Earlier this morning I received an email from Bruce Tasker, a British national living in the Republic of Armenia who was appointed by Deputy Speaker of Parliament, Vahan Hovannisian, to head a team of specialists examining how effectively Armenia had used the hundreds of millions of dollars worth of credits, grants and humanitarian assistance it had received since independence in 1991.

Three years ago, however, the focus of the team’s work changed and started to examine specific projects in-depth. As a result, Tasker started to examine the $35 million World Bank project to improve water utility services in Yerevan.

That particular project was of interest because of incessant Complaints from Yerevan’s Residents about inconsistent and bad quality water. There were even a number of attempts to have the project canceled. The task was to seek out any possible project irregularities and report them to the appropriate authorities, so that they could carry out their own investigations and introduce the necessary corrective actions.

The Commission had Parliamentary Authority to carry out the proposed studies; the question was whether it had the ‘Clout’ to win through against the opposition, which would inevitably come from High-Ranking Officials in the Armenian Government, who would fight to safeguard their vested interests. The Head of Commission gave Assurances that the Commission would use its full Parliamentary Authority in an attempt to Stem the Tide of Armenia’s Increasing Corruption.

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The study started with a close look at administrative documents, and it was seen that the Municipal Development Project had been Fundamentally Re-Structured. The International Operator’s Authorized Representative had been Appointed General Director of the Yerevan Water & Sewerage Company, the Beneficiary of the World Bank Credit and the company to which the International Operator was Obligated under the Municipal Development Project Management Contract.

This Fundamentally Violated Operator Independence and created a conflict between the Operators obligations to the Management contract and his Newly Imposed Responsibility to the Armenian authorities - a ‘Serious Conflict of Interests’.

The study found Major Shortcomings and Irregularities in the Commercial and Technical Aspects of the Project, and the Head of Commission explained some of those in a Presentation to the National Assembly. But the full implications of the ‘Conflict-of-Interests’ were only later fully understood when the Yerevan Water & Sewerage Company finances were studied. The International Operator, in his capacity as General Director of the Yerevan Water & Sewerage Company, had Manipulated Company Finances in an Attempt to Embezzle Tens of Millions of Dollars from the Armenian State Budget. Moreover, it became apparent that the Auditing firm KPMG, which had audited the Yerevan Water & Sewerage Company accounts for Five Consecutive Years, was Compliant in the Affair.

When the findings were known, the Parliamentary Commission and World Bank office in Yerevan both expressed their concerns, but rather than investigate the allegations further, attempts were made to close down the Municipal Development Project Study. However, although some documents were withheld from the Commission, the findings of the study were earth-shattering enough.

[…] The report detailed numerous technical and commercial irregularities, involving millions of dollars. But more importantly, it alluded to a plan by the International Operator’s Authorized Representative, in his dual capacity as General Director of the Yerevan Water & Sewerage Company, to Embezzle Public Funds totalling in value more than the $35 million cost of the Municipal Development Project.

But by August the study had attracted the attention of the Speaker of Parliament, and he extended the Commission term by three months to allow the study to be completed. When the outstanding documents were eventually released to the Commission, it became apparent that the World Bank had not only been Fully Aware of the Problems, but it had Undoubtedly been a Collaborator in what was already seen to be a Major and Wide-Ranging Agenda of Corruption.

Tasker says that Vahan Hovannisian presented the findings of the initial study to the National Assembly and promised that the full study and conclusions would be then presented to the public. However, “the Armenian Public Never heard about the Major Fraud, Corruption and Embezzlement exposed by Vahan Hovhanessian’s Parliamentary Commission” and Tasker returned to the work he had previously been doing.

But his involvement in the Parliamentary Commission study had not only soured his formerly amicable relationships with senior Government officials; more importantly it had clearly aggravated the World Bank. After two years of ‘Brick-Walling’ by the World Bank, it was eventually confirmed to the British national that he had been ‘Blacklisted’ by the World Bank because of his involvement in the Parliamentary Commission study.

Moreover, the British national found that the Authorized Representative, who had been central in the corrupt activities, continued to provide consultancy services for a subsequent World Bank water project. Moreover, he was implementing a project that the British national had written, piloted and had approved by the Armenian Government.

In January 2007, the Parliamentary Commission Senior Specialist applied to the Government Accountability Project (GAP) for support. GAP agreed to apply on his behalf to the World Bank’s Watchdog Organization, the Department of Institutional Integrity (INT) and request that it carry out an investigation into why the World Bank Armenia Country Manager allowed Wide-Ranging Fraud, Corruption and Embezzlement to continue in a World Bank Project, after the problems had been submitted in detail to the Bank by a Parliamentary Commission.

After receiving his email, I asked Tasker to ring me and about an hour ago we spoke on the phone. Basically, the World Bank has promised to launch an official investigation into the findings revealed by the report, but a team to do so has still not yet materialized in Armenia prompting concerns that none ever will. As a result, Tasker says that recriminations he has suffered from the World Bank and others involved in the possible scandal are enough for him to push the matter into the public eye by revealing details of the corruption he uncovered on a blog, Blowing the World Bank Whistle.

