Energy Commission Cites $200 Million Damage to Armenia

YEREVAN (RFE/RL)–Fraud–inefficiency and mismanagement registered in the energy sector since 1992 has cost Armenia about $200 million in total damages or 40 percent of its budget for this year–an ad hoc parliamentary commission claimed on Tuesday. In a damning indictment of the country’s present and especially former authorities–widely suspected of having embezzled huge sums of public funds–the multi-party commission urged law-enforcement agencies to open a large-scale investigation into its findings.

A 37-page report issued by the commission at the end of its six-month work accuses energy officials and their powerful patrons of appropriating public funds set aside for imports of badly needed energy resources and making procurement deals on highly unfavorable terms.

"We believe that what we have managed to unearth must not be deemed complete," the head of the commission–David Lokian of the Armenian Revolutionary Federation party–told an extraordinary session of the parliament. "The National Assembly–carrying out its oversight functions–must make sure that the damage inflicted to the state is compensated and people who are guilty of the abuses are brought to justice." Lokian demanded that the office of prosecutor-general look into the facts contained in the report and take appropriate legal action.

The document–which is bound to cause a stir–alleges that 305,000 tones of procured fuel oil worth $25 million never reached Armenia between 1992 and 1995 as was claimed by the authorities. The 224,000 tones of fuel oil imported in 1993 and 1994 had actually cost the ministry of energy $11 million and not $29 million reported by official statistics–it says. The administration of former president Levon Ter-Petrosyan is also accused of "abusing" $12 million of a $60 million energy loan extended by the European Bank for Reconstruction and Development.

The report goes on to claim that discrepancies in the financial reports of the Armenian gas distributing network reach $80 million. In addition–it says–Armenia’s real debt to Turkmen’stan for natural gas supplies is $27 million–$7 million less than officially accepted by the former authorities.

The report is also full of other instances of alleged fraud and mismanagement–most of it blamed on the Ter-Petrosyan administration. Among individuals specifically figuring in the document is the former prime minister–Hrant Bagratian. Bagratian has repeatedly denied any wrongdoing.

One of the most powerful facts underpinning the findings of the commission is government figures showing that Armenia generated more energy in 1992-94 (when the population had only a few hours of electricity a day) than now that electricity is not rationed. The commission believes that the figures were grossly inflated to cover up massive embezzlement. "From 1992 to 1995 the stated amount of electricity was not generated. These are bogus figures," Lokian charged.

"People who struck those deals must by all means be brought to account," the deputy speaker of the parliament–Tigran Torosian–told reporters after the publication of the report. There was no reaction from the energy ministry or former government officials implicated in the embezzlement.


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