Armenia

Researcher + Peer Reviewer3634: Asset disposal issues are controlled by the Government and governed by the Government decree N 882-N from 13.06.2003. According to the decree, the Government, upon the presentation of the State Property Management Department and with the consent of the relevant agency, adopts a decision on the disposal of assets. The asset disposal is conducted through auction, tender or sales. In case of sales, the Government also approves the name of the buyer and the price. The information on planned disposals is published on www.azdarar.am, as well as on the website of the State Property Management Department. There is no information available on contracts concerning asset disposal on the web page of the State Property Management Department.

However, information on maintenance and disposal of weapons and munitions is not available. Planning and implementation for such issues is regulated by internal orders of the Ministry of Defence.

In August 2015, the Armenian government approved a sale of a sports centre previously controlled by the MOD to a limited liability company with a single owner. The company was registered about 3 weeks prior to the transaction and other details about it are not known. The value of the sports and entertainment centre together with the adjacent land plot was estimated 29,144,000,000 AMD (about 60.97 million USD) but the selling price has been set at 30 million USD. This indicates that corruption risks within asset disposal exist.

RESPONSE TO PEER REVIEWER 2: Score of 1 maintained as some information is available.

RESPONSE TO TI REVIEWER: Score 1 selected.

Researcher + Peer Reviewer3634: Independent control over asset disposal is exercised by the Chamber of Control; however, the Chamber has never published asset disposal reports relating to the Ministry of Defence, which casts doubt on its effectiveness.

RESPONSE TO PEER REVIEWER 2: Score 0 would not reflect the prerogative of the Chamber to scrutinise asset disposals. Score 1 maintained.

Researcher + Peer Reviewer3634: The information on the proportion of the total defence budget spending devoted to national security and intelligence budget spending is not available. The arms part of the defence budget is strictly confidential. The non-military part of the budget is listed in the Republic of Armenia Government decree No 1515-N from 18.12.2014, Appendix 12. However, the mentioned decree does not provide any information on items purchased for military needs and intelligence budget expenditures.

Researcher + Peer Reviewer3634: According to the National Assembly’s rules of procedure, the confidential expenditures are debated in a joint session of the Defence, National Security and Internal Affairs and the Budget and Finance Standing Committees, in which other members of the National Assembly may participate. Since national security- and military intelligence-related expenditures are classified, the committees hold hearings on them. Research into the budget formation (based on parliamentary documents) has revealed that members of the National Assembly are only presented with the total amount of expenditure and the general destination of expenditure, without mentioning the materiel and services subject to procurement. At the same time, the confidential budget is presented to the members of the National Assembly. An opposition member of the Armenian the National Assembly stated at one of sessions of the National Assembly in 2013 that Ministry of Defence budget expenditures are submitted to MP's 'in closed envelopes', for their eyes only.

Researcher + Peer Reviewer3634: According to the National Assembly’s rules of procedure, annual reports on defence and intelligence budget expenditures, which are classified as secret, are debated in closed joint session of Standing Committee on Defence, National Security and Internal Affairs and Standing Committee on Financial-Credit and Budgetary Affairs, where other members of the National Assembly may participate. There is no information on whether the information is presented completely. There is no evidence that annual audit reports are presented to the National Assembly and they have never been discussed there. The National Assembly sessions records also show that heads of the committees have never discussed audit reports by the Chamber of Control in the Parliament.

RESPONSE TO TI REVIEWER: Agree, score changed to 0.

Researcher + Peer Reviewer3634: Armenian ministries, including the Ministry of Defence, are allowed to hold off-budget accounts, subject to approval by the Government. The order of such approval is provided for in Government decree N17 14.01.1999. According to the Law on Procurement, the Ministry plans off-budget procurement on its own. The reports on use of off-budget means are sent to the Ministry of Finance. Ministry of Finance website makes it clear that the Ministry of Defence possesses off-budget accounts and some transactions on of this account were reported in 2008. The Law on Draft Dodgers provides that persons to whom criminal sanctions for draft-dodging do not apply shall pay a stated amount to the Ministry of Defence off-budget account. This proves the existence of off-budget accounts. Reliable information on off-budget expenses is not available. Particularly, Armenpress media reported that the new premises of the Ministry of Defence were built using off-budget expenses, but no report on such expenditures exist. Available reports do not allow the identification of off-budget expenditures.

Armenian Times daily reported that before selling the 5th unit of Hrazdan power plant to Russian Gazprom, that property was transferred to the Ministry of Defence, and subsequently the money paid buy the buyer was transferred to the ministry's off-budget account. About 97.7% of the amount was then transferred to ArmRusGazprom, a monopolist intermediary on the market of gas supply and distribution, with 80% of shares owned by Gazprom.

RESPONSE TO TI REVIEWER: Score 1 selected.

RESPONSE TO PEER REVIEWER 2: As some information is available, score 0 would not be appropriate. Score 1 maintained.

Researcher + Peer Reviewer3634: Armenpress media in 2008 reported that the new premises of the Ministry of Defence have been built using off-budget expenditure. The Law on Draft Dodgers provides that persons to whom criminal sanctions for draft-dodging do not apply shall pay the stated sum to an Ministry of Defence off-budget account, which shall be spent for defence needs. This may indicate that off-budget spending is a common practice in Armenia. In addition, a Saferworld analysis stated that defence expenses provided for in the budget do not reflect the real state of issues. According to the analysis, a number of profitable businesses are run under the auspices of the Ministry of Defence, and a part of their revenues are used for arms procurement. At the same time, there is no evidence in the media that off-budget resources are used for illegal economic activities or received through illegal practices.

Armenian Times daily reported that before selling the 5th unit of Hrazdan power plant to Russian Gazprom, that property was transferred to the Ministry of Defence, and subsequently the money paid buy the buyer was transferred to the ministry's off-budget account. About 97.7% of the amount was then transferred to ArmRusGazprom, a monopolist intermediary on the market of gas supply and distribution, with 80% of shares owned by Gazprom. That was alleged to have been a process involving corrupt practices.

