Anti-corruption reforms in Armenia

198 Pages·2017·3.59 MB·English

F C E E C A
IGHTING ORRUPTION IN ASTERN UROPE AND ENTRAL SIA

Anti-corruption reforms in Armenia

4th round of monitoring of the Istanbul Anti-Corruption Action Plan
ANTI-CORRUPTION NETWORK FOR EASTERN EUROPE AND CENTRAL ASIA

Anti-Corruption Reforms in

ARMENIA

Fourth Round of Monitoring
of the Istanbul Anti-Corruption Action Plan
About the OECD
The OECD is a forum in which the governments compare and exchange policy experiences, identify
good practices in light of emerging challenges, and promote decisions and recommendations to
produce better policies for better lives. The OECD’s mission is to promote policies that improve
economic and social well-being of people around the world. Find out more at www.oecd.org.
About the Anti-Corruption Network for Eastern Europe and Central Asia
Established in 1998, the main objective of the Anti-Corruption Network for Eastern Europe and
Central Asia (ACN) is to support its member countries in their efforts to prevent and fight corruption.
It provides a regional forum for the promotion of anti-corruption activities, the exchange of
information, elaboration of best practices and donor coordination via regional meetings and seminars,
peer-learning programmes, and thematic projects. ACN also serves as the home for the Istanbul Anti-
Corruption Action Plan.
Find out more at www.oecd.org/corruption/acn.
About the Istanbul Anti-Corruption Action Plan
The Istanbul Anti-Corruption Action Plan (IAP) is a sub-regional peer-review programme launched in
2003 in the framework of the ACN. It supports anti-corruption reforms in Armenia, Azerbaijan,
Georgia, the Kyrgyz Republic, Kazakhstan, Mongolia, Tajikistan, Ukraine and Uzbekistan through
country reviews and continuous monitoring of participating countries’ implementation of
recommendations to assist in the implementation of the UN Convention against Corruption (UNCAC)
and other international standards and best practice.
Find out more at www.oecd.org/corruption/acn/istanbulactionplan.

This report was adopted at the ACN meeting on 4 July 2018 at the OECD in Paris.

This report is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and
arguments employed herein do not necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or
area.

© OECD 2018

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ACRONYMS
ACC Anti-Corruption Council of Armenia
ACN Anti-Corruption Network for Eastern Europe and Central Asia
AMD Armenian Dram
AML/CFT Anti-money laundering/Combating the Financing of Terrorism
ANQA National Centre for Professional Education Quality Assurance Foundation
ANSA Armenian National Students Association
Armeps Electronic procurement platform of Armenia
CBA Central Bank of Armenia
CC Criminal Code of Armenia
CEHRO Ethics Commission of the High-Ranking Officials of Armenia
CoE Council of Europe
CoST Construction Sector Transparency Initiative
CPC Commission for Prevention of Corruption of Armenia
CPCL Law on Commission for Prevention of Corruption of Armenia
CPI Corruption Perception Index
CSC Civil Service Council of Armenia
CSL Civil Service Law of Armenia
DC Disciplinary Commission of the General Assembly of Judges of Armenia
EBRD European Bank of Reconstruction and Development
ECTS European Credit Transfer and Accumulation System
EITI Extractive Industries Transparency Initiative
EU European Union
ECHR European Court of Human Rights
FIU Financial Intelligence Unit
FMC Financial Monitoring Centre of Armenia
FOI Freedom of information
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FOICA NGO Freedom of Information Center of Armenia
FT Financing of terrorism
GCB Global Corruption Barometer of Transparency International
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society for
International Cooperation)
GRECO Group of States against Corruption
HEI Higher Education Institution
HHK Ruling Republican Party of Armenia
HR Human resources
HRM Human Resources Management
HRMIS Human Resources Management Information System
IAP Istanbul Anti-Corruption Action Plan
ICT Information and communications technology
IFC International Finance Corporation
IMF International Monetary Fund
INTES Methodology for assessing the integrity of education systems
Marz Administrative unit (province) of Armenia
ML Money laundering
MLA Mutual legal assistance
MoES Ministry of Education and Science of Armenia
MoF Ministry of Finance of Armenia
MoJ Ministry of Justice of Armenia
MONEYVAL The Council of Europe Committee of Experts on the Evaluation of Anti-Money
Laundering Measures and the Financing of Terrorism
MoU Memorandum of understanding
MP Member of Parliament of Armenia
NCLR National Center for Legislative Regulation
NGO Non-governmental organisation
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NIS National Integrity System
OCS Office of Civil service of Armenia
OGP Open Government Partnership
OECD Organisation for Economic Co-operation and Development
OSCE Organisation for Security and Co-operation in Europe
PAA Public Administration Academy of Armenia
PPL Law on Procurement of Armenia
PSL Public Service Law of Armenia
QA Quality assurance
RA Republic of Armenia
RIA Regulatory impact assessment
RTI Global Right to Information Rating
SCPEC RA State Commission for the Protection of Economic Competition of Republic of
Armenia
SIGMA Support for Improvement in Governance and Management, OECD/EU joint initiative
SIS Special Investigation Service of Armenia
SJC Supreme Judicial Council of Armenia
SOE State-owned enterprise
SRC State Revenue Committee of Armenia
TI Transparency International
TIAC Transparency International Anti-Corruption Centre, Armenia
UNCITRAL United Nations Commission on International Trade Law
UNCAC United Nations Convention Against Corruption
USAID United States Agency for International Development
Venice European Commission for Democracy through Law of the Council of Europe
Commission
WEF World Economic Forum

