How to Deceive the Public: Armenia’s Ministry of Culture's "Book World" Project A Land Grab Scheme
In 2012, when UNESCO designated Yerevan as the World Book Capital, the Ministry of Culture managed to develop and present to the government a project "in line with the year": on July 26, 2012, the government adopted decision No. 1052-A, an investment plan to build Book World, a multifunctional complex at 36 Yeznik Koghbatsi Street in Yerevan.
The decision begins with this preamble: “To take note that Sohocenter limited liability company has offered in connection with the 500th anniversary of Armenian printing and UNESCO recognizing Yerevan as the World Book Capital in 2012 to build the Book World multifunctional complex…”
The decision was adopted and the property rights to this state-owned land in downtown Yerevan were registered to Sohocenter LLC, but till today there is no Book World on the site. The project proposed to the government was simply a means to appropriate the area.
Armenian government "didn't know" there was no Book World
The area sold to Sohocenter is adjacent to the Tchaikovsky Music School. The area is 335.5 m2 and includes the school's 300 m2 of land and 33.5 m2 boiler house. A 2012 Yerevan City Hall decision allocated a new postal address to the property divided from the music school: 36/3 Yeznik Koghbatsi St.
This appears also in the cadastral documents, but the distinct address was virtually impossible to find.
There was no hint or mark in the areas adjacent to the music school, and it was hard to understand where one must search for the Book World, or whether construction was underway. Prior to this, we had contacted the government to inquire about the status of the project. The government, in response, informed us that construction works for Book World had begun.
Finding no trace of the multifunctional complex, we contacted the municipality to get the construction permit for Book World — but it seems the construction permit had long expired.
If Sohocenter was, in fact, carrying out construction, as the government had informed us, then it should have had an extension on its construction permit, but this was missing from the documents.
And when we again contacted the municipality, to get a copy of the administrative proceedings launched against the company for building without an extension on its construction permit, only then did we get a response that construction works for Book World never began.
"When" is not defined and might also become "never"
The Yerevan Municipality, as an inspection and supervisory body, cites the Ministry of Urban Development, while head of the Ministry's State Urban Development Inspectorate and chief urban development state inspector Aram Melqonyan, in reply to Hetq's query, informed us that the deadline for the construction of the Book World complex is not defined by a government decree.
Sohocenter First Director Nikolai Kostandyan had the same response. He managed the company when the Book World project was presented to the Ministry of Culture. Kostandyan is now the director of the Komitas Museum-Institute.
Minister of Culture Hasmik Poghosyan and Nikolai Kostandyan, photo: designdeluxegroup.com
Asked when they planned to complete construction when they proposed the project, Kostandyan said, "In terms of the construction work, the company had no term commitment".
Nowhere is it mentioned in the contract signed with Sohocenter, which Hetq obtained from the Ministry of Culture, that the land to be acquired must be used for the purpose of building Book World.
And so, Melqonyan, the head of the State Urban Development Inspectorate, and Kostandyan even gave us a gentle and reassuring answer. They could've replied that Book World might not even be built and that the "investment" project was just commerce — with a cultural title and preamble.
In 2014 and 2015, the State Urban Development Inspectorate had planned to conduct annual inspections at Book World, but again — only on paper.
As grounds for not carrying out the inspections, Melqonyan, in the response sent to Hetq, cites a government decision terminating inspections in several agencies. But this decision was only for 2015, and why Book World, for example, was left out of the list of inspections also in 2014 is not specified in the response.
In reality, the complex had to do with books only in name
In 2014, the company presented to the municipality a project to build the Book World multifunctional complex. Though no construction work is underway and the construction permit has expired, if the company were to decide one day to begin construction, the construction project authorized with the city is for a 13-storey business project, only the name of which has to do with books.
An excerpt from the architectural construction section reads as follows: "The building is designed with one basement and 12 above-ground floors… The building's first and second floors are planned as commercial spaces; the third floor, a cafe; from the fourth to the twelfth floor, office spaces."
Asked why the multifunctional complex is called Book World and what it would have to do with books, Kostandyan said, "The plan was to build the Book World multifunctional complex, where there was supposed to be a bookstore."