Researcher + Peer Reviewer3634: Issues related to classified information are governed by the Law on State and Service Secrets. According to the law, the information is classified as secret if it relates to certain spheres prescribed by the law; the classification of specific categories, however, is in itself confidential. The classified information is protected by the government and dissemination of it may cause serious harm to national security. According to Article 11, classification of information should be reasoned. The Government approves the list of classified information, with the name of the agencies in charge of its ownership. The heads of these agencies draft enhanced lists of classified information. The law does not provide for classification reasoning procedures, or control over it. The media outlets www.aravot.am, “1-in lratvakan” regularly reports cases of unjustified classification.

Due to evidence of unjustified classification and lack of oversight, the score of 2 was selected.

Researcher + Peer Reviewer3634: The Armenian Ministry of Defence controls several business entities. In 2013 a media outlet reported the sale of “DzoraHEK” CJSC (closed joint stock company) assets to “Dzoraget” CJSC, which is believed to belong to the President’s son-in-law. “DzoraHEK” is known as the jewel of Armenian hydroelectricity and is famous for producing low-cost energy. In 2007, “DzoraHEK” was put under Ministry of Defence control. In 2011, DzoraHEK” CJSC was liquidated. Reports on activity of DzoraHEK” CJSC are not available.

In 2012 the media reported the purchase of 100 per cent shares of “Automatica” CJSC by the Ministry of Defence.

As of June, 2013, the Ministry of Defence held shares in 11 companies, including: “65 Military Factory”, “Automatica” CJSC, “Garni-Ler GAM” OJSC (open joint stock company), “Charentsavani Hastotsashinakan Gorcaran” CJSC, “Armenikum” CJSC, “Laser techniques” CJSC, “Henaket” CJSC, “Zinar” CJSC. These companies produce military items, as well as printing materials, military uniform items and catering services. No financial data is available on their activities. In 2012 the media also reported that the Ministry of Defence would control an events stadium in Yerevan. That deal was concluded in 2015: After five unsuccessful attempts to sell the Sport and Concert Centre at auctions it was given to the Ministry of Defence by a government decree, its balance cost was estimated 10.4 billion AMD.

Also, according to www.safeworld.org.uk, a number of profitable businesses, such as sales of petroleum and cigarettes, are run under the auspices of the Ministry of Defence. Information on the economic activity of the above-mentioned businesses is not available. Thus the list of properties owned by the Ministry of Defence is not comprehensive.

Researcher + Peer Reviewer3634: As of June 2013, the Ministry of Defence held shares in 11 companies. Transparency and accountability of companies is governed by the Law on Joint Stock Companies, Article 96, according to which the open joint stock company should publish its annual reports, balance sheet and income statement, as well as other information as required by the legislation on the website www.azdarar.am. Since the only open joint stock companies, in which the Ministry of Defence holds shares, are “Garni Ler GAM” and “Charentsavani Hastotsashinakan Gorcaran”; research was conducted in relation to those companies only.

Investigation of the website www.azdarar.am did not identify any financial data on these companies. As to other companies, the financial data on them is also not available. None of the mentioned companies has a website. According to the Republic of Armenia Government protocol decision N50 of session of 13.12.2012, in some companies, inspections and checks were conducted and several violations were detected, however the mentioned document does not contain any other information. According to corporate governance declaration of “Charentsavani Hastotsashinakan Gorcaran”, external audit was conducted in the company, but the audit report is not available.

RESPONSE TO PEER REVIEWER 2: Agree, score revised to 0.

RESPONSE TO GOVERNMENT REVIEWER: Analysis in Q30 indicates that the MOD does control businesses. The focus of the question is on the institutional dimension, not private enterprise by individual members.

Researcher + Peer Reviewer3634: According to the Law on Public Service Article 24 Paragraph 1, public officers are not allowed to conduct business activity or occupy any other paid positions. A similar provision is also provided for in the Law on Passing Military Service,” Article 1, Paragraph 3, Provision 7.

In spite of this, some Ministry of Defence officials occupy positions in companies controlled by the Ministry of Defence. For example, according to 2011 corporate governance declaration, of “Charentsavani Hastotsashinakan Gorcaran,” OJSC, 5 Ministry of Defence officials are members of the board of the company. Information on whether they are paid for this is not available. Also, www.lragir.am and the Armenian Times reported several businesses belonging to the Ministry of Defence high-ranking officials.
The Armenian Times reported that deputy chief of general staff Haykaz Baghmanyan owned businesses in wood processing and transportation services. General Gagik Melkonyan was the owner of petrol stations and public transportation companies, and also owned a company that supplies army uniform; minister of defence Seyran Ohanyan, according to the publication, owned a night club in Yerevan. The Armlur news agency reported that Head of General Staff Yuri Khachaturov owned petrol stations as well as a company that supplies the army with hygiene goods.

Though the government condemns public and high ranking officials’ engagement in businesses, no particular steps against their involvement seem to be taken. Prime Minister Hovik Abrahamyan once told at a briefing that ministers could not be involved in business. Yet, when asked about business by proxies, he said that could be normal unless the official position is used to evade taxation. The Hetq website, which specialises in investigative journalism, reported in a series of publications about properties owned by Abrahamyan, his wife, son and other relatives, including hotels, office buildings, supermarkets, wine and brandy factory, canned food factory, mines, petrol stations and other businesses.

RESPONSE TO TI REVIEWER: As the government does outlaw private enterprise, the score of 1 would be too low. Score 2 maintained.