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TABLE OF CONTENTS
ACRONYMS ..............................................................................................................................................3
EXECUTIVE SUMMARY ........................................................................................................................8
SUMMARY OF COMPLIANCE RATINGS ...........................................................................................16
INTRODUCTION ....................................................................................................................................17
CHAPTER 1: ANTI-CORRUPTION POLICY .......................................................................................20
1.1 Key anti-corruption reforms and corruption trends ........................................................................20
1.2 Impact of anti-corruption policy implementation ...........................................................................21
1.3 Anti-corruption awareness and education .......................................................................................27
1.4 Corruption prevention and coordination institutions ......................................................................29
CHAPTER 2: PREVENTION OF CORRUPTION ..................................................................................36
2.1 Integrity in the public service..........................................................................................................36
2.2 Integrity of political officials ..........................................................................................................58
2.3 Integrity in judiciary and the public prosecution service ................................................................60
2.4 Transparency and accountability in public administration .............................................................90
2.5 Integrity in public procurement .......................................................................................................98
2.6 Business integrity ..........................................................................................................................112
CHAPTER 3: ENFORCEMENT OF CRIMINAL LIABILITY FOR CORRUPTION .........................118
3.1 Criminal law against corruption ....................................................................................................118
3.2 Procedures for investigation and prosecution of corruption offences ...........................................132
3.3 Enforcement of corruption offences .............................................................................................142
3.4 Anti-corruption criminal justice bodies (police, prosecution and judges, anti-corruption bodies)147
CHAPTER 4: PREVENTION AND PROSECUTION OF CORRUPTION IN HIGHER
EDUCATION .........................................................................................................................................151
4.1 Introduction ...................................................................................................................................151
4.2 Anti-corruption policy ..................................................................................................................159
4.3 Prevention measures .....................................................................................................................167
4.4 Enforcement and results ................................................................................................................178
4.5 Recommendations .........................................................................................................................182
ANNEX 1. LIST OF CORRUPTION CRIMES ACCORDING TO THE ORDER OF THE
PROSECUTOR GENERAL OF THE REPUBLIC OF ARMENIA ON 19 JANUARY 2017 № 3 ......184
ANNEX 2. LIST OF FOURTH MONITORING ROUND RECOMMENDATIONS TO ARMENIA .188

CHARTS
Chart 1. Recruitment in Civil Service in Armenia 2016-2017 ______________________________ 45
Chart 2. Number of Published Asset Declarations_______________________________________ 52
Chart 3. Statistics of visits of e-drafts website __________________________________________ 91
Chart 4. Doing Business 2018 Indicators for Armenia ___________________________________ 112
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Chart 5. Armenia in Governance and Doing Business Ratings (change over 2013-2018) ________ 113
Chart 6. Global Competitiveness Report (2017-2018) ___________________________________ 113
Chart 7. Number of convicted officials from the total number of convicted persons, 2014-2016 __ 144
Chart 8. Discrepancy in numbers of initiated cases and those submitted to the court or those where
trial finalised with sentence, 2014-2017 ______________________________________________ 145
Chart 9. Academic staff in public HEIs by employment status, 2010-2015 __________________ 154

