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"...WHEN THE BENEFACTORS, THE FUND, THE BENEFICIARIES AND THE CONTRACTORS ARE ALL DISSATISFIED"
KarabakhOpen
26-05-2008 14:06:24
An Interview with Vahe Aghabegians, Executive Director of the Hayastan
All Armenian-Fund
Q - Mr. Aghabegians, the North-South Highway in Karabakh was slated
to be finished in the autumn of 2007. What's the reason why the work
is still going on?
A - Most of the monies collected during the Annual Telethons are
in the form of cash pledges. We don't always collect 100% of what's
been pledged; moreover the pledges made are honored in the upcoming
eleven months.
We have many pledges made during the November 23, 2007 Telethon that
haven't been honored as yet; that's to say that the cash contributions
have yet to be forwarded to us. During the past 2-3 years the
U.S. Dollar was depreciated in value in Armenia. Over the course of the
year this translates into a 30% drop in our reserves. At the same time
there's been a rise in the cost of construction materials. For example,
one ton of cement used to cost $300 but today it's soared past $500.
There came a time when the flow of money expected from the pledges
was interrupted and we found ourselves in the situation we witness
today, when 30 kilometers of the North-South Highway remains
unfinished. During last year's Board of Trustees meeting it was
announced that our resources had been exhausted. However, given that
the Highway is of great strategic significance and must be completed,
the Armenian government declared that it would allocate $2 million
from the state budget to this end and the Artsakh Government promised
an additional $1 million. As of last month, the necessary paperwork to
complete the project had begun. A trilateral contract to complete the
Highway was signed by the All-Armenian Fund, The Artsakh Government
and the project contractor. Construction work on one of the incomplete
sections of roadway has already started. It is our hope that the
entire length of the North-South Highway will be completed and ready
for public use by the end of 2008.
Q - After reviewing your workload it would appear that the reason for
all of this is the lack of proper planning. It seems that only after
work has started that you begin to look for the necessary funds. From
the get-go isn't there one person responsible for each project?
A - There's some truth in what you say. To be fair though I'd have to
say that we have been cursed by these wild swings in prices. Two months
ago a ton of iron cost $300. Today, its price has increased three fold.
Thus, the plans conscientiously drafted a mere three months ago
loose much of their validity. I have with me the estimated costs
involving HayRusGazArd as of February 2007. Based on those cost
estimates I collected an amount of funds. Today however those cost
have increased by 100% and a project that was once estimated to cost
30 million now will cost 60 million. In reality, the time it takes
to complete a project should only take six months. If during that
period the funds are not pledged or raised or they don't reach the
Fund, there is a great probability that the particular project will
financially collapse. One of the solutions would be that The Fund
possesses a serious reserve fund that could be used to smooth over
such cost fluctuations.
We also believe that another reason for the shortcomings is the time
it takes for decisions to be finalized. Due to bureaucratic red tape
the process gets drawn out. If the decision process only took, say
three months, the price rises we've spoken of wouldn't essentially
affect the completion of the projects.
If it were possible for the process to be managed effectively we would
already have a developed country and not merely a developing one. All
the challenges we face are contingent on such factors. If The Fund
were just one example of this process, that would be a different
matter. Then you could ascribe the problems to be the fault of one
individual or one organization.
But when the problem is pervasive it really dictates ones actual
bottom-line. Of course, I may have exaggerated the situation a
bit, but I believe we have reached a point when all involved are
dissatisfied - the benefactor, the Fund, the intended beneficiary
and the contractor. None of us are happy with the current state of
affairs and I'm well aware of it.
However, there are no easy textbook solutions to be applied. This
really requires some unique solutions and each case has its own
particularities that must be addressed.
Q - In the list of contributions raised during the 2006 Telethon
there were some really big donors who made specific pledges. For
instance, Ara Abrahamyan pledged $1 million to build a school in
Stepanakert. I've asked around but no one can tell me whether the
money was received and if the school was ever built.
A - I don't think it's a big secret. It's only logical to assume
that if the school's been built and the building exists that the
money has been donated, and vice-versa. As to the specific case of
Ara Abrahamyan, I really can't give you an answer. A certain portion
of the pledge has been received, but I can't give you a specific
amount. This all took place before I started working at The Fund. All
I can say is that the name of Ara Abrahamyan and other donors appear
in our receivables list.
Q - During the last Telethon a film was shown about the village of
Azokh that depicted residents having to carry water in buckets on a
daily basis.
Certain people who saw the film then raised funds to solve the
matter. Later on The Fund announces that the water pipes in Azokh
will not be laid due to certain objective factors. Don't you think
that such an approach is incorrect?