Researcher + Peer Reviewer3634: The Minister of Defence and the deputy ministers have frequently stated the importance of tackling corruption in armed forces. The Minister of Defence said during a press conference on 18.01.2013 that all efforts will be made to eradicate corruption in the armed forces; that commitment was repeated in 2014 and in 2015, as the Minister deposited a completed Building Integrity Self-Assessment Questionnaire at NATO HQ. Examples of anti-corruption initiatives mentioned by the Minister include introducing lottery-based draft in 2013. In November 2013, an international seminar on anti-corruption issues in the army was organized in the Ministry of Defence, where high-ranking Ministry of Defence officials participated.

The Chief of Staff and other officials avoid making public statements. Public statements have been made by the minister, his deputies and the ministry's spokesperson. The score of 3 has been selected to reflect the commitment from the MOD and lack of public statements by the Chiefs of Staff.

RESPONSE TO PEER REVIEWER 2: Agree, but this is reflected in answers to other questions.

Researcher + Peer Reviewer3634: Armenian legislation provides for criminal liability for bribery and abuse of authority (see para 312 and 214 for abuse of authority). According to www.panorama.am and www.aysor.am, in 2011-2013 a number of criminal proceedings have been initiated against several Ministry of Defence officials for corruption. There is some evidence that the proceedings and sanctions applied are ineffective. In 2011, the criminal proceedings of the widely publicized “Rozh Case,” initiated for extortion of money under the patronage of the chief of staff, were suspended; the Ministry of Defence Investigative Service initially had claimed that it was going to detect the crime (see source 5). Another corruption scandal relates to the commander of peacekeeping brigade. As the “Hraparak” media outlet reports, criminal proceedings were initiated against the commander for bribery, but were closed as some of the witnesses changed their testimony.

In 2014, other arrests followed: two officers and two doctors were arrested for accepting bribes for giving exemptions from compulsory military draft. Yet, human rights activists suggested that while the Ministry of Defence's struggle against corruption related to the military draft procedure could be related to the lack of potential draftees followed by a need to cut the number of exemptions, individuals became 'scapegoats' while the corruption issue was more widespread.

RESPONSE TO TI REVIEWER AND PEER REVIEWER 2: Score 2 maintained. Score 0 would suggest absence of any measures to hold offenders liable are in place.

Researcher + Peer Reviewer3634: The obligation to report corruption is provided for in the Law on Public Service. Though no special obligation is given to Ministry of Defence personnel, the Law on Public Service covers both civilian and military Ministry of Defence personnel. Protection of reporting officers is provided for by the Government decree N 1816-N, which contains a formal provision requiring that a whistleblower should report to an offender's superior, who is to guarantee secrecy. This, however, does not seem to provide for substantial security measures.

However, the Global Integrity Index evaluated protection of whistleblowers as “very weak” in 2011. According to the Transparency International report listed, 2/3 of interviewees say he/she would not report on his fellow citizens’ corruption; the interviewee stated that officers are not advised on whistle-blowing.

There is no other legislation and mechanisms which regulates issues relating to whistle-blowing. In addition, according to interviewee, civilians and military officers are reluctant to submit a report because of concerns about their protection. Government decree N 1816-N contains a formal provision requiring that a whistleblower should report to an offender's superior, who is to guarantee secrecy. This, however, does not seem to provide for substantial security measures.

Researcher + Peer Reviewer3634: According to the interviewee, the Ministry of Defence has not identified positions that are highly exposed to corruption risk. No information on such positions is available on the Ministry of Defence website.

There is no particular approach towards these positions. The appointment of positions in the Armenian Ministry of Defence is governed by the Law on Special Civil Service (civilian) and by the Law on Passing Military Service (military). The law does not provide for opportunity to differentiate between roles when making appointments. According to the Law on Special Civil Service, the civil servant is to remain in office until the age of 65, and is not subject to dismissal before that term. Thus, there is no rotation and the civil servant stays within his/her specific role unless he/she resigns or removed from service. This is also borne out by the fact that high-ranking officials in the areas of finance and procurement tend to occupy the same position for more than 10 years.

The only restriction that civilians face is that an officer is restricted from working in a company that was under the officer’s control during the last year while he was on duty. The restriction relates only to cases in which the officer was in control of the company, and not general involvement in transactions.

RESPONSE TO GOVERNMENT REVIEWER: The comments relate to personnel in general and do not explicitly confirm that personnel particularly at-risk have been identified and that tailored training applies to them, although the 'extraordinary attestation' procedure suggest that some processes are in place. The score therefore remains at 0.

Researcher + Peer Reviewer3634: The Global Firepower website estimates that Armenian army has 68,047 active personnel. Armenian sources do not provide data about the number of military personnel; according to the interviewee, the number of military officers is confidential and is not available - indeed the Constitution does not allow for this number to be made public. As www.armnewstv.am reported, on October 28, 2013, during a debate in the Standing Committee on Defence, National Security and Internal Affairs, the deputy Speaker of Parliament interfered and did not allow the number of military officers to be stated, claiming that it was confidential information. According to the Civil Service Council website, there are 401 civilians employed by the Ministry of Defence. No media reports doubt this number.

The score of 1 has been selected to reflect the availability of information on civilian staff and the classification of information regarding military personnel numbers.

Researcher + Peer Reviewer3634: The remuneration of civilian staff consists of post rate, rank rate and other additional payments based on experience (these are publicly available). Article 16 and Appendix 3 of the Law on Remuneration of Civil Servants provide that remuneration of military staff is determined on the basis of basic salary multiplied by rate that depends on military rank and the number of years in service.

According to the law, military personnel do not receive additional payments for their rank and, unlike civilians, are not entitled to financial assistance related to marriage, loss or damage of property because of natural disaster, illness or death of a family member. Article 22 of the Law on Remuneration of Civil Servants stipulates that up to three times a year, bonus payments equal to monthly salary can be awarded by a superior for fulfilment of special missions (for the military, information related to such missions is confidential). The law also provides that depending on service conditions, additional payments can be made, the rates are to be decided by the government. Government decree 656-N that further regulates the issue includes four confidential clauses.

