White Paper on “Hayastan” All-Armenian Fund

Part IV

By Ara K. Manoogian

 

This is the concluding part of the white paper on “Hayastan” All-Armenian Fund (hereafter HAAF, or the Fund). The final chapter explores how Armenian authorities have been shrinking Armenia’s potential of self-sustainment by tolerating government corruption, shadow economy, as well as using the HAAF as an accessory for large-scale tax evasion. The theme of Part IV is Armenia at 20, No Longer Needs a Baby Walker.

  1. “Hayastan” All-Armenian Fund Missing the Mark
  2.  

    Many HAAF donors continue donating selflessly, despite the realization that most of the collected funds will inevitably sift through the fine sieve of the large-scale corruption in the two Armenian states. “Armenia is too poor to be able to take care of all of its citizens’ needs” appears to be a prevalent argument. Other arguments are that the existing corruption is the consequence of having a weak economy, which charitable projects tend to strengthen.

     

    But is it not the way Armenia and Artsakh are governed that prevents their economic growth, therefore leaving the populations of both republics in continued dependence on charitable handouts? What lenient, apolitical Armenian charitable organizations do can be compared to filling a bucket with a hole in it—this creates the illusion that the leaky bucket can hold water without being fixed.

     

    Yet another category of donors justifies its donations by the presence of top-priority problems that have to be addressed, before necessary economic reforms can take place. The number one concern cited is the emigration from Armenia and Artsakh. But how much is the Armenian government really doing to address this issue?

     

    Unlike the 1990s, poverty today is not the sole incubator of emigrants. Classified wires from the U.S. Embassy in Armenia, publicized by WikiLeaks in February 2011, confirm what Armenian demographers have been whistleblowing about for a long time—the dominating ground for emigration in today’s Armenia is social, economic and political injustice. The leaked wires clearly document that even the more or less successful representatives of the middle class leave the country, since they don’t believe in the future of Armenia any longer.

     

    Instead of fixing the problem, the Armenian government is allowing Russia to lure Armenian families with the help of a “Compatriots,” a state run program offering immigrants from Armenia unprecedented opportunities in exchange for settling in sparsely populated areas in Russia. If a country’s government is careless about the massive emigration, then no fund, even as big as HAAF can stop people from leaving that country.

     

    What is really happening on the ground? How desperate is the Armenian state for assistance? While the remainder of this paper focuses on both questions in detail, it has to be emphasized that HAAF’s activities, while well-intended, barely hit the mark and almost never address the core problem—the socio-economic injustice and human rights abuses faced by Armenia’s citizens on a daily basis.

  3. Resource Curse
  4.  

    In his interview about the Fund, discussed throughout Part I and Part II, Sarkis Kotanjian, Executive Director of HAAF U.S. Western Region, made the following statement:

     

    Because, let’s not forget that all of us, most of us help our families in Armenia. Every month, be it $50, $100 or… unrelated to “Hayastan” All-Armenian Fund. And I encourage them to provide even greater support because these people have needs in Armenia.

     

    Sending remittances to needy households in Armenia or Artsakh is, indeed, a noble cause; and for many households there they are the only source of income. However, the benefits of remittances in Armenia in general are often overstated. In a paper published recently in the reputable Review of Development Economics, entitled “Destined to Receive: The Impact of Remittances on Household Decisions in Armenia”, economists Dr. David Grigorian and Professor Tigran Melkonyan document the impact of remittances on household behavior in the Armenian context. They demonstrate that beneficiaries of remittances work fewer hours, spend less on education of their children, and while they save more than their peers who do not receive remittances from abroad, they do not leverage those savings for the purposes of setting up new businesses and expanding economic activity. But perhaps more importantly, as the authors conjecture, remittances encourage further emigration. This is the disastrous economic development model adopted by Armenia’s ruling elite and supported by some in the Diaspora, including the Executive Director of HAAF.

     

    Remittances can also be regarded a resource curse, which describes a feature of modern economic growth when economies abundant in natural resources have tended to grow more slowly than economies without substantial natural resources (see here). “Remittances and Institutions: Are Remittances a Curse?”, an International Monetary Fund (IMF) working paper, shows how “an increase in remittance inflows can lead to deterioration of institutional quality—specifically, to an increase in the share of funds diverted by the government for its own purposes.” On the other hand, remittances also serve as tranquilizers for potential protesters against unfavorable government policies, which adversely affect living standards. When prices for goods are arbitrarily raised, public attitude is not always unanimous. Instead of fighting a government agency, most remittance-receiving households are likely to ask for more aid from their supporter abroad. Therefore, many citizens who have no such external source of income are dealt a double blow. On the one hand, they are hurt by an unfavorable economic situation; on the other hand, by the passivity of their remittance-receiving fellow citizens in the struggle against injustice.

