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BUSINESSMEN ARRESTED AMID COURT BATTLE WITH ARMENIAN CUSTOMS
By Ruzanna Stepanian
Armenialiberty.org, Armenia
Radio Liberty, Czech Rep.
Oct 13 2005
The two top executives of a coffee importing company who have alleged
high-level corruption within Armenian customs have been arrested on
charges of fraud and smuggling, their lawyer said on Thursday.
The arrest of Gagik Hakobian and his deputy Aram Ghazarian is the
latest twist in a long-running bitter dispute between their Royal
Armenia firm and the State Customs Committee (SCC). It began nearly
two years ago when they the company claimed to be penalized for its
refusal to cut illegal deals with corrupt customs officials.
Criminal proceedings against the Royal Armenia executives were launched
by the National Security Service (NSS), the Armenian successor to
the KGB secret police, last spring. The case is reportedly based on
a complaint filed by a U.S. citizen of Armenian descent who claims
that Royal Armenia owes him $164,000 for coffee supplies and has
failed to pay up. The man, identified as Vache Petrosian, has also
alleged that Hakobian and his associates forged financial statements
to understate the volume of their imports.
Hakobian's lawyer, Ashot Sargsian, described the case as "weird." "I
wonder why he went to the National Security Service," Sargsian
told RFE/RL. "If one of the parties fails to honor its contractual
obligations, it must be taken to court."
"I don't know what National Security wants today. They themselves
probably don't know," he said.
The NSS refused to comment on the case on the grounds that the
investigation is still going on.
Speaking at a news conference last June, Hakobian charged that he is
being prosecuted in retaliation for its high-profile battle with the
customs chiefs. "We are dealing with a group of officials who set
unofficial rules, and if you don't comply with those rules then you
must not operate," he said.
The two-year dispute centers on the Customs Committee's controversial
discretionary power to determine the market value of imported
commodities before levying a fixed 10 percent duty from them. Royal
Armenia, which imports, processes and sells coffee, said last year that
customs officials offered to grossly undervalue price of its imported
coffee beans in return for sharing in the resulting extra profits.
The Armenian customs has evaluated one kilogram of Indonesian raw
coffee imported by Royal Armenia at $1.8. The company insists that
its real purchasing price was only $1.24 per kilogram. The value of
the same sort of coffee brought in by other importers is set at $1.1
per kilogram or even less.
Customs officials say they trust invoices submitted by Royal Armenia's
competitors but they have yet to clearly explain why they distrust
customs declarations issued by Hakobian's company.
Royal Armenia says it has repeatedly demanded a written explanation
of the price evaluation policy from the customs but to no avail. It
asked Armenia's Economic Court last month to force the SCC to provide
such a document and reconsider its controversial import duties. The
court is still considering the lawsuit
Customs administration is one of the most frequent sources of
complaints made by Armenian entrepreneurs. However, few of them go
public with their grievances for fear of government retribution.
Royal Armenia is the only private firm which is known to have publicly
clashed with the SCC in recent years.
Corruption among Armenian officials in charge of collecting taxes and
import duties is widespread. President Robert Kocharian personally
warned senior customs officials on two occasions this year to stop
harassing honest taxpayers and helping importers avoid taxes in return
for kickbacks.
Armenia's controversial customs chief, Armen Avetisian, is believed to
be close to Defense Minister Serzh Sarkisian. Incidentally, Avetisian
has held senior posts in the NSS in the past.
By Ruzanna Stepanian
Armenialiberty.org, Armenia
Radio Liberty, Czech Rep.
Oct 13 2005
The two top executives of a coffee importing company who have alleged
high-level corruption within Armenian customs have been arrested on
charges of fraud and smuggling, their lawyer said on Thursday.
The arrest of Gagik Hakobian and his deputy Aram Ghazarian is the
latest twist in a long-running bitter dispute between their Royal
Armenia firm and the State Customs Committee (SCC). It began nearly
two years ago when they the company claimed to be penalized for its
refusal to cut illegal deals with corrupt customs officials.
Criminal proceedings against the Royal Armenia executives were launched
by the National Security Service (NSS), the Armenian successor to
the KGB secret police, last spring. The case is reportedly based on
a complaint filed by a U.S. citizen of Armenian descent who claims
that Royal Armenia owes him $164,000 for coffee supplies and has
failed to pay up. The man, identified as Vache Petrosian, has also
alleged that Hakobian and his associates forged financial statements
to understate the volume of their imports.
Hakobian's lawyer, Ashot Sargsian, described the case as "weird." "I
wonder why he went to the National Security Service," Sargsian
told RFE/RL. "If one of the parties fails to honor its contractual
obligations, it must be taken to court."
"I don't know what National Security wants today. They themselves
probably don't know," he said.
The NSS refused to comment on the case on the grounds that the
investigation is still going on.
Speaking at a news conference last June, Hakobian charged that he is
being prosecuted in retaliation for its high-profile battle with the
customs chiefs. "We are dealing with a group of officials who set
unofficial rules, and if you don't comply with those rules then you
must not operate," he said.
The two-year dispute centers on the Customs Committee's controversial
discretionary power to determine the market value of imported
commodities before levying a fixed 10 percent duty from them. Royal
Armenia, which imports, processes and sells coffee, said last year that
customs officials offered to grossly undervalue price of its imported
coffee beans in return for sharing in the resulting extra profits.
The Armenian customs has evaluated one kilogram of Indonesian raw
coffee imported by Royal Armenia at $1.8. The company insists that
its real purchasing price was only $1.24 per kilogram. The value of
the same sort of coffee brought in by other importers is set at $1.1
per kilogram or even less.
Customs officials say they trust invoices submitted by Royal Armenia's
competitors but they have yet to clearly explain why they distrust
customs declarations issued by Hakobian's company.
Royal Armenia says it has repeatedly demanded a written explanation
of the price evaluation policy from the customs but to no avail. It
asked Armenia's Economic Court last month to force the SCC to provide
such a document and reconsider its controversial import duties. The
court is still considering the lawsuit
Customs administration is one of the most frequent sources of
complaints made by Armenian entrepreneurs. However, few of them go
public with their grievances for fear of government retribution.
Royal Armenia is the only private firm which is known to have publicly
clashed with the SCC in recent years.
Corruption among Armenian officials in charge of collecting taxes and
import duties is widespread. President Robert Kocharian personally
warned senior customs officials on two occasions this year to stop
harassing honest taxpayers and helping importers avoid taxes in return
for kickbacks.
Armenia's controversial customs chief, Armen Avetisian, is believed to
be close to Defense Minister Serzh Sarkisian. Incidentally, Avetisian
has held senior posts in the NSS in the past.