The comparison of the total amount paid to officers, as provided in the publicly available information and as reported in the media outlet “Armenian Version,” confirms that the average amount paid to the officers differs from the one indicated in the official sources.

RESPONSE TO GOVERNMENT REVIEWER: Agree. Amendments to Article 24 of the Law on Remuneration of Civil Servants (introduced in June 2014) state that public officials may receive one-time financial assistance on occasion of marriage or in cases of loss or damage of property because of natural disaster; long-lasting illness of the official or his/her family member; or death of a family member. The Law also states that military personnel are excluded from these provisions; article 23 adds that military personnel’s social security issues not covered by the same law shall be regulated by the Law on Military Social Security and other legal acts. The Law on Military and Their Families Social Security does not mention one-time financial assistance in the cases stated above. It was not possible to find out if other legal acts, such as for instance minister’s decrees, regulate that issue. Therefore score 3 was maintained to reflect uncertainty over allowances and bonuses.

Researcher + Peer Reviewer3634: The Ministry of Defence is reported to have had a contract with the ACBA-Credit Agricole Bank for processing personnel's salaries. It appears that payments are relayed electronically, except for payments to certain distant military units, which can be done in cash. Remuneration is paid regularly and, while there is a lack of clarity on allowances, basic pay is not subject to any discretionary authority. According to the interviewee, no cases of delayed salary payment have been recorded; a search of media content has not revealed any reports of delays. While cash payments in remote military units and absence of clear information about the number of servicemen in those units indicates certain corruption risks, these risks are small-scale. Given the absence of any evidence of delays, score 4 has been selected.

Researcher + Peer Reviewer3634: According to the interviewee, no appointment system for both mid-level and top management positions exists. The announcements on vacancies are not published and military officers are not informed of new vacancies and the necessary qualification criteria. This is verified by researching the Ministry of Defence website. According to the interviewee, military positions do not have terms of reference in which required qualifications and duties are outlined; if there is a vacancy, a particular officer is informed in an informal manner and later introduced to the Minister of Defence for appointment.

RESPONSE TO GOVERNMENT REVIEWER: The orders of the Minister of Defence N571 from May 29, 2013, and N1191 from October 25, 2013, mentioned by the government reviewer are not publicly available. Currently, there are no vacancy announcements in the Hay Zinvor newspaper. Score 1 selected as it has been stated that a system of appointments does exist and as the Law on Passing Military Service appears to contain guidelines on appointments, however, the specific degrees have not been made public.

Researcher + Peer Reviewer3634: The law states that the promotion of civil servants shall be performed through competition. According to the law, any person qualified may participate in competition for a role. During the competition, a board composed of members of the relevant department (plus members from outside the department) evaluates the person’s qualifications. According to the interviewee, control over this system is only exercised when an appeal occurs. If an appeal does not occur, no authority oversees the activity of promotion boards.

RESPONSE TO GOVERNMENT REVIEWER: Articles 15, 17 and 27 of the Law on Passing Military Service govern the promotion process, as noted. Minister of Defence's orders mentioned by the Government Reviewer are not in open access.

Score of 2 selected due to limited oversight and only partial transparency re. procedures.

Researcher + Peer Reviewer3634: Bribery is criminalized in Armenia. According to www.news.am and the “Aravot” Daily, between 2009 and 2011 several officers have been arrested for bribery to avoid compulsory service. According to “Aravot”, the Ministry of Defence has stressed many times that the military draft constitutes a high corruption risk and has underlined the need to undertake relevant measures to prevent corruption in the draft. Draft commissions (composed of military officers have been raised as a way of avoiding corruption risk in the draft; since 2013, the draft procedure has been lottery-based.

Avoiding the draft is usually done through medical commissions. Measures that have been undertaken include changing all members of the commissions, double-checking previously inspected draftees, and subordinating the commissions to direct control of the Minister of Defence and the Minister of Healthcare. According to the interviewee, the draftees who have not been conscripted due to health conditions are subject to double inspection during the next military draft.

In 2014, two officers and two doctors were arrested for accepting bribes for giving exemptions from compulsory military draft. Yet, human rights activists suggested that while the Ministry of Defence's struggle against corruption related to the military draft procedure could be related to the lack of potential draftees followed by a need to cut the number of exemptions, some people just became 'scapegoats' while the corruption issue was more widespread. On the other side, they noticed that the number of 'privileged' persons exempted from draft (mainly sons of state officials) was so high that in order to compensate a number of conscripts mobilised despite having serious health issues had grown substantially.

RESPONSE TO PEER REVIEWER 2: Agree, score lowered from 3 to 2.

Researcher + Peer Reviewer3634: Bribery is criminalized in Armenia. In 2011, the “Noyan Tapan” media outlet reported that a lieutenant-colonel was arrested for bribery. Since 2013, to reduce corruption risks in military drafts postings are chosen based on lottery, according to 1in.am Armenian News & Analyses media. The lottery principle covers both draftees and graduates of military academies. At the same time, media reported corruption in a peacekeeping brigade related to postings in Afghanistan. The report mentions that the criteria for service in Afghanistan are not clear. Some of the officers who had allegedly been chosen for the service in Afghanistan were not sufficiently qualified in terms of discipline, physical and other preparation.

Voluntary conscription possibility is based on the Law on Passing Military Service. Men between 20 and 40 years old who are included in the military reserve and women between 18 and 40 years may sign a contract, usually for a 2-3 year period.

RESPONSE TO PEER REVIEWER 2: I do not agree to scoring 0 as according to the model answers, a score of 0 means that no legislation against bribery exists at all. This is not the case.

Score 1 was selected in line with the model answers.

