When I moved to Armenia in 1998 I have to admit that I wasn’t prepared for the high level of corruption to be found in almost every sphere from international organizations to the public sector. In fact, it didn’t take long to discover at all, but what struck me most was how politics and the economy were pretty much simply a battle between competing clans with the population ostracized from anything remotely resembling an albeit embryonic democratic system.

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RFE/RL ran a story yesterday on a judge recently fired from his position who says he will now support the candidacy of former president Levon Ter Petrosian in the 19 February presidential election in Armenia. Interestingly, linking to an interview I conducted with him on the trafficking of women and children from Armenia, Ara Manoogian over at Martuni or Bust remembers the judge in question.

It seems that Levon Ter-Petrosian has attracted the support of former judge Pargev Ohanian. If you recall from my interview with Onnik, there is mention of corrupt practices by judge Ohaian […]

[…]

[…] The law contains provisions to hand down heavy sentences to traffickers but the legal system is not functioning correctly. I was present at the trial of five traffickers in Armenia last August and as far as I am concerned, Judge Ohanian and the prosecutor failed to do their jobs properly. These individuals should have received sentences of at least ten years but when Gulnara Shahinian, an expert on trafficking, presented the judge with details of Armenia’s international obligations to prosecute those guilty of trafficking, he instead insisted on prosecuting them with old Soviet laws that carried lighter sentences of only two years.

[…]

Though I don’t think LTP has a chance to win, if he does for some reason come back into power, you can be sure that the “justice” we will see is not the kind of justice we are in need of. If Ohanian is a reflection of the type of people LTP will surround himself with to fix our problems, then we can’t expect too much change if LPT wins, nor will we see our problems go away.

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I’ve just received a copy of the November edition of New Internationalist magazine in which my albeit short piece on the continuing saga of alleged corruption in World Bank projects in Armenia is included. Although I can’t see the text on the New Internationalist web site, because it’s now published I can at least now include the text here on my blog.

New Internationalist, NI 406
November 2007, p26

Skulduggery: Fuelling corruption in Armenia

It all seemed to be on the up and up for Bruce Tasker. In 2004, he was invited to become a special consultant to an Armenian parliamentary commission examining the use of $3 billion in international donor funds. He accepted the invitation – but he never could have guessed what would happen next.

The Armenian capital, Yerevan, was used as a case study for the World Bank-funded $30 million Municipal Development Project to improve its water supplies. Tasker, a veteran British development worker, and his team, discovered not only project failure but also an administration riddled with corruption, to the tune of tens of millions of dollars.

So, taking the Bank’s stated concern with corruption in the former Soviet Republic at face value, Tasker reported his findings, not only to the parliamentary commission, but also to the Bank’s office in Yerevan. Rather than act upon the commission’s interim findings, Tasker says that the bank turned on him.

Alleging blacklisting by the bank for reporting the illegalities, Tasker believes that pressure was applied on the government to prevent full public disclosure. He claims that taking the matter further would have revealed colossal fraud and corruption and that all the players, including senior government officials and foreign workers, would lose out. ‘The World Bank is fuelling corruption in Armenia,’ Tasker told New Internationalist.

Despite the documented allegations, no action has been taken – including by the World Bank’s own internal watchdog, the Department for International Integrity (INT). The allegations against the Bank and British nationals involved in the project were, however, reported by Tasker to the British Embassy, which informed the Foreign & Commonwealth Office and in turn, the Serious Fraud Office.

In March 2007, the Washington-based watchdog Government Accountability Project (GAP) took up Tasker’s cause and filed its own complaint with the INT in the hope that an investigation into the documented cases of corruption and fraud would be launched.

When the INT finally responded this August, it gave no indication of when it would investigate the matter. According to INT, the case was considered to be of “medium” priority and dependent on “the availability of investigative resources.” The letter came just days before GAP released its annual report on the INT. The Armenian case was singled out for specific criticism.

Tasker jokes about the INT’s reluctance to investigate the matter: ‘I should consider myself fortunate… the low priority cases are simply filed away with no further action’. Following on from the forced resignation of World Bank president Paul Wolfowitz, this new revelation hammers yet more nails into the coffin of the Bank’s credibility. Self-righteous finger-wagging should start at home.

Onnik Krikorian

Although the media here refused to cover this story when given the chance to some months ago, blogs were responsible for exposing allegations of corruption in World Bank projects in Armenia long before others did. In particular, allegations of corruption were first documented by British whistleblower Bruce Tasker on his own blog, Blowing the World Bank Whistle, and then here on Oneworld Multimedia.

