Armenian agricultural export giant Spayka charged with tax evasion

Armenia’s State Revenue Committee has initiated criminal proceedings against Spayka, a major exporter of agricultural products, and its director for failing to pay taxes.

The State Revenue Committee (SRC) announced the charges on 4 April, and company director David Ghazaryan was arrested four days later. On 8 April, Ghazaryan was denied bail and remanded into two months pre-trial detention.

According to a statement by the SRC, in 2014–2015, Spayka presented false documents to customs agents while importing a number of products into Armenia. As a result, the company underpaid its taxes by ֏7 billion ($14.5 million).

The SRC launched a joint investigation with the police regarding Spayka in June 2018. On 3 July, police spent over seven hours inspecting the business. At the time, the company was suspected of failing to fulfil its tax obligations, however, the company’s spokesperson, Eduard Antinyan, refuted the claim.

It has been widely speculated in Armenian media that Spayka belongs to former president Serzh Sargsyan’s son-in-law, the former Armenian Ambassador to the Vatican, Michael Minasyan. This has been officially denied by the company many times.

Spayka, which has been operating since 2007, is the largest exporter and purveyor of agricultural products in Armenia. According to its website, Spayka has invested over $300 million into Armenia’s agricultural sector.

‘A fake number’

On 5 April, Ghazaryan held a press conference where he announced that he did not accept the accusation against him. He said that as a result of an inspection carried out by the SRC, the company had partially repaid ֏2 billion ($4.1 million) worth of taxes and that ‘7 billion is a fake number’.

‘I consider my cooperation with the SRC to be very honest and their answer was to “massacre” [the company]. Any money which Spayka should actually pay, we will pay.

Ghazaryan said the SRC should have ‘called for a discussion’ before pressing charges. ‘They have operated for six months and haven’t called us anywhere. The SRC wants to slit Spayka’s throat’, Ghazaryan said.

He also announced that the company was not planning to make any further purchases.

In response to Ghazaryan’s press conference, the SRC circulated an official note saying that every step in the process had been substantiated with proof ‘obtained from the criminal case, including relevant documents received as a result of surveys conducted in foreign states’.

‘The Prime Minister cannot intervene’

Following Ghazaryan’s arrest, hundreds of employees of Spayka organised a protest in front of the common jurisdiction court of Kentron and Norq-Marash districts. They demanded that Ghazaryan be released, arguing that the government’s actions were a serious blow to the business.

As Ghazaryan was transferred from the court building to the detention centre, demonstrators clashed with police. They then marched to Yerevan’s Republic Square and continued to protest in front of the government building.

Shortly after, Prime Minister Nikol Pashinyan’s assistant, Nairi Sargsyan, approached the protestors and promised to present their demands to Pashinyan, but adding that the head of the government would not interfere in the actions of the judiciary.

‘The Prime Minister cannot interfere; he has repeatedly stated that he will never intervene in a criminal case. This case cannot be an exception’, Sargsyan said.

In response, the Director of Development at Spayka, Karen Baghdasaryan, said that they were demanding the government release Ghazaryan from detention in accordance with legal procedures.

‘We demand the Prime Minister’s personal guarantee that David Ghazaryan will be released from detention. We do not trust anyone but him’, he said.

However, the Pashinyan informed the protestors through his assistant that he could not mediate the situation.