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Opinion on manifestations of corruption during construction of Yerevan city center

Large-scale urban development programs were launched in Armeniafollowing the RA Government Decision N774 of 25 November 2000 “On Yerevan City’s Northern Avenue Construction Project” and subsequent decisions on property alienation and land allocations for construction.[1] At the same time, these programs were marked with massive deprivation of citizens’ property and forced displacement constituting gross violations of human rights stipulated in the RA Constitution and international conventions. Illegal processes occurring under the guise of “state needs” were also accompanied with symptoms of corruption that reverberate and continue up until the present. 

In fact, programs on the construction of  Northern Avenueand, later other areas in the center of Yerevan, were adopted behind close doors by a few officials with the  sole intent to make profit. It was particularly apparent in view of the unhidden, personal interest of then  President Robert Kocharyan in construction programs[2] and boosting entrepreneurial activities of a few at the expense of the distorted fates of thousands of citizens’ and the destruction of the city’s historical and cultural heritage. These processes were carried out by the Yerevan Municipality based on illegal decisions of the RA Government and were accompanied by criminal inaction and/or actions supporting illegal activities by other respective state institutions, including oversight entities, law enforcement bodies and the judiciary. These actions and/or inactions are detailed below.


Illegal decision-making processes

  • Construction processes in the center of Yerevanwere carried out in violation of the RA Constitution (1995). Article 28 stipulates that “the property may be alienated for the needs of the society and the state only in exceptional cases, based on the law and with prior equivalent compensation.” Pursuant to the Decision of RA Constitutional Court N92 of 27 February 1998, a person’s private property could have been alienated as substantiated by part 2 of Article 28. Without a person’s consent, the right to property could have been ceased by the state only in case of adoption of a law on a particular property. Such a law would justify the supreme importance and significance of the alienation of property and state, which needs of the society and the state will be satisfied through the alienation of property. Nevertheless, the lack of such law at that moment did not prevent the Armenian authorities to illegally promote their ambitious urban development programs. 

    According to theRA Constitutional Court’s above-mentioned decision N92, the authority to prescribe the right to real estate alienation belonged exclusively to the National Assembly of theRepublicofArmenia. Whereas the RA Government was directly prohibited to set forth a procedure of property alienation for society and state needs that could entitle it to alienate the property.

Pursuant to the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocol 1 on the Protection of Property Article 1, ratified by theRepublicofArmeniain 2002 “every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.” RA Government decisions on the construction ofYerevancenter in no way ever addressed “public interest” stipulated by the Convention and “society need” stipulated by the RA Constitution, while the speculated exclusiveness of “state need,” was never justified within the context of expropriation of people’s property and actual evictions to the street.

Furthermore, according to  European case law, deprivation of property occurred in order to confer a private benefit to a private party cannot be “in the public interest.” [3] Based on this premise, it is manifestly obvious that citizens’ properties in the center ofYerevan were alienated in contravention to the public interest, as they were directly transferred to private companies whose sole aim was to construct buildings and make profit from sales or lease of their premises. The owners of alienated properties were urged to conclude contracts with private companies on the sale of their properties. The state was not considered as party to contracts and actually failed to bear any responsibility, either for the legality of alienation processes, or proper execution of the contracts. 

  • Urban development programs of the Yerevancenter did not undergo environmental impact and urban development assessments as stipulated by Armenian legislation, which put under risk the environmental and construction security. There was a violation of the RA Law “On Environmental Impact Assessment” Article 12, which stipulates the prohibition of implementation of intended activities without a positive environmental assessment conclusion. In line with RA Government Decision N193 of 30 March 1999 “On the Thresholds for Intended Activities Liable to Environmental Impact Assessment” the construction conducted in an area exceeding 1000 sq. m. should have been subject to an environmental impact assessment and respective public hearings.  The construction program of the center ofYerevan, started with 72,000 sq. m. ofNorthern Avenue and expanded to 345,000 sq. m. and yet failed to undergo any environmental impact assessment. 

In accordance with Article 6 of the RA Law “On Urban Development” and the RA Government Decision N96 of 30 March 2002 “On Endorsing the Procedure of Assessment of Urban Development Documents”, urban development  programs were to undergo complex assessment which, among other considerations, had to take into account environmental impact assessment results. Given the failure of conducting environmental impact assessments it is, again, manifestly obvious that urban development assessments for construction programs inYerevanwere not carried out. e 

Also violated was the requirement of Article 14 of the RA Law “On Urban Development” on notification of the planned changes of the environment, intended to be implemented in line with RA Government Decision N660 of 28 October 1998 “On Procedure of Notification on Planned Changes of the Environment and Participation of Representatives of the Public in Discussions and Decision-making on Publicized Programs and Projects”.. Citizens were only notified of alienation of their properties, but they took no part in decision-making processes regarding the given areas.   