Tasker set up his blog when news outlets here refused to cover the story at the beginning of the year although the former finally did so only after this blog brought the alleged scandal to greater public attention. Eventually, some media outlets here did follow suit, but many publications here and abroad were hesitant in taking material from yours truly when I approached them. Nobody wanted to get on the bad side of the World Bank.

However, New Internationalist published my short piece on Tasker and his battle with the World Bank at the end of October. Now, RFE/RL reports that the scandal has hit the big time in Yerevan. However, the World Bank continue to deny any wrongdoing. Time will tell.

A U.S. anti-corruption watchdog joined on Thursday a British whistleblower in accusing the World Bank of covering up what they see as gross misuse of a $30 million loan that was meant to upgrade Armenia’s battered water infrastructure.

The loan was part of a 1999 World Bank project designed to quickly improve supplies of drinking water in Yerevan. The Armenian parliament formed in 2003 an ad hoc commission to investigate the effectiveness of these and other large-scale infrastructure projects financed by Western donors.

In its first report made public in March 2004, the commission headed by deputy speaker Vahan Hovannisian concluded that the water scheme has failed to achieve its main objectives due to mismanagement and corruption among government officials and private firms. The report also deplored the fact that 27 percent of the World Bank funds have been spent on project management, overheads and logistics.

The World Bank dismissed the claims at the time, insisting that the project’s implementation has been a success. Earlier this year it was again put on the defensive by Bruce Tasker, a Yerevan-based British engineer who had participated in the 2003-2004 parliamentary inquiry as an expert. Tasker detailed those allegations on his website and effectively implicated the World Bank in the alleged corruption.

The allegations were picked up by the Government Accountability Project (GAP), a Washington-based group that specializes in whistleblower protection and scrutinizes World Bank projects around the world. It urged the bank’s Institutional Integrity Department (INT) to launch an official investigation.

The GAP’s international director, Beatrice Edwards, said on Thursday that she and Tasker spent the past two days meeting with U.S. and British diplomats and the head of the World Bank’s Yerevan office, Aristomene Varoudakis. She said the latter again denied any wrongdoing on the part of his lending institution.

“Mr. Tasker produced two documents that show quite clearly that there was corruption and fraud in the municipal development project, and we were told that these documents signified nothing of importance,” Edwards told a news conference in Yerevan.

“Mr. Vardoulakis told us to go to the Department of Institutional Integrity where we have already been,” she said, adding that the department has told the GAP that the fraud case is a “medium priority” for it. This means that the case will not be investigated by the INT anytime soon, she said.

[…]

Tasker claims that the installation of water meters was a major source of corruption among Armenian and foreign officials as well as private firms involved in the project’s implementation. He says local contractors alone were able to pocket up to $10 profit on the sale of each meter by charging customers for installation.

Veolia Eau, the French utility giant running the Yerevan network, now says that it will need a decade to ensure 24-hour water to the vast majority of local households. The operator argues that as much as 80 percent of drinking waters leaks out of eroding pipes before reaching consumers. The World Bank funds were supposed to significantly reduce the huge losses.

Anyway, all my posts on this alleged corruption scandal are here, while Bruce Tasker’s blog is here.

Via Unzipped, Armenia Now reports that a 59-year-old cleaning woman has been killed by a bear kept by the head of Armenia’s Military Police. According to the report, it is also believed that the Military Police headquarters in Yerevan is home to a tiger raising serious concerns as to the rule of law and abuse of position in Armenia.

The family refuses to give the alleged victim’s surname; they only say that a woman named Jasmine, 59, who was a cleaning lady at the department, was killed on Thursday. The sources say the bear escaped its cage while attendants entered to feed it. It is said that the woman was taken to hospital where she died of wounds. The family says it was called to identify the body and saw that she had suffered an attack.

[…]

The family refuses to give further information. The Military Police refused to answer ArmeniaNow’s question concerning the alleged event.

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As Komitas grinds to a halt because of ill-devised road works and other municipal “development” all underway at the same time despite the disruption it causes, Zarchka at Life Around Me reports that construction in another part of the city has now been stopped. The reason? Well, plans to build an underpass under a road in the center hit a snag. Quite a big one, actually. More precisely, the Yerevan Metro.

This is kind of a continuation to the post on Oneworld Multimedia blog about the construction mess in Yerevan and alleged money being spent on digging deep needless holes as if for constructing subways, although the rumor has it that “…the construction is being done now so that the authorities can spend as much money as possible in the shortest amount of time and siphon off much of it…”

However, this allegation may turn out to be true especially when the huge hole dug along Khanjyan street at Khanjyan and Tigran Mets intersection is now filled back.

What I got from talking to some people, no subway will be constructed there as one of the reasons I was told was that only after digging deep into it they found out that the metro passes under that area!

