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Head of Armenian diaspora fund arrested for ‘squandering money on gambling’

5 July 2018
Ara Vardanyan (Armenia’s National Security Service)

Armenia’s National Security Service (NSS) announced on Tuesday the arrest of Ara Vardanyan, executive director of the Hayastan All-Armenian Fund. Vardanyan was charged with embezzlement and misuse of the organisation’s funds.

The authorities accused Vardanyan of misappropriating approximately ֏130 million ($270,000) from the Hayastan Fund over the past two years, including ֏14 million (almost $29,000) in just the past week.

Officials report that once presented with the evidence against him, Vardanyan admitted to spending ֏20 million ($41,000) from the Fund on online gambling. He claimed he later replenished the Fund’s empty account with charitable donations and his personal savings.

Speaking to the press, the head of the NSS, Artur Vanetsyan, confirmed the transfer of about ֏130 million from the Hayastan Fund to online casinos but said they are still investigating Vardanyan’s claim that he returned the money. The NSS said they were also looking for other possible violations by the organisation. Citing Zhoghovurd newspaper, Panorama reported that the NSS might also summon Nagorno-Karabakh’s former president Arkadi Ghukasyan for questioning on possible mismanagement of funds related to Hayastan’s projects.

Deputy Diaspora Minister Babken DerGrigorian told OC Media that Vardanyan’s arrest ‘will only increase’ trust and confidence that the government will not tolerate corruption, rumours about which have been present ‘for a long time’ in Hayastan.

DerGrigorian declined to comment on the ongoing investigation, saying instead that although charity work ‘is important and has its place’ in the relationship between the Armenian diaspora and Armenia, ‘these relationships should not be based on philanthropy, but rather on partnership’.

‘The latest developments regarding the All-Armenian Fund Hayastan will not weaken but strengthen the diaspora’s trust in Armenia. We are proving our intolerance to any abuses of power’, Armenian Prime Minister Nikol Pashinyan said on Wednesday.

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Fonds Arménien de France, the French branch of the fund, released a statement on Wednesday assuring the public that all donations had been used appropriately, as they were intended. OC Media has reached out to the Hayastan All-Armenian Fund for comment.

David Harutyutyan, who served as justice minister from 1998–2007, weighed in on the arrest, arguing that if Vardanyan did indeed replenish the Fund’s money, then this would not classify it as ‘embezzlement’.

In spite of Vardanyan’s reported confession, his lawyer, Yervand Varosyan, wrote on Facebook that no matter what everyone thought about placing bets, ‘Ara Vardanyan did not waste any money from the Hayastan Fund’. According to the lawyer, although he used the card owned by the Fund, ‘among other purposes, for personal needs’, he returned everything. Varosyan claimed the reports of misappropriation were doing much more damage to the Hayastan Fund than Vardanyan’s actions.

Criticism of the fund

The Hayastan Fund was established in 1992 by Levon Ter-Petrosyan, the first President of Armenia, with the aim to mobilise Armenians outside the republic to help the ‘development of Armenia and Artsakh’. Money raised is used to finance basic infrastructure projects in the country. The Fund receives regular direct financial contributions from the worldwide Armenian diaspora and additionally organises annual fundraising telethons, radio-marathons, bike marathons and entertainment events.

The organisation has its critics — in Armenia as well as among the diaspora. In 2012, Harut Sassounian, former Senior Vice President of Kirk Kerkorian's Lincy Foundation and the founder and president of the United Armenian Fund, two diaspora funds, attacked the Hayastan Fund’s fundraising campaigns. He argued that as the principal network uniting Armenian communities worldwide, the organisation has a responsibility to support the most vulnerable among the Armenian diasporas — Syrian Armenians concentrated in Lebanon.

Sassounian told OC Media the recent scandal ‘undermines the trust of all donors' of the Fund. 'A thorough investigation must be conducted to see if there are any other violations by Vardanyan or others', said Sassounian.

In 2015, human rights activists and journalist Ara K. Manoogian published a 2010 conversation with Sarkis Kotanjian, the executive director of Hayastan’s US Western Region, who confidentially admitted the substandard quality of roads Hayastan reconstructed in Yerevan. According to his report, Kotanjian also said that the then government of Serzh Sargsyan was ‘pocketing’ the Fund’s money ‘like there's no tomorrow’. Manoogian published a series of investigations, collected in ‘to Donate or Not to Donate’, published on his project website the Truth Must be Told.

[Read more about recent prominent cases under NSS supervision on OC Media: Armenian ‘hero’ general arrested for stealing military aid, Armenia cracks down on ‘thieves-in-law’]