In February 2007 “Hetq” published the following articles: “Apartments for Graduates from Children’s Homes are Unfit to Live In” and “Beneficiaries are to Blame, Says Ministry”. It has taken the General Prosecutor’s Office of theRepublic ofArmenia about a year to take an interest in the issues raised in those articles.

Since 2003 the government of Armeniahas been allocating apartments to those graduating out of the children’s home system and has invested heavily in the program. To obtain apartments the Public Procurement Agency of Armenia announces a tender competition at the start of every year that is open to individuals and organizations alike.

For three years straight, these monies allocated by the state budget have gone to the “Sokol Group”, a company that has never won any of the tender competitions. “Sokol Group”, which has thus been granted the right to obtain the necessary housing, is better known for importing gasoline into Armenia. While other companies have participated in the bidding competition, they all have constantly lost out to “Sokol”.

Accordingly, in the years 2004, 2005 and 2006, three-party contracts to obtain housing have been signed between “Sokol Group”, the ROA Ministry of Labor and Social Affairs and the Public Procurement Agency attached to the ROA government. These contracts stipulate that with the 746 million drams (approximately $2.5 million) allocated to it the “Sokol Group” must hand over some 132 apartments to the Ministry. One year later, the Sate Interests Protection Department of the General Prosecutor’s Office uncovered the fact that during the purchase of the apartments abuses of official authority and illegal commercial activities have occurred, resulting in a losses of some 53 million drams to the government.

In the Prosecutor’s April 28th statement it is noted that Dzonik Margaryan, Head of Administration at the Ministry of Labor and Social Affairs, who signed the above contracts on behalf of the government violated the specifications of the law on “Licensing”; specifically that mechanisms to inspect and verify the prices during the purchasing process weren’t specified in the contracts. It also notes that “Sokol Group” Chairman Liova Aghababyan, without specific permission, engaged in commercial activity subject to licensing.

In the Prosecutor’s statement notes that, “In the end, our investigation of only 12 of the 132 apartments revealed that they were purchased at 53 million drams higher than market prices, resulting in a loss to the government. Given this the State Interests Department has initiated a criminal case based on Article 308, Section 2 (abuse of official authority) and Article 188, Section 3 (illegal commercial activity). The case has been forwarded to the ROA Police Department’s Chief Investigations Unit for preliminary examination. But there’s one very important matter missing from the Prosecutor’s statement - how were the apartments obtained at higher than market prices? What actually occurred was that “Sokol” artificially inflated the prices of the apartments it furnished. In reality it bought the apartments at much lower prices. During the years in question scores of the apartments obtained were in a state of disrepair and thus purchased a very low prices. For example, our investigations uncovered that the apartment given to children’s home graduate Igor Kameshko located in the 6th district of Charentsavan was obtained in 2005 for $1,100U.S. The neighbors living next door who knew the apartment’s original owner confirmed this. You probably couldn’t find a cheaper apartment on the market at the time. We weren’t able to find out how much “Sokol” actually paid for it.  Representatives of the company categorically refused to reveal the purchase price. We also weren’t able to find out the price from the Ministry of Labor and Social Affairs. For a variety of incomprehensible reasons, the prices paid for the apartments remain a secret.