Almost funny, if it weren’t that sad. How on earth could they not take into consideration the fact that they might stumble upon the underground, especially when by simple logics one may presume that the line from Hanrapetutyan Hraparak to Zoravar Andranik stations should pass right under that area!!?? Didn’t they bother to shoot a glance at the metro map before starting their destruction??!!

If that’s not the case, then I wonder, what is a logical explanation for laying a double layered asphalt along Khanjyan street, then digging it deep, then filling it back??

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Two months after first covering allegations of corruption in a $30 million World Bank loan to improve the water system in Yerevan on this blog, the media in Armenia has finally gotten round to covering the accusations even though they had been approached by a British whistleblower, Bruce Tasker, before the parliamentary election in May. Moreover, as the allegations had first surfaced in an interim report released by a 2004 parliamentary commission, it’s fair to say that the media as well as civil society failed to do its job or fulfill its function.

Neither followed up on criticism of the international banking organization by Deputy Speaker of the Armenian National Assembly, Vahan Hovannisian, but now that The Observer newspaper published details of Tasker’s allegations on Sunday, the local media has finally covered the story. Yesterday, Aravot, Haykakan Zhamanak, and one other covered the allegations. Today, A1 Plus and RFE/RL reported on the claims made against the World Bank in Armenia, and its reluctance to send an investigation team to Yerevan to clear the matter up once and for all.

The World Bank on Thursday again shrugged off embarrassing allegations about gross misuse of a $30 million loan to Armenia that were first made by an Armenian parliamentary commission in 2004 and have resurfaced in recent weeks.

The loan was part of a 1999 World Bank project designed to upgrade the country’s water infrastructure and improve Yerevan residents’ access to drinking water. The Armenian parliament formed in 2003 an ad hoc commission to investigate the effectiveness of these and other large-scale infrastructure projects financed by Western donors.

In its first report made public in March 2004, the commission headed by deputy speaker Vahan Hovannisian concluded that the water scheme has failed to achieve its main objectives to due to mismanagement and corruption among government officials and private firms. The report deplored the fact that 27 percent of the World Bank funds have been spent on project management, overheads and logistics.

The World Bank office dismissed the claims at the time, insisting that the project’s implementation has been a success.

The Washington-based institution, which has been Armenia’s principal lender, was again put on the defense recently by Bruce Tasker, a Yerevan-based British engineer who had participated in the 2003-2004 parliamentary inquiry as an expert. Tasker detailed those allegations on his website and effectively implicated the World Bank in the alleged corruption.

“The fact is it was not an isolated case of a few thousand dollars here or there, it was tens of millions of dollars,” Britain’s “The Observer” newspaper quoted him as saying on Sunday.

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After a hectic few days, I’m trying to catch up with posting links to news on significant events as they pertain to Armenia. Perhaps one of the most interesting stories is news that an MP from the ruling Republican party, Tigran Arzakantsian, was last week shot, stabbed and hospitalized after a night out gambling in a Moscow casino. Last Wednesday, RFE/RL reported on the incident.

“According to eyewitnesses, a fight broke out in the casino among three of the guests” shortly after 4:00 a.m. (0000 GMT),” the Russian news agency Interfax quoted a police official as saying. “During the fight, one of the participants twice shot his opponent, who has been hospitalized…. Doctors are fighting for his life,” the official said.

“It was in the casino of the hotel,” another unnamed Russian police official told the AFP news agency. “Two unidentified attackers came up to him and stabbed him several times. He fought back, then one of them shot him in the arm. Then they ran away.”

[…]

Arzakantsian, who was reelected to the Armenian parliament on the HHK ticket last May, had already been hospitalized in the Russian capital after being beaten up at another local casino in March 2006. Reports in the Armenian press likewise linked the incident to a gambling dispute, saying that the 41-year-old businessman lost as much as $800,000 on a single night and failed to pay up. He denied those reports.

The latest incident coincided with a visit to Moscow by an Armenian government delegation headed by Prime Minister Serzh Sarkisian. Arzakantsian was reportedly present Sarkisian’s meeting with Armenian university students there held on Tuesday evening. Both Sharmazanov and a government spokeswoman in Yerevan said he was not a member of Sarkisian’s delegation.

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After first being covered in the blogosphere, Bruce Tasker’s allegations of corruption in a World Bank project in Armenia have now hit international headlines with the U.K.’s The Observer carrying a story today. Interestingly, Tasker approached local Armenian media outlets such as Armenia Now and Hetq Online, as well as local NGOs such as the Center for Regional Development/Transparency International Armenia (CRD/TI Armenia), with these allegations just before the May parliamentary election, but none followed up on the hundreds of pages of evidence that Tasker says he has.