Researcher + Peer Reviewer3634: No media reports on “ghost soldiers” are available. According to the interviewee, salary payments are controlled by a central apparatus and central military units, and are paid directly to bank accounts, which limits the possibility of ghost soldiers. Salary payments to certain distant military units, however, are paid in cash. While cash payments in remote military units and absence of clear information about the number of servicemen in those units indicates certain corruption risks, these risks are small-scale. However, as mentioned in indicator 38, the number of personnel is not disclosed which poses a risk.

Researcher + Peer Reviewer3634: According to the interviewee, payment of salaries is not subject to the discretionary authority of a commander and the commander may not have an impact on the salary payment. However, this is not a published policy and there is no legal act on this.

Salary payments may be controlled by two departments within the Ministry of Defence - the department of financial inspections and the department of personnel's social security. There is only open information about the structure of units within the ministry, details on the exact authority of each unit are not available.

Researcher + Peer Reviewer3634: Codes of conduct are internal documents of ministries and other state institutions. The Codes are based on relevant laws and set rules of conduct and limitations for public servants.

Issues such as gifts and hospitality are governed by the Armenian government decree “On Order of Transferring to the State the Presents Received while on Duty,” adopted in 1993, according to which the gifts received while on duty should be transferred to the state. According to the interviewee, most civilian officers are not familiar with the decree.

The Law on Public Service also regulates gifts and hospitality issues. Article 29 stipulates that public servants shall not accept gifts except gifts given at official events (and gifts worth over 100,000 must be transferred to the institution where the official works) and decorations; books, computer software and other materials distributed free for work purposes; and scholarships or grants awarded by means of open contests.

Some provisions on conflict of interests are contained in the Code of Ethics, but they are not properly detailed. Concerning post-work restrictions imposed on civil officers, the legislation states that civil servants are forbidden to work in a company which was controlled by them while on active duty.

With regards to military officers, ethical approaches are governed by Code on internal service, which does not contain provisions on conflict of interest, or restrictions on occupying positions after resigning.

Researcher + Peer Reviewer3634: Results of criminal cases (some breaches of the Code are also criminal offences) are publicly available, however results of internal investigations related to violation of the ethics code are not. According to the interviewee, the Code of Ethics for civilian officers is not precise and no special attention is paid to it during training of civil servants. Research of the Ministry of Defence official website identified that information on investigations related to civil servants is not published. As to investigations relating to military officers, “www.lragir.am” media reports that on June 29, 2013, during parliamentary hearings, the Minister of Defence stressed that there is no necessity to publish all the results of investigations regarding military officers.

RESPONSE TO GOVERNMENT REVIEWER: It has been noted that &quoute;the armed forces staff are informed of cases when someone is subject to liability for disciplinary violations&quoute;, which suggests that the general public is not informed.

Researcher + Peer Reviewer3634: The Law on Public Service and the Law on Passing Military Service do not contain a requirement for anti-corruption training. Concerning civil servants, the law provides a requirement for completing training once in three years, but these training sessions do not include anti-corruption topics.

According to the interviewee, there is no legal act in place to identify the periodic nature and procedure of such training sessions. Training is not conducted in practice, either. The Ministry of Justice Legal Institute does organise regular seminars for public officials on anti-corruption topics.

RESPONSE TO GOVERNMENT REVIEWER: The BI Self-Assessment Questionnaire was only completed in April 2015 and no follow-up training plan is available at the time of the research.

Additional information from TI-UK DSP: A representative of the Armenian MOD completed a 10-day secondment at the DSP offices in London in September 2014, building up anti-corruption expertise. It has been stated that the expertise would be used toward constructing an anti-corruption plan as well as training courses, especially for at-risk employees at the MOD; however, it is uncertain whether this has been done. Score 1 maintained.

Researcher + Peer Reviewer3634: Corruption-related crimes are mainly reported by media outlets. In 2009-2013 “Hraparak”, www.panorama.am and www.aysor.am media outlets reported criminal proceedings initiated against several Ministry of Defence officials charged with corruption. According to the “Iravunq” media outlet, the Minister of Defence stressed that results of investigations should be published to the extent requested by society. According to a RFE/RL report, the Ministry of Defence does not provide exact statistical data on prosecution of corrupt officials, although representatives of the ministry claimed that dozens of mid- and high-ranked officials had been dismissed or faced criminal charges.

Some corruption investigations, in spite of initiating criminal proceedings, appear to have been abandoned without due reasons. As an example, the widely publicized “Rozh” case was allegedly closed.

RESPONSE TO PEER REVIEWER 2: Agreed but some results are made public which fulfills the requirements of score 1. Score maintained.

Researcher + Peer Reviewer3634: According to legislation, military officers and special civil servants do not have the right to remuneration other than prescribed by law. “Facilitation fees” are considered bribes according to the Criminal Code and the legislation imposes criminal liability for it. Criminal Code paragraphs 308 (Abuse of authority), 311 (Bribe taking), 311-2 (Using real or alleged influence for illegal gain), 314 (Forgery committed by an official) may be applied in different cases.

The government has repeatedly stressed a zero tolerance policy towards corruption. As 7or.am online news agency reported, in September 2013, the deputy head of the Social Security Department of the Ministry of Defence was arrested for requesting a bribe of USD 1000 for expediting the granting of privilege. In spite of the provisions in effect and this example, though, Policy Forum Armenia and Transparency International reports indicate that facilitation fees in Armenia in general, and in defence sector in particular, are a common practice.

RESPONSE TO REVIEWER 2: Score 2 maintained. Score 0 would suggest that facilitation payments are allowed in the legislation and encouraged, which does not reflect the legal situation or public comments of officials.

Researcher + Peer Reviewer3634: The Ministry of Defence has repeatedly stressed a zero tolerance policy towards corruption. But no document with a comprehensive evaluation of corruption risks in defence sector and armed forces and relevant measures has been published. According to the interviewee, there is no document evaluating and analysing of corruption risks while deployed or on operations, or identifying measures for reducing such risks.