That there was going to be a bookstore in the building was not mentioned in any of the project documents. And if books are to be sold in any of the commercial spaces, that doesn't make the building a "book world." The books would be part of the multi-story business center only as much as, say, the cafe.
Book World: A means to sell the land without a request for proposals
Let us explain why it was called an investment program. Book World wasn't the compensation measure for the area sold to the company. It was the rationale or purpose for expropriating the area. It was the company's forthcoming investment, which, as we saw, was not carried out. But, it's due to raffling Book World that the company privatized the land and compensated the land price with non-competitive prices.
And so, with the government's first decision, as a land compensation measure, Sohocenter was obligated to build a concert hall and new boiler house for the music school.
The work to build the 288 m2 concert hall and boiler house taken together was estimated at 102 million dram (US$211,000): the cost of the first obligation being about 83 million dram, and the second, 19 million.
The Ministry of Culture had compiled the decision in such a way that it even evoked a sense of debt to the company. It was said that the land market value of Book World was 100 million dram; meanwhile, the cost of the work is 102 million dram, thereby exceeding the value of the acquired land.
Let us stress that the work for the school wasn't preceded by a request for proposals (RFP). Consequently, the cost of the work could've changed, if an RFP was announced and if the bidder had been not only Sohocenter. That wasn't done because the company instead was preparing to make an investment. Also knowing this were those who compiled the project, who made the aforementioned binding estimate.
According to the documents provided by the municipality, Sohocenter received a construction permit for its small-scale undertaking(the construction of the boiler house) in 2012, for six months.
Missing in the boiler house construction documents was the construction permit extension. Tchaikovsky Music School Director Martuni Kostandyan, in response to Hetq's query, said the boiler house was built in 2014. That is to say, with a delay of almost two years.
Are the boiler house construction costs equivalent to the work carried out? We can't say. The cost assessment was done by Seysmanvtangutyun LLC, which SoHoCenter paid for the respective service. The investigative body did not provide a negative opinion on the estimate costs.
The person complaining of a bad job should've been the school principal. But, in this case, he would've had to be displeased with his brother, since Nikolai Kostandyan is Martuni Kostandyan's brother.
Compensation, ultimately, became the musical instruments: no photographs allowed
The term for the company to fulfill its obligations was defined as 2.5 years from the date the contracts were signed. They were signed about four months after the decision. One is the Property Expropriation and Collateral Agreement, which expropriated the land and put it up for collateral until the fulfillment of obligations. The second was the General Contract Agreement, which obligated the contractor, SoHoCenter, to carry out construction of the boiler house and concert hall, and receive the land as a means of payment.
Two years later, in 2014, when only a few months were left for the deadline to build the concert hall, the Ministry of Culture "came to the rescue." A new project was proposed, which replaced construction of the concert hall with the phrase "capital renovation." What was capital renovation and what part of the school was going to be renovated? This is stated neither in the decision nor in the agreement to amend the contract.
But this work too, which, according to the contract, was supposed to be completed on May 12, 2015, wasn't carried out. The ministry with the signed contract could've refused the contract and without going to court confiscate the land, but instead, one month after the end of the term, it presented another project to the government. On June 10, 2015, the government adopted decision No. 625-A.
According to the new decision, "capital renovation" was replaced with a new commitment: the acquisition of musical instruments for the Tchaikovsky Music School. In response to Hetq's query, the government said the amendment was made based on an application submitted by the principal of the music school, Martuni Kostandyan.
In 2015, a new contract was signed between the Ministry of Culture and Sohocenter, which obliged the company to purchase musical instruments for the school with a total value of 83 million dram by February 12, 2016. Principal Kostandyan assures us that all the instruments are in the school's storage, only the "paperwork" remains to be done. Asked whether the instruments could be photographed, Kostandyan first replied that he has to check, then later called and said he is opposed to the filming.
"Let me put it to you this way. To be honest, the school is being renovated, it's in a catastrophic state, and also I wouldn't want [you to take photographs] as promotion," he says.