  • Prior to the construction inYerevancenter, illegal preparatory work was carried out in order to remove the possible barriers related to protection of the city’s historical and cultural monuments. The Yerevan Mayor violated requirements of the RA Government Decision N13 of 15 January 1996 “On State Registration of Departmental Normative Acts” and failed to submit to the registration of the RA Ministry of Justice, in due time, the “Design of Complex Protection and Use of Historical and Cultural Monuments of Yerevan City,” endorsed by the Yerevan City Executive Committee Decision N 6/18 of 12 April 1991. As a result, the document became invalid. 

In addition, the Yerevan Mayor himself adopted Decision N1137 of 30 August 2000 on invalidating the above-mentioned decision of Yerevan City Executive Committee. As a result, Yerevan city “ceased to have” historical and cultural monuments subject to protection and for 4 years, until the adoption of the RA Government Decision N1616-N of 7 October 2004 “On Approving the State List of Immovable Historical and Cultural Monuments of Yerevan City” and the authorities were free to damage and destroy at least 26 monument-buildings on the place of construction.[4] 

It is noteworthy that the RA Prosecutor General’s Office revealed the fact of monuments’ destruction  in 2005, however up until now no one has been subjected to criminal liability.  

Discretionary valuation of property and compensation

  • Prior to launching the property alienation process, based on the RA Government Decision N1151-N of 1 August 2002, the authorities deprived the citizens of the opportunity to register the right to property for the real estate that they legally possessed. Later the RA Constitutional Court, in its Decision N630 of 18 April 2006, judged that the given decision of the RA Government, along with a number of Articles of RA Civil Code and RA Land Code, were in contradiction with the RA Constitution. As a result, a great number of citizens who had the right to ownership and to use of land plots and buildings, were unable to register their property in real estate cadastre bodies given the endorsed ban on their property and, hence, were deprived of their possessions.   

The rights that failed to be registered by the State Committee of the Real Estate Cadastre under the RA Government, naturally, were not reflected in the reports by respective valuation entities and in the proposed compensation nor were citizens compensated later in the outcome of court rulings. 

  • Citizens’ properties were valuated by a number of licensed organizations hired by construction companies,  mainly by Artin Enterprise Ltd.. These organizations carried out the valuation work in a discretionary manner, valuating the property as low as possible and by using various approaches for different citizens,[5] provided that the State Committee of the Real Estate Cadastre under the RA Government kept in secret the baseline data needed for the valuation of real estate related to the real estate transactions in those areas.[6]       

Compensation proposed for the property of the residents of Yerevancenter was considerably lower than their market price as was proven by the higher values of property obtained by independent experts. For example, Artin Enterprise Ltd. hired by the construction company valuated a 303 sq. m. plot of land and 143.18 sq. m. residential area in Yerevan 3/2 Abovyan Street for 104.222 EUR, whereas Elephant Realty Ltd., an independent valuator, estimated it at 335.235 EUR.[7] Despite significant differences between the values, the results of independent valuations were not taken into consideration byArmenia’s courts. 

Suspicious relations with constructors

  • The valuable property located in the center ofYerevanthat belonged to thousands of citizens was transferred by the authorities to another group of people through illegal and non-transparent processes, by casting doubt on the integrity of relations of the given privileged group with the authorities. 

The RA Government abused its discretionary powers, as stipulated by Article 48 of RA Land Code, by granting the right to implement large-scale and big- investment projects, as well as to property acquisitions inYerevancenter, to a number of unknown, and in several cases, suspicious companies without any official substantiations and without tender. 

  • By the RA Government Decisions, the YerevanMunicipalitywas allowed to grant the plots of land to constructors without tender through direct negotiations, giving them a corruption leverage to also concur on possible illegal payments and processes. Thus, the Yerevan Municipality, using its authorities and “through negotiations”, granted plots of land to Vizkon LTD., the director of which Pavel Anderson transferred 550,000 USD to Yerevan Municipality via Simon Aghazaryan, another constructor who had direct relations with the Municipality and who is currently accused of appropriation of particularly large amounts of property from various citizens by fraud. Actually, the Yerevan Mayor made this decision by exceeding his authorities and making amendments to RA Government Decision by changing the name of one of the granted companies Avant-Tour Ltd. to Vizkon Ltd.[8] It is also interesting that a number of companies commissioned the designs of their projects to Narek Sargsyan, the Chief Architect, Deputy Mayor of Yerevan City in 1999-2004 and the author of Yerevan center urban development, by paying him as a private person or through the business company controlled by him. [9] 

In view of such processes, it is not surprising that the city authorities, without refraining from illegal means, attempted to expropriate the citizens’ properties paying as low a price as possible by serving the interests of construction companies and reducing the amounts of compensations to be paid to citizens by them. 

