The Union of Advanced Technology Enterprises (UATE) said over the weekend that foreign and local investors have started viewing Armenia as a “risky country” following a spate of “unfounded detentions.”
Ashot Hovanesian, the owner of Synergy International Systems, was arrested last week along with two current and former employees of his software company as well as several Ministry of Economy officials in a corruption investigation conducted by two law-enforcement agencies. Criminal charges brought against them stem from a procurement tender organized by the ministry and invalidated by an Armenian court last summer.
Synergy won the tender despite setting a much higher price for its services than another bidder. According to the Investigative Committee, the latter was illegally disqualified by the indicted officials, notably former Deputy Economy Minister Ani Ispirian.
The officials have been charged with abuse of power, rather than bribery. It is not yet clear what exactly Hovanesian and his two subordinates are accused of.
Synergy, which is registered in the United States but mainly operates from Armenia, on Monday strongly denied the accusations and demanded Hovanesian’s, senior company executive Lili Mkrian’s and her former colleague Ani Gevorgian’s immediate release from custody. It argued, in particular, that Synergy, which employs hundreds of software engineers, did not receive any government funds as a result of the invalidated tender.
In a weekend statement, the UATE said Hovanesian’s arrest followed an alarming pattern of “business representatives and other prominent persons” being taken into custody on dubious charges lately.
“The vast majority of those criminal cases are closed for lack of evidence,” it said. “Such treatment not only damages the reputation of these persons, the companies run by them or the whole sector, built up over the years, but also that of the Republic of Armenia, which has begun to be perceived as a risky country for making investments and starting a business.”
“Such a short-sighted state attitude towards business representatives will ultimately force not only foreign but also local high-tech businesses to either stop their activities or to move to another country where all rights, including due process, are respected,” warned the business association.
The information technology industry dominated by software developers has long been the most dynamic sector of the Armenian economy, having grown at double-digit annual rates since the early 2000s. The sector currently employs more than 30,000 people, including thousands of mostly young Russians who relocated to Armenia following Russia’s February 24 invasion of Ukraine.
Significantly, Gevorgian, the arrested former Synergy executive, is married to the brother of Alen Simonian, the Armenian parliament speaker and a key political ally of Prime Minister Nikol Pashinian. This fact has fueled speculation about political motives behind the high-profile case. Some commentators claim that Pashinian personally sanctioned the young woman’s arrest in a bid to boost his falling approval ratings by showing Armenians that he is serious about combatting corruption.
There have also been media reports that Simonian is increasingly at odds with other senior members of Pashinian’s Civil Contract party. The party’s deputy chairman, Vahagn Aleksanian, denied this on Friday.
Pashinian pledged to separate business from politics when he swept to power in 2018. He claims to have significantly improved Armenia’s business environment.