     

    What will happen if private money transfers from abroad cease entering Armenian households? When journalists asked this question to Vahe Vardanyan, Head of the Department of Financial Stability and Development of the Central Bank of Armenia, on April 26, 2011, according to the First News, he responded: “It will be sad, because private transfers amount to 13-14% of Armenia’s GDP.” One of the major shortcomings of Armenia’s heavy dependence on remittances is that its economy becomes more vulnerable to economic crises occurring in foreign countries. That’s the reason why Armenia was among the countries hit the hardest by the 2008 global economic crisis, from which it hasn’t recovered yet.

     

    In response to the criticisms about HAAF, voiced by French-Armenian forum users (see Deleted Forum) who had largely alluded to Part I and Part II of this white paper, Bedros Terzian, President of the Fund in France, wrote in Nouvelles d’Arménie: “Our accusers have no idea of the means of the Armenian states, nor of the scope of needs in Armenia and Karabagh. And they want to prevent us from helping them!” (Indeed, how original to claim that the opponents have no idea of what they are talking about.) But what Mr. Terzian and others need to understand is that any funding given without proper oversight and strings attached—both at the household level or at the level of country budgets, as discussed above—creates fundamental disincentives and ends up turning into a resource curse by its corrupt government… courtesy of unsuspecting and complacent donors.

     

  5. Armenia is 20 years old and no longer needs a baby walker
  6.  

    There are prerequisites to suppose that the Republic of Armenia has the potential to sustain itself without the help of donations and remittances. The potential resides chiefly in efficient tax administration. The failure to carry out proper regulation of the sphere has been strengthening the country’s shadow economy instead.

     

    According to “Tax Potential vs. Tax Effort: A Cross-Country Analysis of Armenia’s Stubbornly Low Tax Collection,” an IMF working paper published in 2007, Armenia had been consistently under-collecting as much as 6.5% of Gross Domestic Product (GDP) in taxes between 1996 and 2006. Using the pre-crisis value of Armenia’s GDP (and slight improvement in the tax ratio in recent years), these losses would account for $400-$500 million per year. In a 2010 report entitled “Armenia-Diaspora Relations: 20 Years Since Independence,” Policy Forum Armenia looks at the spending side of Armenia’s budget and estimates that the procurement-related losses of the budget in 2008 alone accounted for $225-280 million. These two numbers together (from the tax/revenue and expenditure side of the budget, respectively) suggest a budgetary leak in the magnitude of three-quarters of a billion dollars annually.

     

    When Armen Martirosyan, Head of Zharangutyun (Heritage) faction of the Armenian National Assembly, brought up the issue of tax under-collection based on the IMF report during a parliamentary hearing, Prime Minister Tigran Sargsyan merely said they were working on it.

     

    A recent assessment of that work that has been done paints a different reality. “Unfortunately, we don’t see any correct step or procedure regarding this shortcoming,” Gillermo Tolosa, a resident representative of IMF in Armenia, was reported by Panorama.am as saying in April 2011. Their analysis of the tax collection levels in Armenia shows that the situation is not improving. According to Tolosa, the percentage of tax revenues in the Armenian economy in 2010 was as unfavorably low as in 2009, “which mean that the shadow economy hasn’t shrunk in Armenia.” By tax-GDP ratio, Armenia is far behind all the post-Soviet Republics, except for Tajikistan.

     

    Juxtaposition of the numbers calculated by the IMF, with total amount of the donations HAAF has attracted since its establishment in 1992, reveals an astonishing picture. The Fund’s total donations collected in 1992-2010 (over $200 million) is less than 50% of the total amount of the estimated tax revenues the Armenian government could, but failed to, generate in taxes within a single year: 2006. This failure was largely due to leniency toward the widespread tax evasion among the country’s biggest companies owned by oligarchs. The following section provides a few concrete examples of how this grand scale evasion happens.