  • A considerable number of constructors ofYerevancenter, determined by RA Government decisions, possess “suspicious” biographies. 

Some companies were founded and/or administered by the same people, while the reasons for being concealed under various company names was not clear. . For example, Pavel Anderson is the director of Gradshininvest Ltd.  and Vizkon Ltd. and the founder of Gapbnakshin Ltd. Gagik Papoyan is the Director of Gapbnakshin Ltd. and Narekgrad Ltd. and founder of Narek-Shelter Ltd. Simon Aghazaryan is the director of Gapbnakshin Ltd. and director and founder of Narek-Shelter Ltd. Eduard Melikyan is the director of Glendale Hills CJSC, AG Development CJSC, City Center Development CJSC and the founder of EMC CJSC. Samvel Mayrapetyan is the director of Local Development Ltd., Merkator Ltd. and Progress-Armenia Ltd. Galina Yedigaryan is the director of Makared CJSC and North Island CJSC. 

Some companies, such as Time Zero Ltd. and Makared CJSC are registered in offshore zones in the Virgin Islands andBahama Islands, respectively, which puts under question the legitimacy of their income sources. There is no information available, even on internet, on the founding organizations of some companies (for instance, on Russian Ches-Tour CJSC - the founder of Griar CJSC or American En Duxi (sp) Ltd. - the founder of American Right and Cupper (sp) Ltd., etc.). One of the founders of Griar CJSC is a government official - Ara Dolunts, Deputy Regional Governor of Syunik Marz.  

In the name of “state needs” the constructors acted in the atmosphere of absolute permissiveness. For example, Vizkon Ltd. received the right for construction and carried it out without having a relevant license. In addition, after obtaining the plot of land its representative confessed that it is not clear what is going to be built. Gagik Papoyan, director of Gapbnakshin Ltd. and Simon Aghazaryan, director of Narek Shelter Ltd. captured a particularly large amount of property from various citizens by fraud and failed to implement respective contractual obligations on providing apartments. And, although, the residents have petitioned law enforcement entities for years, these people are being investigated now.[10]    

In general, the list of names of stockholders of closed joint stock companies is unknown, which creates doubt on the integration of business companies and state institutions. The issue is particularly noteworthy in respect with Glendale Hills CJSC, which evidently plays a leading role in the construction projects both inYerevanand in other areas of theRepublicofArmenia. By RA Government decisions, Glendale Hills CJSC was granted numerous plots of land,  for construction in various areas inArmenia, without tender. It  also received an actual monopoly for reconstruction in the earthquake zone through procurement from the state budget: Glendale Hills CJSC is the only company implementing the state project, that cost 39 billion AMD (~73 million Euros), to construct residential buildings for families who became homeless after the 1988 earthquake. It should be mentioned that the government continues to cooperate with Glendale Hills CJSC without consideration of numerous warnings regarding the low quality of construction carried out by it and its failure to pay the contractual workers. 

  • Actions or inaction by the RA Government aimed at protection of the granted construction companies are doubtful. The public has always been denied access to urban development documents related to the construction in the center of Yerevan– architectural-planning terms of reference, demolishment and construction permits, expert opinions, perhaps caused either by the absence of those documents or desire to hinder from the public.[11] 

As stipulated by Article 6 of RA Law “On Alienation of Property for Society and State Needs” it is required to provide data on construction companies’ sources or guarantees of financial resources. The RA Government has failed to provide this data to the public.[12]   

The neglectful attitude expressed toward monuments, by companies who carried  out construction in the area of historical and cultural monuments, was in no way prosecuted by respective state bodies. In line with relevant obligation pacts, the stones of a number of dismantled monuments were subject to protection by constructors. Meanwhile there are certain facts that may raise questions on their protection and existence. For instance, the Agency of Protection of Historical andCulturalMonumentsunder the RA Ministry of Culture is unaware of the contact information about of Diamond House CJSC, who are charged with the protection of monuments in 86 and88 Aram Street. No information is available about the stones regarding monuments in 2/8 Amiryan and 20a Nalbandyan Streets, under the responsibility of SGI-Invest Ltd. and Renco Armestate Ltd. Dismantled stones of the monument in 28 Pushkin Street have disappeared from the area, where construction is carried out and responsibility for protection of stones is held by Glendale Hills CJSC. 