There is awareness of corruption as an issue of governance as mentioned in previous questions.

RESPONSE TO GOVERNMENT REVIEWER: The NATO BI Self-Assessment Questionnaire was completed in April 2015; as of yet, there is no implementation plan.

Researcher + Peer Reviewer3634: According to the interviewee, no training for military commanders is required by the legislation. As the military doctrine does not identify corruption as an issue on operations, it is unlikely that any training would be in place.

Researcher + Peer Reviewer3634: According to the interviewee, no procedures for commanding trained specialists to areas of operation for the purpose of monitoring of corruption risks exist. As the military doctrine does not identify corruption as an issue on operations, it is unlikely that it would be monitored.

Researcher + Peer Reviewer3634: No information on the issue is publicly available.

Armenian peacekeepers participated in missions in Afghanistan, Kosovo and Iraq. In all these cases Armenian troops were under command of other countries, which procured all necessary equipment. Armenia has never procured anything for its troops in deployment. According to the interviewee, in cases of Armenian troops are deployed on a mission abroad, general procurement legislation covers the issues related to procurement. Armenian procurement legislation only governs issues related to procurement within Armenian borders. Thus, contracting abroad is not regulated in Armenia.

Researcher + Peer Reviewer3634: The composition of defence structures is defined by the Law on Defence. According to the Law on Defence, defence is the remit of the armed forces. Relevant units of national security, police and civil protection forces may only be engaged in defence in a period of martial law. The law prohibits engaging other types of units in defence. Issues of private security providers are regulated by the Law on Private Guarding Activity, adopted in 2012. According to this law, private guarding services may be rendered only to legal entities, and this definition does not include state institutions.

According to the interviewee, private guarding entities are not engaged in defence. A scan of media reports on the subject did not find cases of engaging private guarding entities in defence.

Researcher + Peer Reviewer3634: Defence procurement is governed by general procurement legislation, which does not provide for any specific measures for defence purchases. According to the Law on Procurement, if the procurement contains classified information, it is conducted through ‘limited procedures'. According to the interviewee, defence procurement is conducted through such ‘limited procedures.’ Article 19 of the Law on Procurement sets out conditions for using 'limited procedures': they are applied if considered procurement is related to a state, official or bank secrets. Only companies invited (pre-approved) by the buyer may participate in bidding, and there are no negotiations on contract conditions. Government decree N1259-N stipulates that the Ministry of Finance is entitled to control state procurement deals, including those under limited procedure.

The Law on Military Industrial Complex was adopted in 2015. It includes some guidelines for companies involved in production and supply chain. However, the documents and procedures must correspond to the Law on Procurement clause related to classified information.

The legislation has few provisions that govern corruption-related issues. Since defence-related procurements are secret, there is no evidence that all defence and security procurements are conducted in compliance with the legislation.

Score 1 has been selected as some legislation is in place, but it is impossible to verify to what extent it contains anti-corruption provisions and whether procurement processes are independently verified.

Researcher + Peer Reviewer3634: According to report of Helsinki Citizens’ Assembly Office in Vanadzor, all defence procurements are classified and are not publicly available. This statement refers to both military and non-military items of the budget. As of 2013, no information on Ministry of Defence need assessments has been made available on the Ministry of Defence website or in 2014-2016 mid-term expenditure plans. Information on contracts signed within the framework of open procedures was published on the official website of the state procurement system in 2013. No information on contracts signed in the framework of other procedures is available. Neither the Ministry of Defence website nor the Armenian state procurement system website contain information on contract implementation and asset disposals. According to the interviewee, information on contract implementation is published only when a person violates his/her contractual obligations.

RESPONSE TO GOVERNMENT REVIEWER: The public availability of procurement cycles has changed in 2013 and the analysis now reflects that.

RESPONSE TO TI REVIEWER: Agree with comments. Score 0 maintained as only very little information on the procurement cycle is disclosed, in a summary and non-comprehensive way.

Researcher + Peer Reviewer3634: Procurement legislation provides for control over procurement procedures if there is an appeal by a participant against procurement officials.

Public oversight is also performed by the Chamber of Control, although it is incomplete at best. The 2013 Chamber of Control 2013 report only reviews procurement of food, medicines, and bookkeeping software in the MOD, although it did criticise the MOD for wasting resources and identified a number of cases where explicit misconduct occurred. The report is publicly available on the Chamber of Control website. The 2014 report does not mention defence procurement at all.

According to the Law on Procurement a Procurement Appeal Commission, an independent body, is formed when an appeal is submitted. A representative from a CSO is also included in the committee. According to the OECD report, the effectiveness of an appeal committee is stipulated by the fact that a participant is entitled to appeal against any decision of a procurement officer and the evaluation committee, and they can challenge the decision on what form of procurement is used. From 2011-2013, according to report of the state procurement system, 19 appeals were submitted to the Ministry of Defence Procurement Appeal Council, 11 of which has been approved and 4 were dismissed. Decisions of the Procurement Appeal Commission are published on the website. The media has not reported on the ineffectiveness of the Procurement Appeal Commission.

In 2013 The Chamber of Control in its report strictly criticized the MoD for wasting budget resources. The report identified a number of cases when there were explicit misconducts and resource wasting. The report is publicly available on the website of the Chamber of Control (www.coc.am). Also, according to insider information, the Chamber of Control conducts regular inspections relating to procurement process, though its results are not published.


RESPONSE TO TI REVIEWER: Agree. Score changed to 2 to reflect lack of comprehensive oversight by institutions such as the Chamber of Control. Though the checks mentioned by Ministry of Defence are indeed conducted, it is not clear that they are entirely independent of government. No mechanism for overview of procurement procedures besides appealing exists. It is possible that the CoC audits procurement without publishing the reports, but if this is the case, results of oversight cannot be seen as transparent.