     

  7. Economic Suicides

The Banana King
 

As mentioned in Part III, Grisha Harutiunyan is the co-owner of Griar, a construction company erecting elite apartment buildings at the intersection of Buzand and Aram Streets. Grisha Harutiunyan had secured part of the money for the construction of luxury apartments in the heart of Yerevan by means of Catherine LLC. According to Hetq, the company claimed to have imported about 6,500 tons of bananas to Armenia in 2005-2007 with the purpose of reprocessing and eventual export to the Bahamas. Thanks to that, Catherine, LLC. became exempt from various customs taxes and levies, as well as VAT. However, the investigative journalists of Hetq proved the company had not exported any reprocessed banana products from Armenia, despite the fraudulent documents, thus robbing the state budget of about $1.5 million. Moreover, Hetq has found out that in that same period “huge amounts of bananas, several times more than registered by the State Council on Statistics and the State Customs Committee, were imported into Armenia.”

 

The investigative journalists rule out the possibility that the National Security Agency, the State Revenue Committee, Prosecutor’s Office and other state institutions were unaware of these illicit activities. However, no criminal charges have been pressed against the co-owners of the company, Grisha Harutiunyan and Mihran Poghosyan. The former was simply dismissed from his office, while Poghosyan, who was appointed head of the Judicial Acts Compulsory Enforcement Service by Serzh Sargsyan about a month before the publication of the first article about the banana business in July 2008, still holds the office.

 

Unprofitable Gold
 

For six consecutive years, GeoProMining Gold, which has been mining gold from two of the largest gold mines in the former Soviet Union—Sotk and Meghradzor in Armenia—paid not a penny in taxes. From 2004 to 2010, the company reported losses of tens of millions of dollars a year. The highest loss was reported in 2008 in the amount of AMD 17 billion 273 million (about $56 million). However, as GeoProMining Gold reportedly incurred these sizable losses, the price for a gram of gold in the world market jumped from $21 in 2007 to $40 in 2010. Ishkhan Zakaryan, Head of the Parliament’s Control Chamber, pointed out numerous other violations of the license agreement, amounting to about AMD 200 million (over a half a million dollars), in his report in November, 2010.

 

It is common knowledge in Armenia that no company of such proportions could operate with such monstrous violations for such a long time without the knowledge and protection of the country’s top leadership. That is perhaps why Ishkhan Zakaryan had to turn down the journalists’ request to identify the real owners of this company registered in the Cayman Islands, a major offshore financial center. (Watch A1+ video commentary, the full report, or read more details).

 

Such activities only appear to be a manifestation of the authorities’ good will. According to Lragir, this belated initiative is a result of hard pressure from international financial institutions on the Armenian government to force the mining industry—enjoying excessive profit and VAT exemption on exports—out of the shadows before asking for loans. The government, thus, had to put together an improved bill on mining, which would increase tax obligations. The outcome of these drastic measures speaks for itself: the mining industry grew by 24.3% in 2010 alone and paid AMD 18 billion (over $51 million) in taxes vs. AMD 0 ($0) in 2009.

 

Nevertheless, journalists from various Armenian news agencies have been urging the Control Chamber to make similar audits at other major mining companies, such as in Kajaran, Kapan and Akhtala, where they claim the situation is as bad. The Control Chamber, however, does not seem to be as prompt as expected in reacting to these allegations.

 

Robin Hood of the 21st Century
 

In 2007 it became clear that Armenia has its own Robin Hood. The most striking difference from the classical character, though, is that his Armenian counterpart happens to be Armenia’s richest person—Gagik Tsarukyan. Does this mean he robs himself to feed the poor?

 

An excerpt from a Zhamanak journalist’s interview with Roza Tsarukyan, who runs the agricultural division of his son’s business empire, in April of 2007, sheds light on a significant portion of the seemingly fantastic figure, with which the IMF specialists had come up in their working paper:

 

– Mrs. Tsarukyan, what’s the total number of the jobs you have created?

– Oh no, if I say it, the tax inspector will then come and ask “why don’t you show all the taxes?”

– Say as many as reported.

– 78.

– Mrs. Tsarukyan, so is it true that you don’t show your taxes in full?

– We hide some of them, we don’t show some of them, we show some of them, of course!

– That’s why people say that you evade taxes and then do charity for the people with it.

– And right we are! If we have been smart enough to do that, then we’re doing the right thing…

– Why don’t you pay your taxes, so that the state can give pensions, allowances?

– You want me to give it to them so they go to Monte Carlo? I’m not going to give… I’m giving it to the socially vulnerable strata of the society, I’m giving it to a kindergarten, I’m giving it for free medical treatment.

 

What conscientious tax-payers of Armenia expected to happen following this frank conversation was a full-blown investigation into the disclosed information. But these statements only came to prove Gagik Tsarukyan’s invincibility in relation to the incumbent authorities. Even the obvious humiliation of the then Prime Minister Serzh Sargsyan, who allegedly lost big dollars in Monte Carlo while gambling, bore no visible consequences.

