Public Procurement System: Concerning Facts and Suspicious Transactions
27.05.2016
11:00
Although the leaders of Armenia do not stop talking about ensuring transparency in public procurement, the cost efficiency is still concerning. In order to increase public control over public procurement sector, Transparency International Anti-Corruption Center (TIAC) created a system of public procurement, which will operate in online regime.

“From now on citizens that participated in public procurement can anonymously register irregularities and injustice they notice in the field of procurement,” Varujan Hoktanyan, President of Transparency International Anti-Corruption Center, said this during the press conference on “Monitoring Report of Public Procurement: Proposals to increase effectiveness” at Media Center on May 27. He added that instead of many statements about the need to increase transparency in public procurement, mechanisms should be invested detecting people behind transactions containing corruption risks.

“We suggest creating mechanisms which make it possible to determine whether companies participating in tenders for procurement belong to officials or not because there are many such precedents. Besides, there are many cases when companies belonging to officials are dissolved after certain situations but the same people establish new companies and again participate in the public procurement. So, the mechanisms finding out the people standing behind these companies are important. It is necessary to find out whether heads of the participating companies are registered in offshore or not,” Hoktanyan said.  

To solve this issue, legislative amendments are necessary. “In some state such as Great Britain the legislation is like in the USA. This legislation is invested also in Ukraine. So it will be great to have it in Armenia,” he said.

Over the past few weeks, the Prime Minister Hovik Abrahamyan made a few announcements about monopolies, reduction of the state apparatus and the fight against corruption. Although he announced about passing into severe austerity mode and assigned to ensure maximum transparency in the procurement industry the experts say the picture is still worrying. 

“Last year, according to official data, about 23187 public procurement contracts were submitted to the Ministry of Finance to make payments, but there is a discrepancy of 15%,  payments were not made about 43 contracts. Although government officials are talking about improving the transparency of the procurement system, but we can see that the situation has not changed much compared with 2014. Where are the efforts made?” Anti-corruption Center expert Artak Manukyan said.  

TI Corruption Center's study shows that the purchases from one person or by framework agreements still prevail in public purchases. The volume of e-procurement is still small, 9% of the total volume. “To speak about e-procurement is not serious. This is the situation,” Manukyan said and added that the recommendation made a few days before to ensure transparency in public procurement is not new. “The same recommendation was made two years ago but no significant changes were made,” he said.

It is noteworthy that over 50% of public procurement and service delivery perform the same companies that, according to various sources, have close ties to the government. “For example, the following companies are the winners of main trends – “Flesh Med”, “Telia Med”, “Natali Pharm”, CPS, Ucom. These five companies manage half of the framework agreements,” the expert said. He added that state funds are spent mostly ineffectively, on the other hand doubt casts on the fact that some universal companies supply almost everything from washing powder to office furniture.   

As a risky contract of service delivery, the expert presented land lease agreement between RA Finance Ministry and Businessman Samvel Alexanyan’s wife.  

Since 2012, the Ministry of Finance pays 78 million annually for the space rent on Arshakunyats 127/21from Samvel Aleksanyan's wife Shogherina Mkrtchyan. "Therefore, the prime minister calls about transparency are only promises," the expert said, adding that last year the Ministry of Finance bought 30 pieces tablets, each costing about 400,000 drams, at the expense of taxpayers.

Then he presented some interesting facts about the National Security Service procurement. He said that it is not clear why the National Security Service to buy 17 tons of sugar per month, 4.5 tons of margarine, 6 tons of salt, 40 kilos of bay leaf and so on. "This amount is enough to keep a whole army,” he added.

Arshaluys Mghdesyan, editor/events coordinator at “Media Center”

To contact the author please send an email to arshaluismghdesyan@pjc.am.

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