Martuni Kostandyan (photo: designdeluxegroup.com)
Asked whether the instruments are currently being used, the principal says, "Yeah, yeah, the media even came and filmed the five-octave marimba, which is the only one in the country — neither the Philharmonic nor the Opera building has an instrument of this caliber. Within the scope of the Hayastan All-Armenian Fund, related to the renovation, they filmed the percussions class, where all the percussion instruments are placed, which the children play."
But how were they given permission to film? Weren't there the same problems related to the renovation, or wasn't that promotion? The principal replied, "Well, it was filming… Now don't misunderstand: it's a big marimba, a marimba is something else, violins are another. I, simply as the principal, am telling you, a journalist, the instruments are, in fact, with me, as a legal document, you can write to me, and I will reply with great pleasure because I have absolutely nothing to hide. The children will be playing on those instruments; I just don't want us to take photographs."
Note, Hetq obtained the list of instruments received in the first stage, when the term of the contract wasn't yet expired, from both the Ministry of Culture and the school. Everything is in order on paper: according to the supplement to the contract, the acquired are an expensive set of instruments, mainly from the Netherlands-based company Adams Musical Instruments.
Asked whether he considers these good-quality instruments equivalent to their price, Martuni Kostandyan, the principal, who is a musician by profession, replied, "I can't tell you in terms of price because I'm not a professional, I'm a violinist by profession, but now the same goods can be two-hundred dollars more, two-hundred dollars less… Now this is a market, I can't say, but that they're good-quality instruments and there are very serious instruments among them."
Book World’s property land might suffer same fate as 25 Pushkin St.
Sohocenter was founded the year of the government decision, "appearing" at the right time. Company co-founder and currently 50% shareholder Hmayak Avagyan is also the co-founder of Dialab and Diagen Plus diagnostic centers. As for how he, from the healthcare sector, presented a cultural investment program, only he can say, but he categorically refuses to talk about this program. Asked why the Book World construction project hasn't been carried out yet, Avagyan replied, "I can't give you any information," later adding that he has to consult with the other founder.
To the observation that half of the company's shares have belonged to him from the beginning, and he's the only participant who is part of the companytill today, he said: "I can't say anything, now… I can't say, I can't give you information, ok?" Asked if it’spossible to talk after he consults with the other founder, he replied: "It's pointless; all the same, I can't say."
The company's other founder, Gor Davtyan, whom Hetq has written about, is currently the president of AOKS, a company founded by Armenian Minister of Culture Hasmik Poghosyan and presidential advisor Armen Smbadyan; that is, their old colleague. He was part of Sohocenter (as a 50% shareholder) until November 30, 2012, though there's a connection till today.
Davtyan owns 100% of the shares of Audit Service, a company currently operating at the address that, according to the state registry, is the business and legal address of Sohocenter LLC.
This address, 47/7 Movses Khorenatsi St. Apt. 46, according to information supplied by the Cadastre, belongs to Nvard Karapetyan, who is the co-founder of a company (already liquidated), the legal address of which is Gor Davtyan's apartment.
Davtyan's shares were acquired in 2014 (presumably through a sale) first by Hayk Khalafyan, then by Arman Petrosyan, both of whom are businessmen. Petrosyan is the former shareholder of Lev and Dav Group, which is building a hotel complex at neighboring 25 Pushkin Street. In April 2013, there was an uproar surrounding the building designed by Alexander Tamanian located at this address: it was on the list of historical and cultural monuments, but the Ministry of Culture took no action at the time. Despite activists' protest, it was demolished, with construction of the hotel complex beginning in its place.
Note that Petrosyan's Lev and Dav Group went bankrupt in 2015, then was restructured as a new company, L&D, the only shareholder of which is currently Nune Sahakyan, the wife of businessman Stepan Akoyan, who is MP Aragats Akhoyan's brother. While Petrosyan, who was not part of the company after the bankruptcy, acquired half of Sohocenter's shares. It's not ruled out that the land at 36 Yeznik Khoghbatsi St. will ultimately form part of the hotel complex, and the Book World investment program will end there.
Top photo (from left): Former Armenian PM Tigran Sargsyan, Culture Minister Hasmik Poghosyan, PM Hovik Abrahamyan