US State Department Investment Review: A new anti-corruption  institutional framework is being established in Armenia

ArmInfo.Despite the challenges facing Armenia due  to the dual shocks of COVID-19 and the Nagorno-Karabakh conflict, the  Armenian government's commitment to eradicating corruption continues.  This is stated in the published report of the US State Department on  the investment climate in Armenia for 2021. 

Policy action and systemic change remain strong, and the government  has pressed forward with legislative actions to establish  investigative and judicial anti-corruption bodies. The government's  anti-corruption agenda is outlined in a 2019-2022 strategy and  implementation plan. These documents establish a new anti-corruption  institutional framework with separate entities tasked with preventive  and investigative functions, set out specific measures for  strengthening these functions, and prioritize strategic communication  and public education to give citizens ownership of anti-corruption  reforms.

As noted in the review, the government took concrete steps in 2020 to  establish and develop four key anti-corruption institutions: 1) the  Corruption Prevention Commission (CPC), which conducts integrity  checks on judges and other key justice sector personnel; 2) a civil  asset forfeiture department within the Prosecutor General's Office  (PGO); 3) an anti-corruption court; and 4) a new anti-corruption  investigative body. The CPC and PGO asset forfeiture department are  already established, while the anti-corruption court and  investigative body are expected to launch before the end of 2021.  International experts are expected to play a role in the selection  process for anti-corruption court judges and the head of the new  anti- corruption investigative agency, which will serve to improve  the legitimacy of the court's judges and the investigative agency's  leadership.

The government has increased corruption investigations against mid-  and high-level government officials since the 2018 revolution.  Investigation targets include those appointed by the government that  took power following the revolution.  Numerous high- ranking  officials have stated publicly that corruption within their  respective institutions will no longer be tolerated. Though some  report that the government has mainly targeted ex- government  officials in corruption investigations, there is no indication that  Armenia's anti- corruption laws are being applied by the  post-revolutionary government in a discriminatory manner.  Armenia's  anti-corruption laws extend to all Armenian citizens.  Corruption  remains a significant obstacle to U.S. investment in Armenia,  particularly as it relates to critical areas such as the justice  system and concerns related to the rule of law, enforcement of  existing legislation and regulations, and equal treatment.  Investors  claim that the health, education, military, corrections, and law  enforcement sectors lack transparency in procurement and have in the  past used selective enforcement to elicit bribes. Judges presiding  over civil matters are still widely perceived by the public to be  corrupt and under the influence of former authorities.  Anecdotal  allegations of corruption or unethical behavior by sitting officials  and associates, while less common than in the past, continue to arise  and have dampened business sentiment. Although bribery is illegal in  Armenia, the government does not actively encourage private companies  to establish internal codes of conduct. Several multinational  companies, select local companies, and foreign and local companies  working with international financial institutions have implemented  corporate governance mechanisms to tackle corruption internally.   However, such corporate governance principles are not widely  implemented among local companies.

According to Transparency International's 2020 Corruption Perceptions  Index, Armenia made the second-best improvement in the world and  received a score of 49 out of 100, ranking it 60th among 180  countries. This reflects an improvement by 17 places over 2019.

Armenia's ability to counter, deter, and prosecute corruption has  historically been hindered by the lack of robust enforcement of  official disclosure laws meant to prevent corrupt officials from  entering and retaining positions of authority and influence.  The  objective and systematic scrutiny of declarations by government  officials had been lacking due to dysfunction within the Commission  on Ethics of High-Ranking Officials, but is gradually improving with  the establishment of the CPC in November 2019. The CPC has inherited  responsibility for scrutinizing officials' declarations and is  scheduled to launch a fully automated system for declarations of  assets, income, and conflicts of interest. The CPC has also conducted  integrity checks and issued opinions on nominees to public positions.   According to international evaluations, Armenian authorities have  limited capacities to investigate money laundering and bring such  cases to prosecution.

Various laws prohibit the participation of civil and municipal  servants, as well as local government elected officials such as  mayors and councilors, in commercial activities.  However, powerful  officials at the national, district, and local levels often acquire  direct, partial, or indirect control over private firms. Such control  is often exercised through a hidden partner or majority ownership of  fully private parent companies. This involvement can occur through  close relatives and friends. According to foreign investors, these  practices reinforce protectionism, hinder competition, and undermine  the image of the government as a facilitator of private sector  growth. 

Armenia is a member of the UN Convention against Corruption.  While  not a party to the OECD Convention on Combating Bribery of Foreign  Public Officials in International Business Transactions, Armenia is a  member of the OECD Anti-Corruption Network for Eastern Europe and  Central Asia and has signed the Istanbul Action Plan.  A monitoring  report released by the OECD in 2018 cited Armenia's lack of  enforcement of anti-corruption laws, together with the continued  presence of oligopolistic interests in the economy, as points of  serious concern. The report contains a series of recommendations,  including to take bold measures to ensure judicial and prosecutorial  independence and integrity, introduce corporate liability for  corruption offenses, investigate and prosecute high profile and  complex corruption cases, and increase transparency and strengthen  monitoring in public procurement.  Armenia is also a member of the  global Open Government Partnership initiative.  No specific law  exists to protect NGOs dealing with anti-corruption investigations,  noted in the investment report of the US State Department.