 

On the contrary, the relationship between Serzh Sargsyan and Gagik Tsarukyan has been growing warmer and warmer ever since. Gagik Tsarukyan was welcomed into the Government coalition in April 2008. About three years later he signed a coalition memorandum, which was a guarantee of support for Serzh Sargsyan’s candidacy at the upcoming presidential elections. And last but not least, Serzh Sargsyan recently appointed Gagik Tsarukyan a member of the Armenian National Security Council. Among other issues, A1plus reports, “customs and tax reform programs in 2011-2013 were discussed at the session.” It is quite ironic, if not disastrous, that one of Armenia’s major tax evaders will henceforth be “reforming” the country’s tax system.

 

Serzh Sargsyan had the tax collectors ravage another oligarch, Khachatur Sukiasyan, after the latter publicly declared full support for Levon Ter-Petrosyan during the presidential elections of 2008. It is obvious, the former head of the National Security and, currently, the self-declared president of Armenia, Serzh Sargsyan is concerned more about the security of his seat than that of the state and its citizens.

 

The Ministry of Dead Souls
 

The recent scandal that erupted from Armenia’s Ministry of Labor and Social Affairs shows that the Armenian government had the potential to increase pensions even despite Tsarukyan’s continuing tax evasion. In November of 2010, the Control Chamber of the Republic of Armenia revealed colossal abuses in the State Service of Social Security, which reportedly forced Vazgen Khachikyan, the Head of the Service, to seek medical treatment. According to Zhamanak, Armenia’s Ministry of Social Security had been issuing pensions for about 60,000 deceased persons for many years. Some of the listed pensioners have been already dead for 18-19 years. As a result, close to $4 million a month might have disappeared into the pockets of public officials. Ishkhan Zakaryan, Head of the Control Chamber, provided unsettling details of the scam in a report on May 12, 2011. And it is important to realize that, as Lragir emphasized, these 60,000 dead souls were not the only source of extra income for public officials, but also 5% of the active electorate, whose votes are an easy game for vote rigging. (Policy Forum Armenia’s report on 2008 election outcome explains in detail how these dead souls may have been used in an election that is widely known as fraudulent.)

 

Vazgen Khachikyan was dismissed soon after the publication of the facts. He continues to be a member of the ruling Republican party because, as he said in an interview to Radio Liberty, “we have, so to say, good friends in the party.”

 

Khachikyan’s dismissal was followed by yet another scandalous disclosure, an accidental one. In journalists’ presence, on January 27, 2011, Artur Grigoryan, Armenia’s Minister of Labor and Social Affairs, had the carelessness to publicly say the following to the former employees of the dissolved Service of Pension Payments: “We are not going to require those 200 drams from you for each pension delivered, because those at the top don’t require it any longer” (Aravot). When journalists wondered who “those at the top” were, the minister chose not to specify: “I haven’t had to deal with taking those 200 drams. The issue was closed when I came” (Panorama.am). At the time of this dialogue, it was his seventh month as minister.

 

AMD 200 a month from each of about 500 thousand Armenian pensioners amounts to AMD 100 million a month (about $3.8 million a year). Where has that money gone? Another question that craves an answer is why Armen Grigoryan’s accidental frankness was not followed by interviews with the former Ministers of Labor and Social Affairs in the Armenian media.

 

Shadow Employment
 

The National Statistical Service published a report, February 11, 2011, called “The Unregistered Field and Unregistered Employment in Armenia, 2010,” according to which, more than one third of the construction jobs in Armenia is hidden, as quoted by Zhamanak. According to the same report, the percentage of unregistered jobs in retail and wholesale businesses is 26.9% and 11.8%, respectively, in the processing industry.

 

However, that report has failed to reflect a wide-spread practice in the Armenian job market of paying employees higher salaries than reported. And it is ironic that certain news agencies reporting on such illegal practices, according to someone who has worked in a couple of them, applied the same methodology when it came to paying their employees.

 

The VIP Resort
 

Tsaghkadzor has been one of the leading areas by size and number of investments in Armenia since the early 2000s. The above-mentioned Grisha Harutiunyan and Gagik Tsarukyan have hotels in the Tsaghkadzor resort. As a result of an ongoing construction boom, there are over 35 hotels in this small town, including a number of 3-, 4- and 5-star hotels.