Researcher + Peer Reviewer3634: The Ministry of Defence’s current procurements are listed in the Armenian Government decree N1616-N, Appendix 12, from 20.12.2012. According to the interviewee, only defence purchases, i.e. weapons and items of military use are not made publicly available, and defence procurements comprise around 20% of all procurement. However, there is no publicly available information which would confirm that estimate.

With regard to potential expenditures, i.e. expenditures to be conducted in further budget years, the 2014-2016 mid-term expenditure plan does not contain any information on potential procurements.

Researcher + Peer Reviewer3634: Procurement legislation provides that entities led by an executive who has been convicted for corruption within last 3 years may not bid for contracts. According to the interviewee, procurement participants are only required to submit a declaration confirming this. No requirements on anti-corruption compliance programs are contained in the legislation. Research of invitations to bidding published on State Procurement System website identifies that no compliance program requirement exists.

There are sanctions in place to prevent those convicted of corruption and other crimes from bidding, but the government does not require compliance programs from bidding companies. The government decree N 1481-N stipulates, in compliance with the Law on Procurement, that companies managed by an executive who has been convicted for an economic crime or breach of integrity within the last three years may not participate in tenders. Blacklisted companies are also excluded.

Researcher + Peer Reviewer3634: According to the interviewee, Ministry of Defence procurements are planned in accordance with its action plan. Research of public sources, however, find that the Ministry of Defence Action Plan is not published. No information on priorities of the Armenian Ministry of Defence is published in the 2014-2016 midterm expenditures program. According to the interviewee, when planning programs are created, the national security strategy is often referred to, but no control over its reasoning has ever been exercised. The National Security Strategy itself is publicly available, but it does not mention procurement.

Researcher + Peer Reviewer3634: Analysis of the Armenian government decree N1616-N from 20.12.2012, Appendix 12, identifies that the quantity of each item is listed and publicly available. The Ministry of Defence may not, on its own initiative, procure more items than listed in the decree. According to www.mediamall.am, the Deputy Minister of Finance stated on October 25, 2013, that the Armenian Government has approved technical characteristics of certain procurement items, which indicates the existence of a formal procedure. However, according to the interviewee, the vagueness of technical characteristics required in procurement has not been entirely resolved and remains a source of corruption risks.

Researcher + Peer Reviewer3634: According to the Procurement System in the Republic of Armenia website and reports for first nine months of 2013, during 2013 the Ministry of Defence conducted over 50 open procurement procedures, with a total amount of 3,130,344,666 AMD. According to Electronic Government of the Republic of Armenia website, during 2013 the Ministry of Defence conducted over 51 single source procurements with the amount of 60,140,000 AMD. Thus, the option of single source procurements is not more than 2 per cent of total procurements.

As of August 11, 2015, 744,860,638 has been spent in 2015 in single source procurement, mainly on medical examinations, travel and catering, which constitute a minority of spending by the Ministry of Defence. However, the overall proportion of single source procurement is difficult to estimate as the expenditure on procurement of military-use items and information on whether these have been procured through competition or single sourcing is not publicly available. The interviewee estimated this was about 20% of all procurement, but this could not be verified. Score 2 has been selected to reflect uncertainty.

Researcher + Peer Reviewer3634: Members of the evaluating committee, according to the Armenian Government decree N168-N from 10.02.2011, may not be affiliated with potential participants in the procurement process. This is the only provision for the members of evaluation committees. No Code of Conduct is adopted for members of committees. To control the committee, the law set up the Procurement Appeal Commission which, according to the OECD 2013 report, is independent. Records of sessions of the evaluation committee are published on State Procurement System website, although the records may not be complete. According to the interviewee, the Ministry of Finance conducts regular checks of published records. Despite this, Armenian Public Radio reports that the State Procurement System is still not transparent and not accessible to businessmen.

RESPONSE TO PEER REVIEWER 2: Score 2 selected based primarily on the lack of specific codes of conduct and reported limitations in access to audit results.

Researcher + Peer Reviewer3634: The Law on Procurement states that persons and companies breaching anti-trust regulations will be blacklisted and forbidden from participating in further procurements. The list of all blacklisted entities is published on the website of the public procurement system. No special provision for such behaviour in defence procurements exists.

According to the interviewee, however, the anti-trust provision is not implemented. This may also be indicated by the fact that the Ministry of Defence website does not contain any information on blacklisted companies, and the website of the State Procurement System does not contain information on entities blacklisted for anti-trust conduct.

Researcher + Peer Reviewer3634: Article 15 of the Law on Procurement states that procurement staff should be qualified and included in the list of qualified procurement specialists, for which they should pass exams. According to the interviewee, there is no training requirement for project managers and contract managers and procurement positions are often filled with people who do not have relevant background and experience. The interviewee also mentioned that exams and tests are designed in a way that do not allow a full evaluation of knowledge and skills of the employee. In most cases the employees pass the tests, and no case of failure has been recorded. The interviewee also mentioned that there are indications that in some cases high-ranking officials influence the process of contract implementation.

The government reviewer, however, stated that '[a]ll procurement officers have undergone relevant training, passed exams and are included in the list of qualified specialists drafted by the authorized agency, in accordance with Law on Procurement, Article 15 Paragraph 5.'

RESPONSE TO GOVERNMENT REVIEWER: Partially agree with Ministry of Defence position. The score has been reviewed.

Researcher + Peer Reviewer3634: Legislation on procurement provides that procurement participants may appeal against any activity of the procuring entity to the Procurement Appeal Council. According to the 2013 OECD report, the Appeal Council is an independent body. Apart from officials from government agencies, it includes members of non-governmental organizations. Decisions of Appeal Council are transparent and are published on the website of State Procurement System.