A - In the final analysis it's the donors themselves who will
judge a given project completed by The Fund. Truly, if I felt that
there was even the slightest hint of malfeasance involved here, of
irresponsibility, I'd totally agree with you. This is not the case
however. Let me cite the example of the water distribution pipes in
the village of Metz Taghlar.
The contractor turned out to be less than reliable. He cited a list
of prices to use that raised eyebrows on The Fund's committee members
because they were so low. The contractor assured us that the low
estimates were based on the stockpile of pipes in his possession. We
signed off on the project but the contractor was only able to complete
2% of the job. We signed the contract in good faith and started making
payments to the contractor, which of course was deficit spending on
our part. What I am trying to say is that we have a problem regarding
funds management and our programs are being squeezed as a result. We
have to clarify those projects that are not worth continuing and
those contractors who are not dependable.
If we had cash reserves on hand, we would immediately pull out of deals
with unsavory contractors, cut deals with new ones and move forward.
Q - Let's talk about the Metz Taghlar case that you raised. You
announced that a tender competition would take place and the TV
reported about it. The villagers heard the news as well and expected
that water would soon be supplied to them. Suddenly though, the
project grinds to a halt and the local residents aren't even given
any explanation. When you ask the villagers what the problem is their
response is - we don't have a clue, the monies were pocketed. They
can't be faulted for thinking this way since they haven't been brought
into the picture.
A - You are correct, there are gaps in the process every day. It's
a reflection of the quality of the staff. What I mean to say is that
our organization vitally needs to be updated and streamlined. As an
Executive Director working in the 21st century I sign 1800 pieces of
paper every month. Believe me, I was getting so tired that I started to
count the number of times. I even have to sign copies of papers when
required. All this leaves little time for me to be creative on the
job. The structure of The Fund, created many years ago, hasn't kept up
with the demands of the times. I voice these concerns every day because
I've made up my mind to change things around here. During talks that
I've had with the Board of Trustees I've proposed that a separate
committee be created that would review the management structure of
The Fund and bring it up to 21st century standards. Thus, whenever you
have to break a contract the next logical step would be to inform the
intended beneficiary of the delay. All this would be done without delay
and you won't wind up forgetting to tell the project beneficiaries
of the changes, let alone forgetting to tell the benefactor.
When you look at the issue rationally you see that the problems aren't
really that great, believe me. We are smoothing out the wrinkles.
KarabakhOpen
26-05-2008 14:06:24
An Interview with Vahe Aghabegians, Executive Director of the Hayastan
All Armenian-Fund
Q - Mr. Aghabegians, the North-South Highway in Karabakh was slated
to be finished in the autumn of 2007. What's the reason why the work
is still going on?
A - Most of the monies collected during the Annual Telethons are
in the form of cash pledges. We don't always collect 100% of what's
been pledged; moreover the pledges made are honored in the upcoming
eleven months.
We have many pledges made during the November 23, 2007 Telethon that
haven't been honored as yet; that's to say that the cash contributions
have yet to be forwarded to us. During the past 2-3 years the
U.S. Dollar was depreciated in value in Armenia. Over the course of the
year this translates into a 30% drop in our reserves. At the same time
there's been a rise in the cost of construction materials. For example,
one ton of cement used to cost $300 but today it's soared past $500.
There came a time when the flow of money expected from the pledges
was interrupted and we found ourselves in the situation we witness
today, when 30 kilometers of the North-South Highway remains
unfinished. During last year's Board of Trustees meeting it was
announced that our resources had been exhausted. However, given that
the Highway is of great strategic significance and must be completed,
the Armenian government declared that it would allocate $2 million
from the state budget to this end and the Artsakh Government promised
an additional $1 million. As of last month, the necessary paperwork to
complete the project had begun. A trilateral contract to complete the
Highway was signed by the All-Armenian Fund, The Artsakh Government
and the project contractor. Construction work on one of the incomplete
sections of roadway has already started. It is our hope that the
entire length of the North-South Highway will be completed and ready
for public use by the end of 2008.
Q - After reviewing your workload it would appear that the reason for
all of this is the lack of proper planning. It seems that only after
work has started that you begin to look for the necessary funds. From
the get-go isn't there one person responsible for each project?
A - There's some truth in what you say. To be fair though I'd have to
say that we have been cursed by these wild swings in prices. Two months
ago a ton of iron cost $300. Today, its price has increased three fold.
