Corruption in Business: Punctuation Mark which was not put and the Risks; Indifference and Best Practices

The working meeting “Corruption Risks in the Business Sector and Integrity Issues in Armenia,” continued its work on 11 December in Aghveran.

How to build an efficient and corruption-free economy? There were various proposals.

Ms Lilit Gevorgyan, Executive Director of Union of Employers of Information and Communication Technologies suggests to follow the example of Hong Kong. “In addition to the legislative framework we should support the formation of this culture. Hong Kong, of course, is far away and is the leader. However by establishing “Ethical code” for its business, the union of businessmen prevented participation of the companies, which appeared in the black list, in the public procurement process. That is of the companies that in any way dealt with corruption. I think sooner or later, we shall approach to such idealistic solutions as well,” She said. AYLA President Karen Zadoyan added that it was the result of activities of Hong Kong Independent Commission against Corruption.

Mr. Tigran Jrbashyan, Member of the Management Board – Development Director of AmeriaBank CJSC, President of Board of Directors of the American Chamber of Commerce in Armenia believes that the absence of a single punctuation mark in legislation can cause corruption. He sees the problem in the absence of formal institutions. According to him, business is trying to solve the problem through application of informal institutions. “I think in this case corruption is the cumulative effect here. Corruption itself as a phenomenon, is merely the labor fee of this informal institution, in the face of the flow of corruption funds, political support friendly relations, etc,” Mr. Jrbashyan said. “I want to bring an example. There is a clause in our Customs Code, which refers to the import of funeral supplies and goods to the RA. When you make a reference to this clause the relevant agencies simply point at the EU Customs Code, which includes such clause as well. It provides that the funeral supplies and goods shall be exempted from payment of VAT. Both Codes provide the same. There is only one difference. In the European Code after this provision there is a semicolon, which is followed by a list of 25 items with definite codes, and all these subjects are considered as funeral supplies. Whereas in case of the Armenian legislation there is simply a full stop and the customs officer may decide whether the given subject is a funeral supply or not. The European customs employee does not have such functions as there are distinct codes,” the President of Board of Directors of the American Chamber of Commerce in Armenia said. According to him as a result of such incomplete regulation, the flowers that are imported to Armenia are considered as funeral supplies mainly.

So Mr. Jrbashyan urges to regulate the institutional systems.

Mr. Karen Gevorgyan, deputy Executive Director of Small and Medium Business Entrepreneurship Development national center of Armenia said that elimination of corruption in SME sphere in Armenia is solely the problem of the government, on the assumption of the fact that the state bears damages in this case. “There is no such demand by this group, and the corruption schemes that exist today and are applied towards this sphere, are bilateral crime, and mutually beneficial processes,” he said.

Gagik Makaryan, Chairman of the Republican Union of Employers of Armenia referred to different problems and specifically mentioned that the Anti-Corruption Council should define the targets.

In addition, there were many other speeches: Mr. Karen Vardanyan, Executive Director at Union of Information Technology Enterprises spoke about the situation in the sphere and success stories on fight against corruption. Mr. Carl Ulbricht, International Expert of “Multi-Faceted Anti-Corruption Promotion” project presented the topic “The Role of Business and CSO Associations in combatting Corruption in the Business Sector.” Mr. Gevorg Hayrapetyan lawyer of the Freedom of Information center delivered a speech on “Freedom of Information as a Tool for Fight against Corruption for Entrepreneurs.”

Khachik Harutyunyan, Expert of “Transparency International” Anti-Corruption Center, spoke on the topic “Joint Efforts of Business, Civil Society and Media in Fight against Corruption.”

Concluding the event, AYLA President Mr. Karen Zadoyan stressed that many important issues were raised during the workshop. Mr. Suren Krmoyan, the RA Deputy Minister of Justice assured that the problems should be presented to the relevant governmental bodies.

The working meeting was organized by the Armenian Young Lawyers Association NGO in cooperation with CSOs’ Anti-Corruption Coalition with partners the RA Ministry of Justice, “Transparency International” Anti-Corruption Center and “Freedom of Information Center.” The event is funded by European Union and the OSCE Office in Yerevan and co-funded by Arthurs Aghveran Resort Company.

In fact this is the first time that such workshop is funded by a business company.
During the event, the organizers hoped that this move will stimulate companies to support civil society in its activities aimed at improving the business environment.