TABLES
Table 1. Key changes in the role of the President and the Parliament in the judiciary ____________ 63
Table 2. Financing of judiciary, 2014-2017, AMD ______________________________________ 65
Table 3. Appointment and promotion of judges, statistics for 2014-2107 _____________________ 70
Table 4. Grounds of termination of judge’s power _______________________________________ 71
Table 5. Basic salaries of judges, AMD _______________________________________________ 75
Table 6. Average monthly judiciary remuneration _______________________________________ 75
Table 7. Statistics on disciplinary sanctions imposed on prosecutors in 2014-2017 _____________ 86
Table 8. Statistics on average gross salaries of prosecutors ________________________________ 87
Table 9. Share of public contracts awarded via non-competitive process ____________________ 100
Table 10. Procurement transactions of the funds allocated from the 2014-2017 RA State Budget _ 100
Table 11. Procurement transactions from the funds allocated of the 2014-2017 State Budget
implemented electronically and registered by the RA Ministry of Finance ___________________ 103
Table 12. Statistics on the work of the previous complaints review body for 2014-2017. ________ 106
Table 13. Statistics on debarment procedures _________________________________________ 108
Table 14. Limitation periods applied to the major corruption crimes ________________________ 125
Table 15. Statistics on corruption cases dismissed as a result of statutory limitation expiry ______ 125
Table 16. Regulations on immunities of MPs and judges before and after the Constitutional
amendments of 2015 _____________________________________________________________ 127
Table 17. Sanctions for basic (non-aggravated) offences in Armenia _______________________ 129
Table 18. Statistics on MLA and extradition requests on the cases at pre-trial stage, including
corruption-related offences ________________________________________________________ 139
Table 19. Investigation, prosecution, adjudication and sanctioning of corruption criminal offences
(2014-2017)____________________________________________________________________ 143
Table 20. Statistics on cases initiated, submitted to the court and finalised with conviction ______ 145
Table 21. Anti-corruption policy in higher education: risks, measures and priorities (2018) _____ 160
Table 22. Overview of financing of anti-corruption measures in higher education, 2018 ________ 163
Table 23. Obligations for the implementation of AC measures in higher education, 2018 _______ 164
Table 24. Availability of definitions of violations and sanctions, by area at risk of corruption ____ 178