Biased and illegal judgments

  • Citizens were deadlocked by the authorities. They were urged to sign contracts waiving their properties by receiving compensation that was not equivalent to their possessions. Those that declined to sign the contract were deprived of their property by the court. Numerous citizens that disagreed with the size of their property valuation and the proposed amount of compensation, refused to sign the contracts. Applications were filed in courts against them by the “Northern Avenueand Cascade” project implementation office.  

In all known cases, the Armenian courts made biased rulings, and neglected the norms of human rights protections stipulated by the RA Constitution and international conventions and theRA Constitutional Court’s decision N 92. They actually legalized the processes of unlawful deprivation of properties of Armenian citizens and, hence forced evictions of citizens to the streets. 

  • As became clear from the statements of Pavel Anderson, director of Vizkon Ltd., one of companies that carried out construction work in the center of Yerevan, besides carrying out centralized orders to deprive citizens of their properties by different methods, judges also had personal interests. He confessed that he personally bribed the judge of the first instance court, who was examining his case, by paying him 5,000 USD. For the court of cassation to make a judgment in favor of construction company Anderson paid 100,000 USD by the instruction of the Chief of Staff of the RA President.[13] 

Issues regarding judgments by European Court of Human Rights

  • In seeking justice, more than twenty families had to file applications to the European Court of Human Rights (ECHR), who has made a number of judgments and decisions recognizing the violation of the citizens’ right to property. However, provisions on ECHR judgments and decisions regarding compensation pose new questions, which are of special concern given that they may guide further processes of alienation for society and state needs. 

It is disturbing that, similar to Armenia’s practice, ECHR judgments did not take into consideration the citizens’ plots of lands covering hundreds of sq. m. in the center of Yerevan. For example, in the case of Tunyan and Others v. Armenia, the court completely ignored the possession of  240 sq. m. plot of land in 50 m. distance from the Republic Square, which she rented by a special right and could have become the owner by merely paying its cadastre value. She was not able to do so, as there was a ban on property endorsed by the RA Government Decision N 1151-N. 

Likewise, the ECHR did not consider the property, the right to which the citizens could have obtained through state registration, but which they were not able to do because of the ban by respective government decisions. Thus, the applicants of Tunyan and Others v. Armenia and Danielyan and Others v. Armenia cases had respectively 30 and 120 sq. m. non-registered premises adjacent to their houses which were not addressed in any way by the ECHR despite the availability of case law. 

On the other hand, it was unclear based on what methods, or as a result of what political negotiations the court proposed compensations for buildings and constructions. Those have failed to reflect due market prices for property in Armeniaand were contradictory. Thus, according to the deputy head of the State Property Management Department under the RA Government, the price of land, per sq. meter in Yerevancenter fluctuates within the range of 1,500-2,000 USD,[14] which is approximately 1,135-1,514 EUR.[15]  By its 9 October 2012 judgment in Danielyan and Others v. Armenia case for a 130 sq. m. area situated in the same location, the ECHR proposed a compensation of 85.000 EUR, which together with 82,600 USD (~62.560 EUR) made about 147, 560 EUR,  or 1,135 EUR for 1 sq. m. In the Tunyan and Others v. Armenia case for the applicant’s house, covering 89.25 sq. m. and located in the same place, the ECHR proposed a 30,000 EUR compensation that was 336 EUR for 1 sq. m. in area. 

Proposing nonequivalent compensation formulated by incomprehensible approaches, the ECHR, actually legitimizes the practice of expropriation of citizens’ properties taking place inArmeniathrough similar incomprehensible processes and with nonequivalent compensation. As a result, it puts under question the possibility of justice for citizens and respectively, prevents actions  taken to achieve it. 

Corruption risks boosted by ECHR judgments and decisions are also of concern. Those suggest that compensations, instead of being paid from the state budget, engage construction companies. RA Government proposals approved by decisions on Baghdasaryan and Zarikyants v. Armenia, Gharibyan v. Armenia and Ghasabyan v. Armenia cases are confusing, since compensation provided by them are also expected to be carried out at the expense of constructors. The ECHR fails to consider the obvious and criminal cooperation between the RA Government and constructors throughout the illegal construction processes carried out inYerevan center and, in fact, gives consent for the citizens’ disputes with the authorities to be settled at the expense of private construction companies through non-transparent negotiations, under suspicious circumstances.   

Taking into consideration the whole process of the construction ofYerevancenter, together with its corruption manifestations, and the collusion between the authorities and the given constructors, further stimulation of such relations and practices by prominent institutions of European democracy is unacceptable. 

