28.02.2019

The Armenian CSO Anti-Corruption Coalition and the Armenian Lawyers’ Association have elaborated the Shadow Progress Report on the Process of Implementation of Recommendations of the Fourth Round of Monitoring in Armenia in the framework of OECD-Istanbul Anti-Corruption Action Plan.

Recommendation 20 of the latter document concerns "Bussiness Integrity". It stipualtes the following:
"1. Prioritise business integrity measures in national anti-corruption and law-enforcement policy.

2. Develop business integrity section of the anti-corruption policy documents based on risk analysis, in consultation with companies and business associations. Promote active participation of private sector in the monitoring of anti-corruption policy documents.

3. Ensure that business has a possibility to report corruption without fear of prosecution or other unfavourable consequences, for example through independent bodies. Promote such reporting.

4. Promote integrity of state-owned enterprises through their systemic reform, by introducing effective anti-corruption programmes and increasing their transparency, including setting the requirement for proactive publication of information. Develop, implement and monitor anti-corruption measures in state-owned enterprises.

5. Consider adopting a Corporate Governance Code for SOEs based on the OECD Guidelines and other international standards.

6. Promote the role of business associations for business integrity, such as studying corruption risks, disseminating good integrity practices; support awareness raising and training.

7. Ensure gradual and effective beneficial ownership disclosures: a) require disclosure of beneficial ownership of legal persons; b) create a central register of beneficial owners; c) publish the information on-line in open data format in line with local and internationally recognised guarantees of data and privacy protection; d) ensure dissuasive sanctions for nondisclosure in law and in practice.

8. Raise awareness of and train the representatives of state bodies and those of the companies on business integrity issues.

In regard to the implementation of this commitment, Armenian Lawyers' Association's and Armenian Anti-Corruption Coalition's has expressed concerns which is viewpoint is the following: 

"1. Although the identification of corruption risks in the business sector included in the Strategy Draft, however we believe that the mentioned formulation is very common and thus consider that there is a need for specific actions.

2. It is worth mentioning that the Strategy Draft stipulates anti-corruption compliance programs. However, we do believe that the above mentioned is strongly linked to the institute of criminal liability of legal persons, which is not provided in the Strategy Draft. At the same time, it is necessary to note that the criminal liability for legal persons is envisaged under the Article 129 of the new draft Criminal Code, but there is no progress in this Draft for a long period of time. 

3. The Action 28 of the Strategy Draft envisages the introduction of the Register of Beneficial Owners, which almost repeats the actions provided in Point 4 of Annex 1 to the RA Government of Armenia Decision N 1307-L of 15 November 2018 on “Approving the Fourth Action Plan of the Open Government Partnership Initiative of the Republic of 32 Armenia” with the difference that the program envisages the introduction of an open public Register of Beneficial Owners. However, this document provides for only the creation and operation of a registry, as a result of which legal persons are provided the right and not the obligation to disclose to the beneficial owners. It should be noted that the creation and launch of this register is already envisaged to be implemented within the framework of the Extractive Industries Transparency Initiative (EITI) where a pilot commitment will be set only for legal entities operating in the metal mining industry. We are convinced that the full implementation of this institution will be an instrument for fighting against merger of business and politics, monopoly, dominating position and anticompetitive agreements. Thus, we deem it necessary to establish a legislative obligation to ensure that all legal entities registered and/or operating in the Republic of Armenia disclose their beneficial owners and not just introduce and run the register." 

The English version of the report is available here.

This material has been prepared in the scope of the “Armenia: Promoting Anti-Corruption Conduct and Reforms” Project implemented by the “Center for International Private Enterprise”, the “Armenian Lawyers’ Association” NGO, the “Corporate Governance Center” NGO and the “Yerevan Chamber of Commerce and Industry” with financial support of the National Endowment for Democracy. The project is implemented as a co-financing to the “Commitment to Constructive Dialogue” action implemented with the financial support of the European Union by a Consortium comprising the “Armenian Lawyers’ Association” NGO, the “Armenian Center for Democratic Education-CIVITAS” NGO, the “International Center for Human Development” NGO, the “SME Cooperation Association” NGO, the Union of Communities of Armenia, as well as “Agora Central Europe” NGO (Czech Republic). The contents of this material are the sole responsibility of the “Armenian Lawyers’ Association” NGO and can in no way be taken to reflect the views of the National Endowment for Democracy and the European Union.