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EXECUTIVE SUMMARY

This report analyses the progress made by Armenia in carrying out anti-corruption reforms and
implementing the recommendations of the Istanbul Anti-Corruption Action Plan (IAP) the Third
Round of Monitoring Report on Armenia adopted in October 2014. It focuses on anti-corruption
policy, prevention of corruption, enforcement of criminal responsibility for corruption and prevention
and prosecution of corruption in the higher education sector.
ANTI-CORRUPTION POLICY
Anti-corruption reforms
Over the course of the past four years Armenia has further reformed its anti-corruption legislation and
institutions, but a genuine resolve to address widespread corruption has been lacking. Armenia
adopted a comprehensive legal framework for civil service and for public service integrity, including
regulations on ethics and conflict of interests. It criminalized trading in influence and illicit
enrichment, introduced the laws on whistleblower protection and the Commission for the Prevention
of Corruption, as well as enhanced the legal provisions on asset declarations and public procurement.
Armenia also introduced various e-governance tools and services, the system for publication and
verification of asset declarations and expanded e-procurement. Some improvements of business
climate and marginal decrease of the perceived level of petty corruption have been achieved as a
result of simplifying regulations and introducing e-governance tools. These efforts however had only
limited impact so far and corruption remained a significant problem in critical areas of public
administration, such as the judiciary, tax and customs, health, education, military, and law
enforcement.
The lack of practical enforcement of anti-corruption laws, in the context of the monopolized economy
and widespread conflict of interest among public officials remained a serious concern. The recent
revolution brought about massive hope for a democratic change and placed the trust in the new
regime, creating an important momentum for change. But this trust may be lost as easily as gained,
unless the Government starts showing real action against corruption. Armenia should take bold
measures against conflict of interest in the Government and the parliament, ensure judicial and
prosecutorial independence and integrity, and step up the efforts to detect, investigate and prosecute
high-profile and complex corruption cases using diverse sources of information and analytical
instruments.
Anti-corruption policy
Armenia adopted the Anti-Corruption Strategy (the Strategy) and its implementation Action Plan
(2015-2018) through public consultations and NGO participation. These policy documents focus on
selected measures of prevention of corruption, criminalisation and law enforcement. In addition, they
include four sectors: health, tax, education and service delivery by police. In view of the magnitude of
the problem of corruption in Armenia and the areas baring highest corruption risks, the choice of
priority sectors has been questionable. Armenia is encouraged to ensure that the new policy
documents are developed with wide stakeholder engagement, are based on needs and risk assessment
and include ambitious measures targeting actual corruption risks and key areas that are vulnerable to
corruption and require reform as a matter of priority.
Public opinion surveys are not been carried out regularly or used in anti-corruption policy
development and monitoring. Surveys should be carried out systematically to measure the level of
corruption, public trust and the impact of anti-corruption measures, including at sector level. The
results of the surveys should be publicized and used in the anti-corruption policy development,
implementation and monitoring. The budget for the implementation of the anti-corruption policy
documents was provided by the USAID direct grant to the state budget (749 110 USD). However,
only 15% of these funds have been used implying poor financial planning or the lack of proactivity to
implement the policy documents. In order to make sure that anti-corruption policy documents are
realistic, affordable and enforceable, the measures of the action plan should be accompanied by
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calculations of necessary budget allocations, indicating the amount and the source of funding. The
monitoring reports should include financial reports/budget execution reports as well.
Anti-corruption policy coordination was improved compared to the last monitoring round, however,
systematic monitoring procedures and practices are still not in place and CSOs do not participate in
the monitoring. Surveys and performance indicators are not used to evaluate impact. There are good
plans and new initiatives to improve monitoring that should be pursued in the future. Systematic
monitoring and evaluation procedures should be put in place and applied in practice. Regular
publication of (at least) annual reports must be ensured to promote accountability. In addition,
structured and systemic awareness raising is needed with the engagement of civil society and large
public, targeted to the sectors most prone to corruption, using diverse methods and activities adapted
to each target group. Necessary resources should be allocated for awareness raising, results of these
activities should be evaluated and the next cycle of awareness raising planned accordingly.
Corruption prevention and coordination institutions
The Anti-Corruption Council (ACC) became more active, transparent and inclusive. Its sessions are
held regularly and are open to media. The minutes are published online. Donor coordination has been
added as one of its functions, however needs to be streamlined to ensure effective donor support to the
implementation of the anti-corruption programmes. Main shortfalls in the performance of the ACC
have been its lack of proactivity to develop and push forward the implementation of practical
measures to decisively tackle corruption as well as the lack of specialized and skilled staff to
analytically and administratively support its work. Armenia is encouraged to provide the ACC with
the resources that are necessary for the efficient exercise of its mandate, including dedicated staff
specialised in anti-corruption and ensure that its secretariat is proactive and engaged with state bodies
to guide and boost their anti-corruption performance.
Armenia has shown commendable progress in cooperation with non-governmental stakeholders. The
Ministry of Justice has been particularly active in this dialogue. Civil society participation became
more systematic compared to the last round. The NGOs are now represented in the ACC as members
or observers and actively participate in its sessions. Armenia has engaged with civil society for anti-
corruption policy development and implementation of selected reform, such as illicit enrichment,
whistleblowing and anti-corruption institutional framework. More is needed to further involve
business representatives in the process.
Armenia introduced a new legislation providing for an independent corruption prevention body
Commission for Prevention of Corruption (CPC) to be set up in the coming months. This change is in
line with international anti-corruption standards and represents a welcome development. Nevertheless,
the practical results of the institutional change and its impact on the level of corruption are yet to be
evaluated. The objective and transparent selection of commissioners must be ensured as well as the
exercise of the CPC’s mandate free from undue influence. In addition, the CPC should be provided
with the resource and specialised staff to carry out its functions efficiently. In the transition period, the
role of multiple agencies involved in anti-corruption policy coordination should be clarified.
PREVENTION OF CORRUPTION
Integrity in civil service
Armenia adopted the new laws on civil service (CSL) and public service (PSL), changing the system
of civil service management, widening the scope of civil service, enhancing the merit-based
recruitment and improving the integrity framework for public servants, including the regulations on
conflict of interest, codes of ethics, asset declarations and ethics commissions. Although adopted with
significant delay and some remaining shortcomings, these laws constitute a major step forward
towards the civil service reform in Armenia in line with the European standards. Armenia should
move on next with the adoption of the remaining secondary legislation and start the application of the
new laws in practice. Armenia is also recommended to improve the Human Resources Management
Information System (HRMIS) adapting it to the enlarged civil service and ensuring that the
disaggregated statistical data is produced and used in assessing the implementation of the new CSL
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