In 2004, a British national appointed to an Armenian Parliamentary Commission exposed wide-ranging fraud, corruption and embezzlement in a WB financed project. He reported the problems to the WB Country Manager and to the Department of Institutional Integrity. But the wrongdoings continued. The British national however became the subject of World Bank ‘Whistleblower’ reprisals, which continue. The Government Accountability Project (GAP) now supports the British national in a claim against the World Bank. Other British nationals were central in the wrongdoings and so documents were submitted to the FCO in the UK.

Tasker says that he also contacted various media outlets such as Armenia Now and Hetq Online, but neither followed up on the information, although the latter said it would. However, it didn’t, and the only promise of support came from the local office of the Center for Regional Development/Transparency International Armenia who said they will become involved if and when the investigation team arrives in Armenia. As the World Bank has funded their projects in the past and will probably do so again in the future, it’s perhaps understandable why CRD-TI Armenia won’t do anything until then.

Indeed, it’s not much of a surprise to discover that few others want to get involved in this case given that much of the money in circulation, including grants for the media and civil society, comes from the World Bank. Tasker also personally warned me that getting involved or covering this story could also create problems for me too, but as I appear to have already been blacklisted by international and even Diasporan organizations for covering issues and stories independently rather than to order, I probably haven’t got much to lose either.

Besides, such information should be made available because it’s in the public interest. Unfortunately, that’s something many media outlets and civil society organizations here seldom think about.

Indeed, it’s really about time that we had a truly and independent media which is not directly or indirectly controlled by local, international or Diasporan funders. On the other hand, if Tasker’s allegations are true, perhaps this case really does represent the potential for blogging. Starved of any media coverage in Armenia or the Diaspora, the findings of the report submitted to the National Assembly are instead being blogged at:

http://better-not-wb-the-wb.blogspot.com/.

Meanwhile, as Tasker notes on the blog, the British Embassy has reported this case to the Foreign & Commonwealth Office in London and the Serious Fraud Office (SFO) is monitoring the matter. The Government Accountability Project (GAP) also supports Tasker in his claims against the World Bank. Of course, there are two sides to every story, but as none of these claims have been publicly addressed or denied by the World Bank or the Government, one has to wonder why.

Incidentally, Tasker has another blog from Armenia here, and the post about the sugar industry is particularly interesting because I’ve heard these allegations before. Indeed, I have to question why the U.S. Embassy hasn’t been more open about what appears to be Lfik Samo’s sugar-import monopoly preventing local sugar refining in and around Gyumri.

In 2000 the U.S. Trade Development Agency (USTDA) signed an agreement to part-finance a study to determine the feasibility of re-establishing the sugar industry and for the next eighteen months more than a dozen international specialists studied every aspect of re-establishing the Armenian sugar industry. They were a team of sugar technologists, supported by agro-technologists, meteorologists, seismologists, and marketing and finance experts.

The data from the study was passed on to an internationally recognised auditing firm, whose experts developed a comprehensive financial model, to determine which parameters would be needed for a sustainable sugar industry. The result was that, with minimal support from the Armenian government, a very sustainable Armenian sugar industry could be developed, assuming a ‘Strategic Sugar Industry Partner and Investor’ could be found.

In January 2002 a Government Commission was established, Headed by Mr Hovik Abrahamyan, Minister for Territorial Administration and in response to a directive from president Kocharyan. The project was selected out of three projects as being most suitable for Armenia and the Minister Abrahamyan committed the Government’s support to the project.

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Numerous Ministers, including Karen Tschmaritian (Trade & industry) David Lokian (Agriculture) Hovik Abrahamyan (Territorial Administration), Serge Sargsian (Co-Chairman for Armenian – Russian economic development), provided letters of support to the project, which all turned out to be worthless. In March 2003, President Kocharyan wrote to the Prime Minister of the Russian Federation, asking him to look at the possibility of Russian finance for the project. That was later understood to be the con of all cons.

Armenia imports more than 100,000 tons of sugar each year and the Armenian sugar industry is worth more than 100 million dollars, with profits in excess of 30 million dollars. A new Armenia sugar industry would provide work places for some 20,000 farmers and factory workers in the devastated northern earthquake zone. Moreover, sugar beets add valuable soil nutrition and their re-introduction into the northern agricultural Shirak and Lori plains would be a tremendous help in halting the soil deterioration that has been going on for the past nearly 20 years, during which time the soil has been bombarded year in and year out with the single potato crop.

In November 2004, it became evident that, despite a number of very attractive financing opportunities for the project, the Armenian authorities simply will not allow a new Armenian sugar industry. The authorities will not support a project that will improve the lives of thousands of the Armenian working class for fear of sacrificing their millions of dollars of yearly gains.

What appears to be a very interesting specialist blog is at http://go-armenia.blogspot.com.