Frustrated, in lieu of any media outlet here interested in the allegations, Tasker then set up his own blog to disseminate the information he had instead. Tasker also approached this blog and after assessing the documents he provided, Oneworld Multimedia concluded that this story should be presented to the public. An email to the World Bank office in Yerevan was less than adequately responded to, and the response from the Washington-based Government Accountability Project (GAP) backed up Tasker not only with regards to his allegations, but also in further claims of blacklisting by the international banking organization.

Hetq Online eventually covered the allegations in August, albeit only after reading posts made on this blog first, but an English translation was never made available to a non-Armenian speaking audience. At any rate, Tasker’s allegations were only covered by the online publication after it was first exposed on his own blog as well as this one. Highlighting the importance of bloggers in reporting such stories, Notes from Hairenik, Martuni or Bust, and Nazarian also covered the story that was otherwise ignored by media outlets and local NGOs perhaps too dependent on foreign donors.

Anyway, my article for New Internationalist will be published in the November edition of the magazine, but in the meantime, The Observer’s Economics Editor, Heather Stewart, also covers the story.

Britain is urging the World Bank to investigate allegations of corruption and embezzlement in a $35m (£17m) water project in Armenia, which the Washington-based body says are only of ‘medium priority’. Bruce Tasker, a British whistleblower, says he has presented the bank with evidence of large-scale fraud in a project to improve the water supply in the Armenian capital Yerevan, but it has so far refused to carry out a full-blown investigation.

With its conciliatory new boss Robert Zoellick at the helm, the World Bank is keen to make a fresh start after the humiliating departure of Paul Wolfowitz earlier this year. Wolfowitz stormed into the bank promising to crack down on corruption, but ended up being embroiled in an ethics scandal of his own concerning lavish pay rises for his girlfriend, Shaha Riza.

Persuading the world’s richest countries that their taxpayers’ money is being well spent is a critical part of Zoellick’s job, but the Armenian case is just one of a backlog of allegations waiting to be examined by the Bank’s Institutional Integrity Department - or INT, as it is known.

INT wrote to Washington-based pressure group the Government Accountability Project (Gap), which is backing Tasker’s claims, saying the case was ‘rank ordered “medium” priority, and as such remains in a queue pending the availability of investigative resources’.

The British Ambassador in Armenia has written to the World Bank, urging it to carry out a full investigation.

‘We’ve run into a wall,’ said Gap’s director, Bea Edwards. ‘We have extensive documentation. It involves high-level government officers, a lot of money and basic services. What else do they want? They’ve been completely unhelpful.’

She says the Armenian case is important, because it could point to potential problems in the way other World Bank projects are run, particularly in the former Soviet Union.

Tasker is a British engineer appointed by an Armenian parliamentary commission investigating the Yerevan scheme. He claims that as soon as he began to examine the details of the project, it became clear that it was riddled with corruption, ‘from start to finish, from top to bottom. The fact is it was not an isolated case of a few thousand dollars here or there, it was tens of millions of dollars.’

The original purpose of the project was to repair Yerevan’s pipelines, and improve the water supply to households, but he says that by the time the work got under way it had shifted to installing water meters instead.

Tasker claims contractors were able to pocket up to $10 profit on the sale of each meter by charging customers for installation. His commission was told that the average number of water meters per customer was 1.5.

[…]

Jeff Powell, of pressure group the Bretton Woods project, said it was still too often left to politicians to decide which allegations to pursue. ‘This case is indicative of the fact that senior management and the board of the World Bank have not taken seriously the issue of corruption,’ he said.

A World Bank spokesman said he would not comment on a specific case.

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It looks as though the Transparency International Corruption Perceptions Index (CPI) is now out and if this chart is anything to go by it appears to be official. Corruption is lower in Georgia than Armenia. According to what I assume is the 2007 CPI, Armenia scored 3.0 on a scale of 1-10 and is at 99th in the list of 179 countries while Georgia scored 3.4 and is at 79th.

Last year, Armenia and Georgia had scores of 2.9 and 2.8 respectively. Azerbaijan doesn’t fare well at all and has a CPI of 2.1, down 3 points since 2006. Armenia’s other neighbours, Turkey and Iran, score 4.1 and 2.5. Want to invest in the South Caucasus? Looks like Georgia is the place to be.

I’ve just received the final edit of my albeit short article on possible recriminations against Bruce Tasker by the World Bank in Yerevan after the British national was part of a special parliamentary commission which uncovered alleged corruption and mismanagement in the international banking organization’s operations in Armenia.

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