By Ruzanna Khachatrian and Ruzanna Stepanian
President Robert Kocharian and Prime Minister Serzh Sarkisian denied on Wednesday any political motives behind the Armenian government’s controversial crackdown on a wealthy businessman supporting former President Levon Ter-Petrosian. Both men claimed that tax authorities have been inspecting companies owned by Khachatur Sukiasian only because the latter has grossly understated their revenues to evade taxes. Kocharian said the State Tax Service (STS) will soon publicize proof of how Sukiasian has “deceived the Republic of Armenia.”
“There are people who understand that the state has adopted an anti-corruption strategy and is consistent,” Kocharian told reporters after opening an annual exhibition of goods produced by Armenian and foreign firms. “There are also people who do not want to reduce the shadowy segment of their business and are trying to politicize the matter, make noise and, to put it bluntly, become hysterical in order to pay less money to the [state] budget.”
“That hysteria will not do them any good,” he warned.
Sarkisian, for his part, insisted that the government actions against businesses making up Sukiasian’s SIL Group are a “very ordinary inspection” which every company operating in Armenia undergoes on a regular basis.
Speaking in parliament, he deplored the growing outcry sparked those actions. “Do you think that a person must not be taxed just because he is engaged in politics?” he asked an opposition lawmaker.
Tax inspectors, joined by officers of a feared police unit tasked with combating organized crime, began raiding the offices of Sukiasian-controlled companies last month following the tycoon’s public endorsement of Ter-Petrosian’s bid to unseat the current Armenian leadership and return to power. The most recent such raid was reported on Tuesday.
The STS has already accused a Sukiasian-owned pizza restaurant chain and printing house of evading a combined 1.36 billion drams ($4.25 million) in taxes. One of their chief executives is currently under arrest pending investigation.
In an interview with RFE/RL last week, Sukiasian denied the tax evasion accusations, saying that they were fabricated in retaliation for his long-standing support for Ter-Petrosian. The ex-president and his opposition allies have also condemned the crackdown as being part of “repressions” unleashed against their supporters by the authorities ahead of next February’s presidential election.
There are indications that Western governments are also worried about political implications of the affair. A spokeswoman for SIL Group told RFE/RL that Steven Banks, the number two diplomat at the U.S. embassy in Armenia, visited Sukiasian to discuss the situation on Wednesday. The embattled tycoon has reportedly also received other Western diplomats in Yerevan in recent days.
Sukiasian is the only millionaire businessman who has thrown his weight behind Ter-Petrosian’s presidential bid. Virtually all other local “oligarchs” are loyal to Kocharian and Sarkisian. Many are affiliated with Sarkisian’s Republican Party (HHK).
Kocharian insisted that the government moved against SIL Group as part of a toughening of its stated fight against the huge informal sector of the Armenian economy. “As you know, we are pursuing a much more consistent tax policy towards all companies,” he said, answering a question from RFE/RL. “All businessmen, whether they are, as you say, pro-government or in opposition, are being brought into the taxation field.”
“At the end of the year we will publish the list of the large taxpayers and you will see by how much everyone has increased their tax contributions,” he added.
Sarkisian likewise cited a “toughening of the government’s tax policy” towards all businesses. “That is the first precondition for creating a level competition field,” he said, answering a question from Anahit Bakhshian, an opposition parliamentarian concerned about the crackdown.
“I would love to trust in your every word. But unfortunately, Mr. Prime Minister, reality testifies to something else,” responded Bakhshian.
Even though many Armenian companies are believed to routinely underreport their earnings, SIL Group is the only major economic entity targeted by the tax authorities so far. Sukiasian’s business interests, although extensive, do not encompass the most lucrative forms of economic activity that have been effectively monopolized by other, even wealthier businessmen close to Kocharian and Sarkisian. Modest taxes paid by those businessmen continue to contrast with their conspicuous wealth.
Sarkisian assured Bakhshian that his wealthy friends and allies do not evade taxes, urging her to examine the list of the country’s leading corporate taxpayers regularly published by the STS. A newspaper reporter told him afterwards that one of Armenia’s two big cement plants owned by Mikael Baghdasarov, one of the country’s richest men reputedly operating under the powerful premier's tutelage, is currently not listed even among the 500 largest taxpayers. Sarkisian responded by claiming that he has never had close ties with Baghdasarov.
(Photolur photo)