Thus, the plans conscientiously drafted a mere three months ago
loose much of their validity. I have with me the estimated costs
involving HayRusGazArd as of February 2007. Based on those cost
estimates I collected an amount of funds. Today however those cost
have increased by 100% and a project that was once estimated to cost
30 million now will cost 60 million. In reality, the time it takes
to complete a project should only take six months. If during that
period the funds are not pledged or raised or they don't reach the
Fund, there is a great probability that the particular project will
financially collapse. One of the solutions would be that The Fund
possesses a serious reserve fund that could be used to smooth over
such cost fluctuations.
We also believe that another reason for the shortcomings is the time
it takes for decisions to be finalized. Due to bureaucratic red tape
the process gets drawn out. If the decision process only took, say
three months, the price rises we've spoken of wouldn't essentially
affect the completion of the projects.
If it were possible for the process to be managed effectively we would
already have a developed country and not merely a developing one. All
the challenges we face are contingent on such factors. If The Fund
were just one example of this process, that would be a different
matter. Then you could ascribe the problems to be the fault of one
individual or one organization.
But when the problem is pervasive it really dictates ones actual
bottom-line. Of course, I may have exaggerated the situation a
bit, but I believe we have reached a point when all involved are
dissatisfied - the benefactor, the Fund, the intended beneficiary
and the contractor. None of us are happy with the current state of
affairs and I'm well aware of it.
However, there are no easy textbook solutions to be applied. This
really requires some unique solutions and each case has its own
particularities that must be addressed.
Q - In the list of contributions raised during the 2006 Telethon
there were some really big donors who made specific pledges. For
instance, Ara Abrahamyan pledged $1 million to build a school in
Stepanakert. I've asked around but no one can tell me whether the
money was received and if the school was ever built.
A - I don't think it's a big secret. It's only logical to assume
that if the school's been built and the building exists that the
money has been donated, and vice-versa. As to the specific case of
Ara Abrahamyan, I really can't give you an answer. A certain portion
of the pledge has been received, but I can't give you a specific
amount. This all took place before I started working at The Fund. All
I can say is that the name of Ara Abrahamyan and other donors appear
in our receivables list.
Q - During the last Telethon a film was shown about the village of
Azokh that depicted residents having to carry water in buckets on a
daily basis.
Certain people who saw the film then raised funds to solve the
matter. Later on The Fund announces that the water pipes in Azokh
will not be laid due to certain objective factors. Don't you think
that such an approach is incorrect?
A - In the final analysis it's the donors themselves who will
judge a given project completed by The Fund. Truly, if I felt that
there was even the slightest hint of malfeasance involved here, of
irresponsibility, I'd totally agree with you. This is not the case
however. Let me cite the example of the water distribution pipes in
the village of Metz Taghlar.
The contractor turned out to be less than reliable. He cited a list
of prices to use that raised eyebrows on The Fund's committee members
because they were so low. The contractor assured us that the low
estimates were based on the stockpile of pipes in his possession. We
signed off on the project but the contractor was only able to complete
2% of the job. We signed the contract in good faith and started making
payments to the contractor, which of course was deficit spending on
our part. What I am trying to say is that we have a problem regarding
funds management and our programs are being squeezed as a result. We
have to clarify those projects that are not worth continuing and
those contractors who are not dependable.
If we had cash reserves on hand, we would immediately pull out of deals
with unsavory contractors, cut deals with new ones and move forward.
Q - Let's talk about the Metz Taghlar case that you raised. You
announced that a tender competition would take place and the TV
reported about it. The villagers heard the news as well and expected
that water would soon be supplied to them. Suddenly though, the
project grinds to a halt and the local residents aren't even given
any explanation. When you ask the villagers what the problem is their
response is - we don't have a clue, the monies were pocketed. They
can't be faulted for thinking this way since they haven't been brought
into the picture.
A - You are correct, there are gaps in the process every day. It's
a reflection of the quality of the staff. What I mean to say is that
our organization vitally needs to be updated and streamlined. As an
Executive Director working in the 21st century I sign 1800 pieces of
paper every month. Believe me, I was getting so tired that I started to
count the number of times. I even have to sign copies of papers when
required. All this leaves little time for me to be creative on the
job. The structure of The Fund, created many years ago, hasn't kept up
with the demands of the times. I voice these concerns every day because
I've made up my mind to change things around here. During talks that
I've had with the Board of Trustees I've proposed that a separate
committee be created that would review the management structure of
The Fund and bring it up to 21st century standards. Thus, whenever you
have to break a contract the next logical step would be to inform the
intended beneficiary of the delay. All this would be done without delay
and you won't wind up forgetting to tell the project beneficiaries
of the changes, let alone forgetting to tell the benefactor.
When you look at the issue rationally you see that the problems aren't
really that great, believe me. We are smoothing out the wrinkles.