 

“When you see these luxurious buildings, you would think that the residents of Tsaghkadzor have jobs. But go and see for yourself, the people Tsaghkadzor are sitting at home without work,” told a local to a Hraparak journalist.

 

The town’s population of 3,400 in 1989 has declined over the years by more than a half to about 1,600 in 2009. According to a number of people interviewed by the journalist, residents of Tsaghkadzor do not comprise the majority of employees at the dozens of hotels and restaurants in the city. Besides, many of the jobs are seasonal. Oligarchs tend to keep their employees’ salaries at the same level as Armenia’s minimum wage—AMD 30,000 a month (as of 2010, about $80), and the excuse is usually the economic crisis.

 

Over $9 million dollars has been invested in the infrastructural development of Tsaghkadzor resorts from 2006-2007 by the Fund alone:

 

2006 – AMD 950,000,000 ($2,500,000) for the construction of the fourth station of the Tsaghkadzor ropeway;

2006 – $6,522,199.93 for the construction of the ski tracks of Tsaghkadzor-4 and two parking lots;

2007 – $60,360.30 for the construction of a parking lot for the Tsaghkadzor funicular;

2007 – $20,051.28 for technical supervision of the Tsaghkadzor funicular;

2007 – $53,974.10 for the design and expertise of the Tsaghkadzor funicular;

2007 – $18,838.34 for technical supervision of the Tsaghkadzor funicular.

 

Many Tsaghkadzor families have suffered from these rapid developments, since they are no longer able to breed cattle. About ten years ago, the mayor of Tsaghkadzor banned the residents from breeding cattle, which fed otherwise unemployed families. The reason for the ban was the fear that it might repulse foreign tourists and disgust the nouveaux riches who have built houses in the town. Almost all the Armenian oligarchs have property and businesses in Tsaghkadzor. And HAAF has made its unique contribution to their prosperity. But whom should these oligarchs really thank?

 

The official website of HAAF presents the Republic of Armenia as the sponsor both for the Windsurfing center at Lake Sevan (see Part I) and the infrastructural developments of Tsaghkadzor. This brings us back to the question raised in Part I: “It is also interesting to know what exactly the Fund implies by presenting the Republic of Armenia as the donor for the windsurfing project.” According to a well-informed former Fund insider, who preferred to remain anonymous, HAAF was dragged into these construction projects by the authorities mainly for one reason: it allows some of its donors to benefit from the tax-exempt status.

 

“The Republic of Armenia,” thus, is a mask that some public officials and oligarchs were authorized by Robert Kocharyan to wear for the purpose of making beneficial investments in Tsaghkadzor. By having HAAF undertake the construction of the above-mentioned projects in Sevan and Tsaghkadzor “sponsored by the Republic of Armenia” alone, Robert Kocharyan and his cronies appear to have saved about $2 million (20% of about $9 million spent on the construction of infrastructures in Tsaghkadzor and about $815 thousand spent to build a Windsurfing Center in Sevan) that would otherwise be due in taxes. It is clear why a ski route was named after Robert Kocharyan and not, say, HAAF. It was thanks not to the Fund, but Kocharyan’s unconditional power over it that oligarchs made “discounted” investments in Tsaghkadzor, that is, at the state’s expense. Such favors also explain the zeal, with which most oligarchs backed Kocharyan during the elections and anti-government demonstrations, most notably in early 2008.

 

Despite all this, these leaders or their subservient representatives cross thousands of miles to squeeze donations out of the Diaspora Armenians in the name of Armenia’s economic development. It is hard to disagree with a statement made by Glendale TV host Harout Bronozian during a program: “They come here once a year and preach patriotism to us, but denounce it during the remaining 364 days” (Armenia Fund Telethon Part 2, Nov 24, 2010, at 2:33).

 

An initiative like HAAF has been conceived as an important asset for the Republic of Armenia, both for uniting all Armenians and helping the country develop its infrastructure by generous donations. The Fund’s aid was invaluable in the early 1990s, when Armenia was at war and on the verge of economic collapse. These gratuitous funds have been an important alternative to the loans from international financial institutions or countries. However, it is now obvious that the caring Armenians’ donations can easily become a resource curse when entrusted to a corrupt government, such as those ruling Armenia and Artsakh today.

 

CONCLUSIONS
 

“To Donate or Not to Donate,” the white paper on the Fund, is an attempt to help Armenian donors all over the world  find answers to some of their questions. This research is an alternative to propagandistic and often misleading answers the concerned public has to hear from the Fund representatives. While this has indeed been overdue for a while, I owe it to the TV interview of Sarkis Kotanjian, Executive Director of HAAF U.S. Western Region for helping expedite the drafting of this series of reports.

