The transfer of shares in the Zangezur Copper-Molybdenum Combine (ZCMC) to the Armenian government is opaque and raises numerous questions, says Daniel Ioannisyan, programs coordinator of the Union of Informed Citizens NGO and a member of the Commission for Constitutional Reforms.
At a cabinet meeting on August 24, Armenian Prime Minister Nikol Pashinyan revealed that a firm called AMP Holding had secretly donated its 6.8% stake in the mining giant to the Armenian government. The latter decided to hand over the shares to the Armenian National Interests Fund (ANIF) to ensure its “effective management”.
The government now holds a 21.875% stake in ZCMC. It got hold of 15% of ZCMC’s shares through a similar donation made by Russian billionaire Roman Trotsenko’s GeoProMining Armenia, which mysteriously acquired 60% of the mining enterprise and granted a quarter of that stake to the Armenian government on September 30, 2021. The government refuses to give a reason for the lavish donation.
“It’s great that the Republic of Armenia acquired some shares and became the owner of a part of the combine a few months or a year ago and gained another stake recently, but the whole problem is that you only get free cheese in a mousetrap. So, the main question is what is the price paid for it by society,” Ioannisyan told Pastinfo in an interview on Tuesday.
As Pastinfo reported earlier, former Russian Health Minister Mikhail Zurabov, who owns 12,5% of ZCMC’s shares, filed a lawsuit in a Syunik court to secure his preemptive right for acquisition of ZCMC’s shares on August 2, 2021. The court not only agreed to hear the suit but also decided to seize 75% shares of the enterprise.
Later on September 30, the Syunik Court of General Jurisdiction ruled to unfreeze the shares which were immediately acquired by Industrial Company JSC, a wholly owned subsidiary of Trotsenko’s GeoProMining.
The Armenian government does not shed light on the deal, denying media requests, including from Pastinfo, to provide a copy of the donation agreement and to reveal the cost of the deal. Also, it remains unclear whether Trotsenko has fully paid for the 60% stake.
Ioannisyan claims objective questions arise under such conditions of secrecy.
“Could it be that they turn a blind eye to the activities of some individuals in exchange for it? I really don’t know what society is paying for it. This is a question which has not received answers yet due to the lack of transparency in the government’s steps concerning the transaction,” Ioannisyan said.
In his words, the deal is, in fact, “shady” and raises suspicions about possible corruption risks, as “no one gives anything away for free.” In the context of the fight against corruption and its transparency, which Pashinyan promised when he came to power in 2018, the civic activist was asked to comment whether the ZCMC deal raises suspicions of political corruption.
“The anti-corruption campaign must be conducted in an atmosphere of transparency and accountability. Being a recipient of shares is not a corruption risk itself. The corruption risk stems from what you give in return, because the shares were not gained by an oligarch or someone from circles close to the government, but by the state. These shares will make a profit and funds will be transferred to the state budget. In the future, they may be sold, generating new budgetary funds, but that is not the point. The problem is what we gave for it,” he said.
Ioannisyan finds it hard to explain why the authorities keep the details of the transaction secret. He charges that the deal may be linked with the procedure for forfeiture of illegal assets. For example, he says it may turn out that someone received money illegally and purchased shares. However, Ioannisyan underlines these are only speculations, since the details are not disclosed.
“There is something dark in the deal. I can’t say whether or not it lies in the interests of society. Thus, corruption risks emerge here. If we knew for sure that it runs against the public interests, we would talk about corruption, rather than possible corruption risks,” Ioannisian added, calling attention to the lack of transparency both in the mining sector and in other areas.
