YEREVAN—The Armenian Special Investigation Service (SIS) announced on Wednesday that it had charged former President Serge Sarkisian with embezzlement of state funds. According to the terms of the indictment, in 2013 Sarkisian used his position as President to orchestrate a scheme to subsidize petrol imported by the conglomerate Flash LTD at a deliberately inflated rate, under the guise of a State Assistance Program for agricultural projects. The difference was then allegedly pocketed by those involved. The former President is being charged under Article 38-179 (3)(1) of the Armenian criminal code for “publicly dangerous acts” which carries a penalty of up to eight years in jail. Sarkisian denies the charges as “fabricated and ludicrous.”
The SIS claims that the former President was well aware that other importers had made tenders offering significantly lower rates but instructed his cabinet to go through with the Flash LTD deal regardless. State records reveal that the government had approved fuel subsidies for the Ministry of Agriculture, transferring funds on three occasions—February 7, March 19 and April 2—to the corporate account of Flash LTD. The total cost of the deal with Flash LTD, which saw the purchase of 12,088,334 liters (3,193,400 US gallons) of diesel at the cost of 1,269,275,070 AMD (2.658 million USD) to the taxpayer, exceeded the amount proposed by rival importer Maxhur LLC by over $886,000.
This initial arrangement with Flash LTD provided the blueprint for Sarkisian to greenlight yet another round of fuel subsidies destined for the Ministry of Agriculture’s agro-business development program, which exceeded the Maxhur LLC’s quote by 66,068,620 AMD (138,350 USD). In total, the SIS estimates that Sarkisian and other government officials involved in the scheme pocketed 489,160,310 AMD (1.02 million USD) in state funds as a result of the deal with Flash LTD in 2013 alone.
Sarkisian has mostly kept a low profile since he was ousted from office in last year’s Velvet Revolution following an attempt to extend his hold on power. However, several prominent members of his family have been investigated and arrested by authorities. One of his brothers, Levon Sarkisian, who has since fled the country, has two warrants out for his arrest on charges of embezzlement and money laundering over his intervention in a $250 million deal to rebuild Armenia’s main North-South highway. His other brother, the notorious oligarch Alexandr “Sashik” Sarkisian was arrested in a National Security Service (NSS) raid but released on bail after he agreed to “donate” the contents of his $30 million bank account back into state coffers.
Sarkisian‘s nephew Narek Sarkisian, who escaped Armenia shortly before the NSS raid, was arrested in Prague by Czech police in possession of a fake Guatemalan passport identifying him as Franklin Gonzalez last December and extradited to Armenia where he faces charges of illegal arms possession and narcotics trafficking. Sarkisian‘s son-in-law Mikael Minasyan, a former media magnate and one-time Ambassador to the Vatican, has seemingly entrenched himself in Italy after a series of vocal criticisms of the new authorities drew some unwanted attention.
During a recent trip to visit the Armenian community of Italy, Prime Minister Pashinyan spoke of investigating the activities of oligarchs who had fled the country. “I don’t know if they are hiding in Vatican basements,” said Pashinyan. “We will grab them by the neck, drag them out and take them to courts,” in what many interpreted as a thinly veiled warning to Minasyan.
The fact that the former president has managed to avoid the same fate as so many of his close relatives and allies has led to much speculation over why no criminal charges had yet been filed. Some have questioned whether he was promised immunity from prosecution in exchange for a peaceful transition of power and retirement from politics. Others, like analyst Richard Giragosian, have suggested that Sarkisian may have been careful to disassociate himself from any personal ties to corruption. Pashinyan himself addressed the issue during a press conference last December where he responded to reporters that he does not have the authority to order investigations. “Investigative agencies need to build a case before requesting an arrest warrant,” he explained.
Still, the timing of this latest charge coincides with a recent re-emergence into public life by Sarkisian. The former president hosted US Ambassador Lynne Tracy in November and publicly accused the new government of eroding Armenia’s democratic traditions.
The Sarkisian government’s fuel subsidies have been the subject of numerous investigations and media interest over the years, however. A 2014 report by the investigative reporting site Hetq found that CPS Oil and Flash LTD were selling gasoline branded as “super” grade fuel at petrol stations across Armenia despite neither of the two having imported that sort of fuel since 2008. Hetq also reported on similar deals for Flash LTD to supply diesel to various government bodies, including the Ministry of Defense and Revenue Service, as well as other companies belonging to Republican members of parliament who had also won government contracts.
The government’s relationship with Flash LTD has continued all the way to 2018. Barsegh Beglaryan, a longtime personal friend of the former president, is the primary shareholder at Flash LTD. The fact that it has continued to receive the lion’s share of government contracts into 2016 and 2017 spurred the ARF parliamentary faction—then a junior coalition partner—to question the transparency of the government’s procurement policy at the time.
A government policy impact assessment released in May 2019 revealed that two oil importers— CPS Oil Corporation LLC and Flash LTD—had effectively solidified their duopoly over the market by 2017, directly contradicting reports by the previous administration claiming that it had in fact diversified.
At the moment, the SIS has slapped the former President with a travel ban as it continues its investigation into the matter.