing and squandering from the people.

It goes without saying that the RA government, particularly the Ministry of Energy and Natural Resources which owns 10% of Nairit, is responsible. The government knew about the tens of offshore and Russian companies that Nairit set up and the transactions carried out. Vahan Melkonyan, Interstate Bank’s representative in Armenia, and Nairit director at the time of the loans, can present a detailed picture of how this tangled financial puzzle siphoned off all those millions.  RA Prime Minister Tigran Sargsyan is also full aware of what happened since the sale and loan transactions occurred under his watch. Adding insult to injury, Ashot Sargsyan, one of the Nairit Plant deputy directors, is the PM’s brother,

 It’s hard to predict if any of these officials will ever be called to account. But neither can these same officials pretend not to notice the facts staring them in the face.

Photo: Armen Movsisyan, Vahan Melkonyan, Prime Minister Tigran Sargsyan

(This investigative article is a collaboration between Investigative Journalists of Armenia and the International Consortium of Investigative Journalists. Based in Washington DC, ICIJ is an independent network of reporters who work together on cross-border investigations.) 


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Comments (4)
1. for hayastan13:53 - 5 April, 2013
INDEED WHAT A SHAME! The stolen money should be returned to the Armenian state budget. PM should be dismissed and our corrupt oligarch’s better stop to pay for charity events (including building churches) when the same money being stolen from state budget!
2. haykUS23:09 - 5 April, 2013
Only hope that Raffi can help clean up and confiscate all that belong to our country. Only Kocharyan stole billions from us. Diaspora must interfere and stop helping these crooks continue rob our country. Whoever helps them, inlcluding disapora Armenians will be beheaded in the future by our people.
3. Robert Davidian12:23 - 7 April, 2013
Anyone found guilty by an independent court of stealing from the people should pay the money back and be sentenced to go to jail! Rule-of-Law will rule Armenia soon!
4. GB02:12 - 10 April, 2013
Russia has oil and stronger military equipments to sell others, therefore Russian oligarchs do not have too much influence with Russian economy system. Poor corrupted landlocked Armenia cannot afford to have Russian style corruption in Armenia!! I wonder about these fat belly Armenian oligarchs, when they will pack up their belonging and leave Armenia for ever!!
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