The law does not provide for special provisions on protecting companies which have exercised their right to appeal. During 2011-2013 there were 19 appeals against Ministry of Defence decisions, 10 of which have been granted relief, 4 were dismissed and 3 were rejected. But according to the interviewee, the participants avoid appealing as some issues may be raised during further operations. The Armenian Public Radio also reports that businessmen do not trust the new procurement system.

According to publicly available information, no appeals against the Ministry of Defence were registered in 2014-15.

RESPONSE TO PEER REVIEWER 2: Disagree. Score 1 would mean that no appeal mechanism exists, which is incorrect. Score 3 maintained.

Researcher + Peer Reviewer3634: The Criminal Code of Armenia imposes criminal liability for bribery (see para 312 and 214 for abuse of authority). The Law on Procurement provides that the company the executive of which has been convicted for corruption during 3 years before submitting the application may not participate in procurement procedures. A list of blacklisted companies is available on the website of the state procurement system. As of August 11, 2015, four companies were blacklisted. However, according to the interviewee, sanctions for punishing the companies previously engaged in corruption were not consistently applied. No executive of a company has been convicted for active bribery during the last 10 years.

The widely known “buffalo meat” case (in which several units were provided with low-quality imported buffalo meat instead of the locally produced beef required by the contract) is evidence that punishing suppliers is not effective. According to “Hetq” media, the person charged with corruption (the director of the Kapan meat factory) is highly influential and politically connected which is why the investigation has not progressed. According to the Hayeli media outlet, there is no progress in the case, while according to “168 Zham” media, investigators are preparing to close the case.

Score 2 was selected as the blacklisting process is evidence of debarment procedures being applied, even if not comprehensively.

Researcher + Peer Reviewer3634: The Law on Procurement does not regulate offset contracts issues and no legal act governing offset contracts exists in Armenia. According to the interviewee, Armenia has never signed offset contracts. The Ministry of Defence, according to the interviewee, is not familiar with the “offset contract” concept. Public sources also did not reveal cases of signing offset contracts.

Researcher + Peer Reviewer3634: The Law on Procurement does not regulate offset contracts issues and no legislation governing offset contracts exists in Armenia. According to the interviewee, Armenia has never signed offset contracts. The Ministry of Defence, according to the interviewee, is not familiar with the “offset contract” concept. Public sources also did not reveal cases signing offset contracts.

Researcher + Peer Reviewer3634: The Law on Procurement does not regulate offset contracts issues and no legislation governing offset contracts exists in Armenia. According to the interviewee, Armenia has never signed offset contracts. The Ministry of Defence, according to the interviewee, is not familiar with the “offset contract” concept. Public sources also did not reveal cases signing offset contracts.

Researcher + Peer Reviewer3634: The Law on Procurement does not regulate issues related to control over agents and intermediaries. According to the interviewee, participation of intermediaries and agents in procurement is a common practice, and there is no special approach towards them.

Researcher + Peer Reviewer3634: Different degrees of openness apply to general procurement contracts and to arms deals.

In general procurement contracts, according to the interviewee, all principal aspects of the financial package, including payment timelines, payment conditions, conditions for delivery of goods and services are included in the draft agreement prior to the signing of procurement contract. The draft agreement is an integral part of the invitation to bid. Research of randomly chosen “HHPNNTAD-BYTSDZB-12/2” open procedure invitation revealed that all the principal aspects of financial packages are included in the draft agreement. According to the interviewee, the signed contract fully complies with the draft which is included in the invitation. The media has not reported any inconsistencies between signed procurement contract and the draft presented in the invitation.

However, arms deals are processed with a much smaller degree of transparency, as defence procurement procedures are classified and no information is available prior to the signing of contracts. Score 0 has been selected to reflect lack of transparency regarding arms deals, which is the focus in this question.

Researcher + Peer Reviewer3634: Procurement legislation does not provide for any requirement for subsidiaries and sub-contractors adopt anti-corruption programs. According to the interviewee, no such requirements are included in the invitation either.

As of August 2015, there were two public invitations by the Ministry of Defence to bid on the website of state procurement service (see sources 3 and 4). Source 3 invitation is open until 11 a.m. on August 18, source 4 invitation is open indefinitely. The standard invitation only requires bidding companies to declare that they have not been declared bankrupt by the court, do not have overdue tax or compulsory social security debts to the tax office, that company manager has not been prosecuted during the previous three years and that the company is not blacklisted. There are no requirements to adopt a specific anti-corruption programme.

Researcher + Peer Reviewer3634: Armenia's National Security Strategy and military doctrine both refer to military cooperation with Russia and the Collective Security Treaty Organisation; the doctrine describes relations between Russia and Armenia as a strategic partnership. This suggests that procurement from Russia is prioritised, although there is evidence that Armenia buys weapons from other countries as well. The UN Conventional Arms Register, for example, states that in 2010 Armenia has imported weapons from Montenegro and Ukraine. In 2013 Panarmenian.net reported that Armenia was allegedly preparing to buy missiles from China; www.lragir.am also reported Armenia’s intention to buy weapons from Europe.

However, Russia is Armenia's main supplier and creditor when it comes to weapons systems (Kucera, Taylor). National Assembly's session on 02.07.2015 was a snap session called specifically for ratification of the agreement on $200 million Russian loan for buying Russian weapons and equipment. The type of weapons that would be acquired was not mentioned during the open session, although speculation has centred around a type of Iskander missile (1in.am).

Armenia's dependence on Russia has been criticised given similar arms deals between Russia and Azerbaijan, thought to foster the risk of an arms race between Armenia and Azerbaijan (Taylor, Kucera).
According to the “Modus Vivendi” center director, buying weapons from other countries should be considered a message to Russia. According to Panarmenian.net media, Armenia prefers buying weapons from Russia because it offers at a cheaper price, given Armenia’s membership in the Collective Security Treaty Organisation (CSTO (ODKB)). According to the interviewee, Russian weapons are more user-friendly for Armenian militaries, which is why Armenia prefers buying weapons from Russia.