As was mentioned above, in the summer of 2012, Pavel Anderson, Director of Vizkon Ltd., a company that carried out construction works in the center ofYerevan, exposed certain details through which corruption mechanisms for carrying out property deprivation process become apparent. He pointed out  a  circle of officials representing theYerevanMunicipality, RA Presidential Staff and courts, who had direct participation and personal interest in illegalities and who currently have high positions in the government. Until the present day, P. Anderson’s statements remain unanswered byArmenia’s law enforcement bodies, and they refuse to see scandalous revelations as a basis for criminal prosecutions. It is noteworthy that no criminal case was opened against P. Anderson for perjury either, and the people accused of corruption did not apply to court for refuting slander. Such processes cast doubt on the existence of political will of authorities to detect crime and, hence, guarantee the continuity of illegalities and further impunity. 

Given actual patronage in corruption transactions, accompanied by shortcomings of the RA Law on Property Alienation for Society and State Needs that fails to set forth criteria for justification of the exclusivity of “exclusive supreme public interest” and to ensure the state’s responsibility along the alienation process, the mentioned judgments of ECHR may cause too negative effects. 

These judgments may boost property expropriation practices in Armenia accompanied with nonequivalent compensation, as well as trigger countrywide projects of antisocial and anti-environmental nature ( in particular, mining and urban development) that serve private interests and  expand daily under the guise of “exclusive supreme public interest.” Nonequivalent compensations and deterioration of the environment may result in the extreme poverty of the country’s population and increase the volume of emigration. Complaining about such processes and attempting to restore justice will not be appropriate any more. Actions securing justice are required. 

[1] RA Government Decisions  N774 of 25 November 2000, N645 of 16 July 2001, N950 of 5 October 2001, N1150-N of 1 August 2002, N1151-N of 14 August 2002,  N1169-N of 1 August 2002, N1232-N of 11 September 2003, N399-N of 4 March 2004 and  N909-N of 17 June 2004. Later after adoption of Law on “Alienation of Property for Society and State Needs” RA Government by its Decision N108 N of 25 January 2007 summarized the list of areas and persons who obtained areas recognized as exclusive supreme public interest within administrative districts of Yerevan city.

[2] See http://www.youtube.com/watch?v=UFtgy3tMjgM    

[3] James and Others v. The United Kingdom.

[4] See http://genproc.am/am/46/item/581/ ; http://genproc.am/am/47/item/593/ and http://genproc.am/am/47/item/705/

[5] For instance, the property belonging to R. Avdoyan, residing in 21 Lalayants Street was valued 849,62 USD  for sq. m. (~644 EUR), which is 4 times more than the value of the property of others living in the same area. While the same citizen who owned only 20,16 sq. m. area was provided with 600 sq. m. plot of land through a direct sale for the cost of 13% of compensation for building a house.

[6] For instance, response  H. Abrahamyan, deputy director of Vizkon Ltd. of 31 July 2008 to citizen M. Babayan

[7] ECHR Grigoryan and others v. Armenia case 

[8] See http://hetq.am/arm/articles/16450/amerikahay-pavel-andersony--asum-e-or--kasharel-e--qaxaqapetarani--u-dataranneri-nerkayacucichnerin-video.html  

[9] See http://www.youtube.com/watch?v=EN078DF1q_Y&feature=youtu.be, project design documents ofNorthern Avenue buildings 

[10] http://hetq.am/arm/articles/15577/artonyal-mexadryaly-ov-e-darnalu-qavutyan-nokhazy.html, http://hetq.am/arm/articles/15960/khardakhutyan-irakan-zohery-kam-inchpes-en-pashtonyanery-hamalrum-irenc-unecvatsqy.html

[11] In reply to the inquiry of the Victims of State Needs  NGO on March 12, 2010 to get access to architectural-planning terms of reference, construction permits and project design documents, Yerevan municipality’s Yerevan Construction Investment Project Implementation Unit SNCO stated that those documents are protected under copyright and offered to apply to construction organizations.

[12]In reply toTransparencyInternationalAnticorruptionCenter’s inquiry of 27 April 2007, RA Government and Yerevan Mayor failed to provide information on former construction activities and sources of their financial resources of companies carrying out  construction inYerevan center. 

[13] See http://hetq.am/arm/articles/16450/amerikahay-pavel-andersony--asum-e-or--kasharel-e--qaxaqapetarani--u-dataranneri-nerkayacucichnerin-video.html

[14] See http://www.azatutyun.am/content/article/24749498.html

[15] One USD is equal to 0.757 EUR as for 24 December 2012 data.

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