 

By resurrecting long forgotten news about mismanagement of the Fund’s resources by officials and their cronies; indicating violations, the perpetrators of which have not been punished by law; publicizing confessions of former and current Fund insiders (some on condition of anonymity); and, eventually, connecting all these dots, the paper defines the Fund’s cooperation with the corrupt governments of Armenia and Artsakh as an illustration to an old proverb: “The road to hell is paved with good intentions.”

 

Despite Executive Director of HAAF U.S. Western Region Sarkis Kotanjian’s allegations, Parts I and II of this paper show that the Armenian and Artsakh governments’ impact on the Board of the Fund and its decision-making is significant. Moreover, all four parts manifest that this overpowering influence has been detrimental to the Fund’s overall performance.

 

The methods of misappropriation of funds by officials and/or their cronies have evolved over time from straightforward wire transfers to more sophisticated procedures, such as having the Fund build developments in areas belonging to them or abusing the tax exempt status of the Fund for personal gain. Facilitation of bid-rigging in favor of the construction companies owned by government officials or their cronies has been yet another widespread method of significant misappropriation.

 

The dire consequences of the government’s overwhelming control over the Fund have been discussed in all four parts of the paper. Poor quality of construction is often due to officials’ patronage, which dramatically reduces the construction companies’ incentive to ensure quality. The same powerful patronage has been exempting the culprits from prosecution. The disappointing outcome of the Fund’s initiatives, as well as ample evidence of mismanagement of the money raised by the Fund, has created a trust vacuum among thousands of donors throughout the world. Instead of carrying out meaningful reforms in the Fund, the authorities, as detailed in Part II, have been systematically compensating the trust vacuum by forcing state employees in Armenia and Artsakh to make mandatory donations to the Fund.

 

The government’s de facto (if not de jure) control over HAAF has made the latter a silent accomplice of its undemocratic moves. Considering all the evidence that the authorities’ powerful presence in the Fund’s administration is detrimental to its performance, I believe that it would be in the nation’s best interest if all the public officials gave up their membership of the Fund’s Board of Trustees. First of all, this step would deter the government from using HAAF as a cash cow for fulfilling its own duties. This enhanced independence will make the government to be more resourceful than having a non-profit pick up its slack. Secondly, this step could also diminish government corruption risks associated with its direct interference in the Fund’s projects, biddings and other procedures. Thirdly, the Fund will have a chance to regain the trust of numerous potential donors, who happen to be in opposition to the incumbent authorities. Thus, independence from the government may eventually boost the Fund’s reputation in the society.

 

As for choice of targets, the new Board of Trustees and the Fund administration have to make sure their choice of projects are not a part of the public services the government is supposed to provide. Alternatively, cooperation with the government may be acceptable only on condition that, like the Millennium Challenges Corporation, HAAF could hold the government accountable for the funds provided, thus using its financial potential as leverage to curb potential corruption. The Fund’s projects should be highly selective and properly targeted. Preference should be given to cultural, educational, and demographic projects. The latter may include support of repatriation efforts in Artsakh and liberated territories.

 

In order to restore justice and to rehabilitate the Fund’s reputation, a forensic audit of the HAAF needs to be conducted. In the event that violations are discovered, the culprits should be prosecuted, the missing funds should be recovered and directed to the implementation of future projects. The Fund should publicly condemn forced donations and provide an option for all the involuntary donors, who have been forced to donate by their employers, to get their money back.

 

Armenia has enough resources to care for most of its needs, if only its rulers wished to use those resources towards those needs. With such a will, the country could generate twice as much revenue in a single year as the Fund has in eighteen years. However, large-scale corruption in the government, tax evasion, and power abuse for personal gain—as demonstrated in this series of reports—are the key reasons why Armenia has been unable to realize its full potential. Under such circumstances, by cooperating with the corrupt government, readily picking up its slack and even contributing to the prosperity of oligarchs, the Fund actually feeds into the corrupt system, making it stronger. As long as HAAF has not dissociated itself from the current corrupt regime, every donation is effectively a vote of confidence for the corrupt ruling elite and the people on the very top.

 

Ara K. Manoogian is a human rights activist representing the Shahan Natalie Family Foundation in Artsakh and Armenia; a Fellow of the Washington-based Policy Forum Armenia (PFA); creator of www.thetruthmustbetold.com.

 

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