On May 4, 2023, the Armenian government) invested 1.5 billion (US$3.8 million today) in a company, whose director is a friend of the wife of Yerevan Mayor Tigran Avinyan.

The company, CFW CJSC, got the money just eight days after it was created.

The money came from the Entrepreneur+State Anti-Crisis Investments Fund, established on May 22, 2020 by the Armenian National Interests Fund (ANIF), a foreign direct investment fund operating under the government of Armenia.

CFW CJSC is owned by companies registered offshore in the U.S. state of Delaware.

ANIF was established in 2019 and dissolved in 2024. Avinyan continued to serve as ANIF’s board chair after being appointed Yerevan deputy mayor in September 2022. The press in Armenia raised a “conflict of interest” issue in its pages. Investigations into the issue fizzled given ANIF’s eventual dissolution and merger in the State Property Management Committee.

During 2020-2023, the Entrepreneur+State Anti-Crisis Investments Fund invested in ten companies and the EU-Armenia SME Fund.

The total amount of investment was AMD 6.650 billion. The state acquired up to 49% shares in various companies, including CFW CJSC.

The purpose of the investment was to create cybersecurity capabilities in Armenia and to train specialists in the field who, over time, would be able to provide cybersecurity services to local and foreign companies.

CFW CJSC Director Karineh Andreasyan owns a 33% share in Lav Products LLC. Mariam Pahlavuni, who owns 34%, is the wife of Yerevan Mayor Tigran Avinyan. (Avinyan served as Deputy Prime Minister of Armenia from 2018 to 2021 in Nikol Pashinyan's government.)

It turns out that at the time (2019-2023), when Tigran Avinyan held the position of ANIF Chair of the Board of Directors, the Entrepreneur+State Fund invested more than 1.5 billion drams in a company run by his wife’s friend.

48% of CFW shares are owned by Ararat Technologies LLC, 3% to Hayk Holding LLC. These two companies are registered in the U.S. state of Delaware at 251 Little Falls Drive, Corporation Service Company, Wilmington. The CEO of both companies is Robert Levin.

Delaware is an offshore zone, or, as it is commonly called, a “tax haven.” An offshore zone is a territory designated by a given country for foreign companies. Companies registered offshore cannot engage in profit-making activities in the territory of a given country. Such companies are exempt from taxes.

Hetq tried to find out whether the funds invested in this company by the Entrepreneur+State Fund were spent in accordance with the intended purpose. ANIF reported that the companies that received money from the state did not submit reports.

The Entrepreneur+State Fund was supposed to monitor the efficiency of the spending of funds. The monitoring was conducted as follows: the company that received investment from the state had to hold a competition every year and select an independent audit company. That company had to conduct an audit and present the results to the fund. The audit company had to be one of the “top ten” audit companies.

In response to our written request from the State Property Management Committee, we were informed that the audit conclusion is confidential.

“Regarding the provision of companies’ financial statements or audit reports to you, we believe that the requested documents may contain trade secrets, the provision/disclosure of which to a third party may be legally problematic,” the response stated.

Thus, while the state has given billions of taxpayer money to private companies, the public doesn’t have the right to ascertain how their money was spent

Given the corruption scandals surrounding ANIF that have been going on for two years, it is especially important to know how these funds were spent.

Hetq also tried to talk to CFW Director Karineh Andreasyan. We visited the address listed in the state register of legal entities, Republic Street 37. However, there was no such company at that address. ANIF also operated in that building before it was taken over by the State Property Management Committee.

Hetq sent a written request to Karineh Andreasyan’s e-mail, asking her to answer the following questions:

• Has CFW CJSC implemented the goals set by the Entrepreneur+State Fund ?
• How many employees did the company have at the time of receiving the investment and how many employees does it have now?
• How many cybersecurity specialists has CFW CJSC trained?
• How many of these specialists work in the cybersecurity field?
• Has ANIF, the Entrepreneur+State Anti-Crisis Investments Fund, or the State Property Management Committee demanded or asked CFW CJSC to return the AMD 1.5 billion investment?

Andreasyan hadn’t responded to our request by the time of this article’s publication.

Hetq wrote to the State Revenue Committee (SRC) to find out how many employees the company had at the time of its establishment and how many employees it has now. The SRC reported that as of April 2023, CFW CJSC had fifteen employees, decreasing to two as of August 2024. From September 2024 to the present, only one person has been working at CFW CJSC, the company's director.

CFW CJSC paid AMD 108.145 million in taxes to the state budget in 2023, and 166.472 million in 2024.

CFW was supposed to pay 49% of any profit to the Republic of Armenia as dividends. We have sent a request to the Ministry of Finance to find out whether the state has received the dividend. The ministry replied that according to the information provided by the authorized state administration bodies, there is no state-owned company called CFW CJSC. It turns out that the Ministry of Finance does not even know that such a company exists, 49% of whose shares belong to the state. Therefore, there can be no question of receiving a dividend.

We sent another request to Prime Minister Nikol Pashinyan, asking him to provide information as to whether CFW CJSC has paid the state dividend and if not, why. Pashinyan’s office transferred our request to the State Property Management Committee. This agency has not yet responded to our request.

Against the backdrop of the ongoing corruption scandals surrounding ANIF, the CFW deal raises serious questions about the effectiveness, transparency, and oversight of public investments.

AMD 1.5 billion in public funds were channeled to a company that not only has offshore connections but also has nothing to show in return.

Top photo: Tirayr Muradyan