In May 2017, the Armenian government invited Armand Arton, the president of Arton Capital (registered in Hungary) and other company representatives to Armenia.
At the meeting, company representatives sat down with officials from Armenia’s Ministry of Economic Development and Investments to study a scheme whereby Arton Capital would advise the government on how to best attract foreign investment.
Regarding their visit, Armenia’s Ministry of Economic Development and Investments published a press release entitled, “Cooperation between the Ministry and “Arton Capital” company will contribute to attracting foreign investments”.
For the past few months, Hetq has tried to find out the price of that cooperation. Neither the Ministry nor Arton Capital has divulged the cost of the contract to Hetq. Such information, it turns out, is unavailable due to a confidentiality clause in the contract.
In Hungary, Arton Capital has been accused of providing its financial and other services at “unusually high” prices. It was Arton Capital’s track record in Hungary that led Hetq to enquire about its activities in Armenia and the cost of the cooperation contract.
According to an August 25,2017 article that appeared in the Hungarian periodical Atlatszo, Arton Capital was one of the companies selling residency bonds to foreigners under a government program. The article says that those wishing to take part in the program paid EUR 300,000, and were then allowed to file for residency in Hungary. The bonds weren’t sold directly by the government, but by intermediary companies - Arton Capital was one. The intermediary companies made a killing, earning at least EUR 29,000 on each bond they sold. (Shrouded in controversy, the program has since been ended.)
What the article focuses on isn’t the bond program itself, but rather the fact that Arton Capital’s Budapest office was burgled in April 2017 and a safe containing EUR 1.9 million was reported stolen. A computer containing important data about the residency bond program was also reported missing.
Arton Capital’s Budapest office (Source)
Atlatszo sources close to the investigation say that the alleged break-in never took place at all, and that it was actually a self-burglary. “The theory of self-burglary becomes even stronger if we consider that investigators have not found any links to known burglar gangs or to criminals specializing in breaking into safes,” the article notes. The newspaper describes the case as “politically sensitive”, adding that police are disinclined to investigate the matter.
The Geneva-based Investment Migration Council (IMC), in conjunction with Transparency International Hungary, published a report about the residency bond program.
The report states: “There are strong indications that the Hungarian Residency bond programme (also settlement bond programme, or investment immigration programme) does not contribute to the Hungarian economy but is used for enrichment of a number of politically influential individuals in the country and companies they cooperate with.” (Arton Capital being one of those companies)
Continuing, the report states: “The real beneficiaries of the Residency bond programme are those – dominantly offshore – companies which enjoy monopolies over their respective geographical areas to act as mediators between the investors and the Government Debt Management Agency.”
“Their service fees are unusually high and the final beneficiaries enjoying the profit cannot be identified,” conclude the authors of the report.
The report notes that, “Arton Capital objected, through lawyers, to various elements of this report and was given an opportunity to set out its position, but declined to do so.”
In his reply to Hetq, Arton Capital Press Secretary Rupert Wright wrote: “Arton Capital strongly rejects the findings of the report. Prior to its publication Arton Capital contacted Transparency International and offered to help review the report for factual accuracy. This offer received no response.”
Wright added that the company has hired the British law firm Schillings to defend its interests and preserve it corporate reputation.
In his reply to Hetq, Wright also attached a statement by Schillings rebutting the findings of the report. The reply notes that Arton Capital has filed a suit in Dubai against the IMC.
The Schillings rebuttal reads: “Arton’s fees are entirely in line with industry standard and the fees charged as part of the Hungary programme are relative to those charged in other European jurisdictions for similar programmes. The fees charged include all commission to agents and consultants, taxes and expenses relating to the application process (e.g. government application tax, legal, translation and legalisation fees). Arton’s fees fully reflect the overhead costs involved in the complex application process which includes robust due diligence and legal procedures.”
Arton Capital also claims that it is the only member of the residency bond programme to operate using a Hungarian registered company, and that “It was under no obligation to use a locally-registered company however it did so of its own volition and is the only company in the programme to do so.” (Thus, defending its credibility in the matter)
As to Hetq’s query as to whether Arton Capital has a contract or agreement with Armenia, and, if so, what is the cost for such planned services, Rupert Wright replied: “A contract was signed in March 2017 with the International Centre for Migration Policy Development (ICMPD) in Armenia. We do not discuss contract amounts for commercial reasons and confidentiality clauses in the contract.”
Trade Secret: The Amount Paid by the European Union remains a “trade secret”
Arton Capital came to Armenia within the framework of an invitation of the International Centre for Migration Policy Development (ICMPD) which implements the project Support to Migration and Border Management (SMBM) in Armenia funded by the European Union. In other words, the funds paid to Arton Capital, the amount of which isn’t published, was paid by the European Union.
The SMBM project has its own website. In September of this year, it published astatement of the work carried out by Arton Capital in Armenia.
Accordingly, as of September 12, “Arton Capital proposes a structure and implementation modalities of a possible Armenian programme to attract passive investments of wealthy foreigners, leading to residency and ultimately citizenship.” (That’s to say, invest in Armenia and you’ll be on the fast track to citizenship)
The SMBM website says that central elements of the Arton Capital program, presented to the Armenian government in its September 12 investor immigration assessment report, will include, “The development of investment options, compliance and due diligence and marketing. The report put an increased focus on the project`s strengths, weaknesses, opportunities and threats, as well as presented risk factors and risk mitigation strategies. According to prognoses, the program can become a reliable source of FDI with projected accumulated net revenues of more than US$100 million over a period of 6 years.”
On the face of it, Arton Capital alleges that it has been busy preparing the assessment report. In its reply to Hetq, the company wrote: “Arton Capital has completed the assignment as requested and has formally submitted a report of recommendations to the client, which is translating it into Armenian.”
The cost of the contract, however, remains a secret. Not only has Arton Capital failed to disclose the cost, but so has the Ministry of Economic Development and Investments. (Deputy Minister Tigran Khachatryan only provided information on the company’s international experience)
“The company has offices in fifteen cities, and has attracted various countries in its program offering citizenship in return for investment. That investment has amounted to more than US$ 3 billion,” Khachatryan wrote.
Carel Hofstra, who heads the ICMPD office in Armenia (the organization implementing the project), also hasn’t revealed the cost of the contract to Hetq.
Mr. Hofstra limited his reply by saying: “The International Centre for Migration Policy Development, as part of our ongoing co-operation with the Armenian Government on migration issues, has contracted Arton Capital after a competitive process in which several consultancy companies providing similar services were involved.”
He goes on to say: “These companies were selected based on Internet research. Arton Capital was chosen on the basis of their competitive pricing and previous experience. I hope you will understand that I cannot relay the exact amount of the contract, but it was very competitive for an international consultancy.”
Top photo: Arton Capital representatives at a meeting in Yerevan at the Ministry of Economic Development and Investments